12 Investment Strategies for the Coronavirus Crisis – Part 1

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Convert an IRA to Roth IRA

The balance of your current IRA is probably lower compared to the beginning of the year. You can convert some, or all, of the investments inside your Traditional IRA to a Roth IRA. Those investments should have time to recover inside a Roth IRA where that appreciation would be tax-free. Note: you will have to pay ordinary income taxes on the value of the investments on the day the Traditional IRA is converted to a Roth.

 

Consider reducing the long-end of a bond ladder (and timing)

Most long-term bonds have seen a jump in value. It’s hard to imagine there is much upside room given where interest rates are. Also, consider margins against these if you need liquidity short-term as rates are low. There are a lot of bonds being sold so pricing should be better in a couple months.

 

Reduce or eliminate High-Yield Bonds

These are the companies that could have a difficult time paying their debt with significant business interruption. This also assumes you view High-Yield Bonds as a risk-reduction element in your portfolio. We do not like them currently as a yield enhancer to fixed income portfolio because of principal risk. If you are using in a portfolio then consider as equity risk.

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