As the COVID-19 pandemic has continued to create uncertainty in our economy and personal lives, it is important to seek counsel from those whom God has blessed with experience and wisdom. “Without counsel plans fail, but with many advisers they succeed.” ~ Proverbs 15:22 ESV. Art Ally is founder and CEO of Timothy Plan, the first suite of biblically responsible investment products brought to market back in 1994. In addition to the founding of Timothy Plan, Ally has over 40 years of experience in both highs and lows in the financial markets from which he can draw insight. Timothy Plan recently sat down with Ally to seek counsel on some of the more common questions we hear from the general public at this time.
Q: From a macro perspective, how is the current situation different from 2008, or other significant market downturns?
A: Although the current, sharp market decline has been very similar to that in 2008, the difference couldn’t be more glaring. In 2008, our economy was standing on quicksand. Today’s economy is the strongest I’ve seen in my 40-plus years in this industry. A very dangerous and contagious virus brought this nation — and the world for that matter —to a screeching halt. Although this is temporary, it’ll take some time to get our economic engine fully humming again. I don’t believe there will be any form of instant gratification — but recover we will because all the economic pieces are still in place for a full recovery.
Q: What do you envision is most likely to occur as we progress over the next three to six months?
A: No one can predict an accurate timeline for when this virus will cease posing a threat. But I can’t believe that it will last more than another two or three months. Once the threat is over, I believe America and Americans will get back to work, and we will once again experience a booming economy (and stock market).
Q: Advisors historically have said that investors should have three to six months of cash reserves. It could be argued that the bull market we have enjoyed, during the Trump administration, caused advisors to disregard some traditional safeguards. Do you see this as an opportunity for advisors to reassess how they approach the planning process? If so, how?
A: The foundation to successful financial planning is, and always has been: First, get out of debt. Second, establish a cash reserve savings account (normally for three to six months of living expenses). Then, and only then, are you in a position to invest for the longer term. To let greed interrupt that strategy is not sound financial planning. Those who give in to that temptation pay a price.
Q: Please elaborate on some of the steps the administration has taken to help those who are near retiring, or in retirement, during this crisis, such as no Required Minimum Distributions (RMDs) for 2020. What are the benefits (or drawbacks) you see from this?
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SOURCE: Christian Post, Timothy Plan