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December Market Commentary
A New Regime Comes Into Focus
November Recap and December Outlook
The transition to a new administration is underway with announcements of cabinet position nominees. The pro-business lean of the incoming government is not a surprise, and the emphasis is likely to be on deregulation and tax cuts. Several of the provisions of the Tax Cuts and Jobs Act of 2017 were set to expire in 2025, and those may get a reprieve.
In the near term, the focus is on the path of interest rates, and whether the Federal Reserve will move more quickly, or continue to stick to its data-dependent, cautious positioning. One hurdle seems to be cleared, however: Chairman Powell looks likely to remain in his post, at least for this point in the cycle.
2025 Retirement Savings Contribution Limits
The IRS has increased the contribution limits for many retirement savings plans. In 2025, 401(k)s, 403(b)s, governmental 457 plans, and the Thrift Savings Plan for government employees and the armed services will see an increase to $23,500, from $23,000. The catch-up provision for savers ages 50 to 59 remains the same, $7,500, for a total of $31,000. A higher catch-up contribution limit of $11,250 applies to savers ages 60 to 63 under the SECURE Act 2.0.
Is Your 401(k) Savings On Track?
Saving for retirement should be part of every stage of your work life, from your first job to your last years before retirement. A 401(k) or other similar employer-sponsored, tax-advantaged retirement savings vehicle is, for many people, the core piece of their retirement nest egg. The sooner you start, the better; however, as you move through your financial journey, at each stage your goals, the amount of income you are able to contribute, your tax situation, and your risk profile may be different. This will require your 401(k) to evolve along with you.
November Market Commentary: Historic Election
October Recap and November Outlook
A Historic Election Removes Some Uncertainty
An election season with several twists and turns came to a not-unexpected end with the reelection of President Donald Trump. The received wisdom is that the financial markets hate uncertainty, and we certainly saw some evidence of that in the rally that followed the decisive election results.
How will a new White House regime impact the economy and the markets going forward? President Trump is on record with his preference for lower rates, but the early market reaction seems to be more focused on potential policy implications of higher tariffs and a stronger approach to immigration portending a return to higher inflation.
A Historic Election Removes Some Uncertainty
An election season with several twists and turns came to a not-unexpected end with the reelection of President Donald Trump. The received wisdom is that the financial markets hate uncertainty, and we certainly saw some evidence of that in the rally that followed the decisive election results.
How will a new White House regime impact the economy and the markets going forward? President Trump is on record with his preference for lower rates, but the early market reaction seems to be more focused on potential policy implications of higher tariffs and a stronger approach to immigration portending a return to higher inflation.
Inflation-Adjusted Increases Come Down to Earth
The Federal Reserve has succeeded in bringing inflation down to the long-term goal rate of near 2%, which is good news for consumers. But for savers and taxpayers, this means that the big increases we’ve seen in recent years that have been pegged to inflation are now a thing of the past. The IRS pegs tax brackets, tax deductions, 401(k), and other tax-efficient vehicle contribution amounts to inflation. It utilizes a formula based on the Consumer Price Index to account for the impact of inflation and determine the changes, and with inflation hitting its lowest point in three years, it’s to be expected that the changes this year aren’t significant.
Social Security and Taxes: Changes for 2025
Social security benefits are linked to inflation, and with inflation largely under control, the large cost-of-living (COLA) increases of the last several years are now a thing of the past. This year’s increase was much smaller, and there are several other changes retirees need to think about as well.
October Market Commentary
A Volatile Start to the End of the Year?
September Recap and October Outlook
September equity markets ended the month in positive territory, but with volatility increased. The VIX, the markets “fear index” closed higher than last month, at 16.73, up from 15.00. Intramonth, the values ranged from a high of 23.76 and a low of 14.90.
September’s somewhat surprisingly 50-basis point reduction in interest rates kicked of the regime change in monetary policy with a big move downwards. Subsequent data releases, including a particularly strong September non-farm payrolls number, may put a damper on expectations going forward, but the long-awaited loosening cycle is finally here. However, with an election looming and heightened tension in the middle east volatility will continue to affect markets and investor behavior alike.
Is Your Home Part of Your Retirement Plan?
Retirement planning is all about making sure you have enough assets, and that they are handled prudently, so they can provide you with the income you want throughout your retirement.
But what about the asset you live in? Factoring your home into your retirement planning has an impact on your lifestyle choices, your available income, your late-stage retirement, and even your estate plan.
