This year will most likely be an interesting one financially. The pandemic wreaked havoc on the finances of many. And businesses, especially the many Black entrepreneurs, saw their bottom lines dwindle. The year 2021 will be a year of recovery and it’s time to get prepared.
DC-based financial advisor Tayvon Jackson, CEO of New Perspective Financial Solutions says there are steps can you take to start to recover from 2020.
It calls for a new approach. “My first recommendation would be to not look at your statements. When you look at your statements, it causes you to make short-term decisions on your long-term money,” advises Jackson.
According to Jackson, 2021 is a second start. “We had one of the worst market crashes since 2008 in March when COVID-19 first struck the U.S. Now that the market has recovered, you have another chance to not make the same mistake,” explains Jackson. “You can insure your accounts by investing in a fixed indexed annuity, which will give you the safety of a money market product and the upside of a balanced mutual fund.”
Financial advice is also a great idea. Last year complicated everything and you might need a financial advisor to untangle it all. “Get professional advice. With pensions going away and so much uncertainty with social security, you need to work with a financial advisor who specializes in income planning,” says Jackson, the author of three financial books (“40 Acres and Some Dividends,” “Poor Dad No Dad,” and “Love and Finance”).
“For those who are still battling financial challenges as we get further into 2021, my best advice would be to treat yourself like a business. Every time you get paid, you should have your money allocated into savings, debt, and investments. Typically, I recommend opening up a bank account for each of these areas,” says Jackson.
This year is not only about repairing your finances from last year, but also about being ready for this one.
Jackson has a few predictions. “I predict that the financial situation of Americans, overall, will include taxes increasing dramatically with the new administration, so it may not be wise to invest in Roth accounts, which tax you upfront,” says Jackson.
He also thinks there will be a rise in interest rates. “Secondly, my prediction is that interest rates will start going up. This is bad for investors who have long-term bonds in their portfolios. The return of bonds is impacted by interest rates similar to a seesaw,” explains Jackson. “When interest rates go, up bonds go down. My final prediction is that there may come a time this year when the market corrects itself. Do not treat a market crash as a negative but, instead, as a sale that will allow you to pick up some of the top companies in the world—cheaply.”