Ep 37: Financial Terms You Should Know During the Pandemic
With so much happening in the financial world these past few months, there can be a lot to process when you’re trying to understand the market and the economy. Certain financial terms are being used a lot more now than they were the past decade so we will help you understand what these things mean and how they apply to you.
The Reality of the Matter:
If you watch business shows or read about financial news, chances are you’re hearing a lot of the same terminology and some of it might be new to you.
With markets staying strong over the past decade, there just hasn’t been a need to talk about things like recessions and recoveries. They weren’t relevant to the state of the economy, but that’s changed since the coronavirus pandemic hit our country. The conversations experts are having on television are completely different than they were when the year started.
We’ve had people reach out to us to discuss some of these things they’ve heard about and want clarity about what we’re dealing with. So let’s use this episode of the Retirement Reality Podcast to define and explain many of the financial terms that are being used consistently through this pandemic.
First off, what would you call what we’ve experienced this year? Mike classifies it as a ‘black swan event’ and he’ll tell you why. But where do we go from here? There are many different types of recoveries for the market and we’ll run through the list on the show.
The type of recovery we have will help decide how long this downturn lasts. Have you heard people talking about whether we’re headed for a recession or a depression? What’s the difference in the two and where does Mike think will happen?
Once we evaluate those things, we’re going to look at planning terminology. Should you be taking advantage of tax-loss harvesting? What about rebalancing your portfolio? Many of the strategies being discussed aren’t familiar to every investor but should be now. That’s what the goal for this episode and hope you come out of it with a better understanding of the things you might be seeing and reading in the news.
1:28 – Mike and his family staying active outdoors.
3:08 – Getting to Know Mike: What do you do to relieve stress?
5:20 – What would you call what’s happening right now with the market?
7:17 – Help us understand the difference between a recession and a depression.
8:55 – Explain the types of recoveries: U-shaped, V-shaped, W-shaped, L-shaped
10:24 – What is the VIX index?
12:38 – Is this an opportunity for tax-loss harvesting
15:17 – How can index funds benefit people during a downturn?
16:46 – What is rebalancing, how does it work, and how often should you?
19:48 – Our team is in the office and available for people that want to take meetings in person.
Thanks for checking out the Retirement Reality Podcast. We’ll talk to you again next week.