by Ashley
I’ve been avoiding logging into my investment accounts lately. Not because I’ve been too busy – but because I knew what I’d see and I wasn’t ready for the gut punch.
It’s been a strange season of life. I’m still grieving the loss of my father (oh yeah – and my husband’s 94 year old grandfather just passed, as well). We’ve had several (5, to be exact) meetings with financial advisors. We’re trying to navigate the legal and financial complexities that come with an inheritance and trying to make smart, responsible choices with the money my Dad left behind.
But it’s hard to make confident decisions with the market in such a “state of flux” (to put it mildly).
I think it’s tough for any/all of us with money invested right now to watch our investments being devalued. But there’s something different about just *barely* inheriting a pretty decent sum of money, only to watch it lose value right before my eyes. It’s been heart-breaking.
I saw a funny (the “ouch! that stings” type of funny) meme that said: “Millennials hearing they are about to live through their 4th “once in a lifetime” recession, with a picture of Amy Poehler throwing up peace signs. Hard not to laugh. And then groan.
Market Volatility Reflections
So I’ve been doing what I do best: reflecting, planning, and trying to learn something from the mess (good thing 2025 is my year of “peace, planning, and purpose”). Here are a few lessons I’m taking away from this market downturn – not just about finances, but about mindset, patience, and the value of thoughtful decision making.
Emergency Funds are worth their weight in gold.
As I’ve been considering where to invest money, I’m glad I have maintained a pretty healthy savings account (I just blogged about my high yield accounts with e-trade and CapitalOne360), in addition to some CDs and general savings accounts. These are the only accounts that haven’t been negatively impacted by the market since they aren’t tied to stocks and bonds. And I’m glad we’ve got it in case its needed.
Diversification is not optional.
All of our investments are diversified, but I wish we had done even more to diversify our portfolio. We have much of our money in target date mutual funds based on retirement dates. While these funds are nice to automatically balance and re-balance our portfolio across time, right now they are “highly aggressive”….which means high loss during times of market downturn. It’s been painful to see.
Debt-free is the way to be!
I’m grateful that our debt is minimal. We only have our mortgage and the last remaining bit of my student loans. I’m on the public service loan forgiveness program (PSLF), but who knows if that program will still be a thing next year when my time for forgiveness arrives (I am crossing my fingers and toes it still will be!). Either way, I’m so glad we don’t have a bunch of extra debt saddling us. We’ve talked about investing in real estate. But is that the next thing to slip? If we’d bought an investment property with debt, just to have the market bubble pop, that would be a whole other layer of stress and anxiety. I’m glad we’ve been relatively conservative with our debt and investment strategy.
Discipline matters.
To be honest, I’m still really working through this in my mind. In conversations with my husband, he explains it this way: “If you have 10 shares of Z stock at $5/share, you have 10 shares. If Z stock drops to $3/share, you still have 10 shares. You only lose money if you sell while it’s low. Otherwise, wait it out (or better yet – continue investing!) and you’ll still have 10 shares when the price of Z stock goes back to $5/share.”
My main problem with this one is that one of my inheritances was an inherited IRA, which requires me to pull all the funds within 10 years. In my meetings with financial advisors, I had planned to pull an equal amount each month for the 10 years, until the funds are depleted. I was choosing this strategy so that the tax obligation would be spread out over the 10 years instead of hitting hard in Year 10 (or whatever year I pull it all). BUT with the markets being down, I’m now considering altering course. Instead of starting a monthly distribution now, I’m thinking I’ll put it off until things have course-corrected a bit. This is troubling since I don’t know when that will be and I don’t want to screw myself by ending up with a huge tax bill down the road (I’d rather have it all spread out equally). But I would also rather NOT be taking distributions when things are low. Thoughts or advice on this one?
You can’t predict the market, but you can control your budget.
This is probably my biggest take-away. So much is outside our control. When markets are volatile and so much feels unpredictable (tariffs, grocery prices, interest rates, etc.), the one thing we CAN control is our budget. It might be time to reduce spending and focus on saving. At least for me, I get stressed out about things I can’t control. Having control over simple things really helps ease the strain. Focusing on the basics: meal planning around ingredients I already have on hand, shopping based on sales, and finding ways to cut back or tighten the budget belt to keep things in check helps me psychologically.
The market will rise and fall – that’s just what it does. But what we learn in the downturns can make us sharper, stronger, and more strategic moving forward. This recent dip has reminded me that while I can’t control the stock market, interest rates, tariffs, global events, etc., I can control how I respond.
I can keep my emergency fund funded. I can not take on new debt. I can revisit my investment strategy with a more critical eye. I can budget with intention to protect my peace.
I’ve been working on “the power of the pause” in general. In this situation, I feel like there’s power in pausing, reassessing, and adjusting as needed. We may be in the thick of the storm right now, but we’ve been through worse. Might as well learn some lessons along the way.
Hi, I’m Ashley! Arizonan on paper, Texan at heart. Lover of running, blogging, and all things cheeeeese. Early 40s, married mother of two, working in academia. Trying to finally (finally!) pay off that ridiculous 6-digit student loan debt!
Specific to the inherited IRA: your options somewhat depend on how the funds are invested. If there is cash, money market or other holdings not in the stock market, you may be able to fund this year’s withdrawal while minimizing selling shares you feel are undervalued in the short term.
If you and your husband have pre-tax contribution space (401k, 403b, HSA, traditional IRA, etc), you can reduce the tax impact of the inherited IRA withdrawals by increasing those contributions.
None is in cash, all is in stock market holdings. :/ I have increased to max out our retirement contributions to try to offset the tax impact a bit! That’s great advice!
Is this a managed portfolio with a long list of varied funds and/or individual stock holdings? If this is the case and the amount is significant, I would consider leaning on a professional to help plan out funding your withdrawal plan.
If it’s all in stock market index fund(s), you have some time before the tax year ends. So you could sit on it for a few months or just withdraw enough to funnel into tax-advantaged accounts for now.
It was a formerly professionally managed fund. When it transferred to me as an inherited IRA, it came over invested in the same funds (a long varied list of holdings), but is no longer professionally managed. And I can change the holdings any time.
In terms of the withdrawals, there’s no monthly or annual minimum. The only requirement is that 100% is withdrawn within 10 years. But the distributions can be done at any rate I like (meaning, I could sit on it for a year or two and take the distributions later. No requirement that I take “X” amount by end of tax year, etc.)
I understand the 10 year rule for withdrawals. My comment was in the context of your idea to spread the withdrawals over the 10 years as much as possible. Tax years still apply to your income with respect to when you withdraw from the inherited IRA. You do have to withdraw something by the end of 2025 if you want to realize that income on your 2025 taxes. Particularly since you said you already increased pre-tax contributions: you won’t benefit from that with respect to the inherited IRA if you don’t make the requisite withdrawals. So, I thought I’d just mention that you have some limited time to sit on it but not past end of year.
I mentioned the portfolio and its former management because it sounds like a relatively complex set of investments. You could, possibly with professional advice, analyze the investments to identify holdings that aren’t hit as hard as the overall market now or that you simply don’t care to sit on. Then you can sell those to fund withdrawals now while you hold onto what you prefer to wait out.
Gotcha! Great points, thanks for the clarification!