Snowbird Nancy

Snowbird Nancy is usually upbeat. She enjoys wintering in Arizona, and summering in Idaho. The kids and grandkids keep her busy in the south. Jeep trails and the ranch keep her busy in the north.

Then the CoronaVirus hit.

No, she didn’t get sick, nor did anyone she knows.

Her portfolio got sick, just as she was about to purchase a NextGen home to share with one of the kids’ families in Tucson.

When she started, the value of her non-retirement account covered her promised down payment.

A month later, there was less than 2/3 of what she needed.

And that’s when she let us know the pain of her plan.

Ralph Bender here for Enduring Wealth Advisors.

Had we known about an impending big spend, we would have moved the money out of risky assets. Now, we needed to scramble to help her accomplish the goal, without permanently destroying her future.

First, we questioned the large down payment amount. With mortgage interest rates at historic low levels, we probed the logic of a 50% down payment.

She’s doing an equity share deal with the kids, and they needed to qualify for the loan payments. We did get some retrenchment from the lender.

Next, we moved all the assets in the non-retirement account onto margin, allowing us to borrow against, rather than sell the temporarily depressed investments. Sure, the firm charged some interest, but when market values moved over 3% per day, interest of 8% per year is insignificant.

Then, when the market recovered, we did the liquidations as originally intended, to eliminate the margin debts.

Nancy is in Idaho for the summer, but when she gets back to Arizona, she’s got an apartment waiting in the new house.
And lots of quality time with the grandkids.

This story is an example of how we pace our clients through life’s crossroads and financial milestones, providing wise counsel allowing them to keep focused on the long run.

Gotta run!

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

This is a specific example and is not representative of all situations. Your results will vary.

Using margin may not be suitable for all investors and carries investment risk along with interest charges.

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