The Next Wave of Bankruptcies

Plus: Tech Dominates Index Funds You are receiving this limited-time email resource as a subscriber to Kiplinger's free e-newsletters. We will continue to publish this daily throughout the height of the coronavirus outbreak. To unsubscribe at any time, simply click the link in the footer below. MAY 1, 2020 [View in browser]( [Corona]( WHAT YOU NEED TO KNOW ABOUT THE CORONAVIRUS OUTBREAK Look for a spike in bankruptcy filings in the coming months, as both businesses and individuals find themselves buried deeper in debt. According to the American Bankruptcy Institute, commercial Chapter 11 bankruptcy filings for the first quarter of 2020 increased 14% over last year. Overall business bankruptcy filings increased 4%. Although bankruptcy filings by individuals decreased 6% over the first three months of 2020 when compared with the same period last year, that represents "a calm before the storm of the financial distress caused by the COVID-19 pandemic," said ABI Executive Director Amy Quackenboss. She predicts consumer filings to start rising in early summer. SEE ALSO: [11 Best Tech Stocks for the New Coronavirus Norm]( There are a number of steps businesses and individuals can take to avoid bankruptcy. Prioritizing debt repayment, renegotiating payment schedules, eliminating unnecessary expenses and credit counselling are all tried and true tactics. But there are also new programs available specifically for the current financial crisis. Businesses can apply for loans or grants through various government relief programs, such as the recently re-funded Payroll Protection Program. The employee retention tax credit also provides immediate payroll tax relief for qualifying businesses. For individuals, the CARES Act allows Americans with a federally backed mortgage to stop making payments for up to one year if they are experiencing financial hardship due to the coronavirus crisis. There's also a 60-day foreclosure and eviction moratorium for homeowners with federally backed mortgages. Hopefully, these and other relief measures can help reduce the number of bankruptcy filings in the months to come. What you're buying when you "buy the market." We frequently point out that the easiest way to gain broad exposure to the stock market is to [buy an S&P 500 tracking fund]( such as the Vanguard S&P 500 ETF ([VOO]( or the SPDR Portfolio S&P 500 ETF ([SPLG](. But looking under the hood of these funds has never been more important than it is right now. The S&P 500 has gradually become less of a broad-based bet on a large swath of American companies, and more of a bet on America's mega-cap tech firms. Right now, 20% of the S&P 500's value stems from just five companies -- Apple ([AAPL]( Microsoft ([MSFT]( Amazon.com ([AMZN]( Alphabet ([GOOGL]( and Facebook ([FB]( -- while tech in general makes up nearly 26% of the index; the other three-quarters are split among 10 other sectors. So far in this bear market, this has been a blessing for investors as each mega-cap has outperformed the broader index, effectively limiting the damage. But the risk is that a broader pullback in technology will have an outsized drag on the index -- this morning's futures, for instance, were weighed down thanks to sizable premarket declines in Apple and Amazon following earnings reports. Investors looking for a little more diversification can consider equally weighted funds such as the Invesco S&P 500 Equal Weight ETF ([RSP](. SPONSORED CONTENT FROM SMARTASSET [People Who Retire Comfortably Avoid Financial Advisor Mistakes]( [People Who Retire Comfortably Avoid Financial Advisor Mistakes]( Don't make the mistake of not properly vetting your options. This [free tool]( helps you compare fiduciary financial advisors in your area. [READ MORE]( RELATED LINKS [Money Smart Ways to Build Your Wealth]( [Sell in May and Go Away: Should You in 2020?]( [20 Best Stocks to Buy Now for the Next Bull Market]( [Bankruptcy Watch: 10 Retail Stocks at Growing Risk]( [10 Questions Retirees Get Wrong on Retirement Taxes]( [Kiplinger] [Facebook]( [Twitter]( [LinkedIn]( [Google+]( [Tumbler]( Send this to a friend. [Click here.]( All content ©2020 The Kiplinger Washington Editors 1100 13th Street, NW, Suite 1000 Washington, D.C. 20005 Thank you for subscribing to Kiplinger's A Step Ahead, a free resource to help readers navigate special circumstances such as the coronavirus outbreak. If you ever wish to stop receiving this daily service, please [click here to unsubscribe.](