Given the increase in home prices we’ve seen over the last decade, the question of whether you should stay in your home, downsize, or even upsize is a little more complicated now. And higher interest rates are increasing the complexity.
But what about the asset you live in? Factoring your home into your retirement planning has an impact on your lifestyle choices, your available income, your late-stage retirement, and even your estate plan.
Given the increase in home prices we’ve seen over the last decade, the question of whether you should stay in your home, downsize, or even upsize is a little more complicated now. And higher interest rates are increasing the complexity.
Tuning Up Your Portfolio for a New Interest Rate Cycle
Tuning Up Your Portfolio for a New Interest Rate Cycle
After a steep rate hike cycle in which the Fed raised rates eleven times between March of 2022 and July of 2023, for a total increase of 5.00%, rates have been on hold for the last six FOMC meetings as the Fed has assessed the success of the fight against inflation. With that battle likely one, rates are likely to come back down.
After a steep rate hike cycle in which the Fed raised rates eleven times between March of 2022 and July of 2023, for a total increase of 5.00%, rates have been on hold for the last six FOMC meetings as the Fed has assessed the success of the fight against inflation. With that battle likely one, rates are likely to come back down.
September Market Commentary
August Recap and September Outlook
As summer ends and September begins, attention is focused on the long-anticipated change in the Fed’s monetary policy, from holding rates steady to returning rates to lower levels.
July and August non-farm payrolls indicate a slowing labor market, but other economic indicators are holding steady and show an economy that is still solid. While there is some conjecture that the Fed may kick off a new dovish regime with a 50-basis point rate cut, the general prudence and data-dependent stance of the Fed to date, along with the absence of any clear signs of trouble, would seem to indicate that a more modest 25-basis point cut may be more likely.
Managing Your Tax Risk – with Diversification
Managing the volatility of investment assets by creating a diversified portfolio is one of the basic principles of investing. Dividing up your investments by asset classes can help you create the income stream you need, once you become dependent on your savings and investments in retirement.
Your goal is to create a risk-adjusted return that you can live on, but that is also a balance of selecting investments that allow to you sleep at night, but also keep you from missing out on potential upside.
Your goal is to create a risk-adjusted return that you can live on, but that is also a balance of selecting investments that allow to you sleep at night, but also keep you from missing out on potential upside.
Tapping Into Home Equity to Build Wealth
The expansion of prices in the housing market means that families across the country are growing their net worth simply by being homeowners. As of May 2024, housing prices have increased 5.1% year over year.1
As you pay down your mortgage, your home is essentially acting as forced savings. But how can you tap those “savings” to build your overall wealth or even diversify your assets? Tapping into your home equity can provide access to funds at very low interest rates, which can reduce your debt costs overall or be used to finance an outright wealth-building strategy, like a new business opportunity. However, this strategy comes with unique risks.
Home equity loans let you borrow against the equity in your home. We break down how home equity can be used as a wealth-building tool in the right situations.
As you pay down your mortgage, your home is essentially acting as forced savings. But how can you tap those “savings” to build your overall wealth or even diversify your assets? Tapping into your home equity can provide access to funds at very low interest rates, which can reduce your debt costs overall or be used to finance an outright wealth-building strategy, like a new business opportunity. However, this strategy comes with unique risks.
Home equity loans let you borrow against the equity in your home. We break down how home equity can be used as a wealth-building tool in the right situations.
August Market Commentary: Too Late, Again?
After weeks of Olympic-themed press reports about the Fed “sticking the (soft) landing” and safely guiding the economy to a place where inflation is coming down and growth is holding off recession, one very bad labor report flipped the script. The threat of recession is not just in the future, it may be here now, according to some reports. The VIX index, a measure of stock market volatility, spiked above 50 on the first market day after the non-farm payroll numbers came out, a level last seen in March of 2020.
Did Powell wait too long to begin cutting rates? Is a recession inevitable? What is the Sahm rule? There are a lot of points of view on the topic.
Did Powell wait too long to begin cutting rates? Is a recession inevitable? What is the Sahm rule? There are a lot of points of view on the topic.
Inherited IRAs: It’s Complicated
Several changes resulting from the SECURE Act and SECURE 2.0 Act in recent years have made inheriting an IRA more complicated. The estate planning and tax advantages conferred by the stretch IRA have been largely discontinued. New strategies and different tax planning are now required.
The stretch IRA was named because the tax code before the SECURE Act allowed account holders to name younger relatives, including even great-grandchildren, as the beneficiary of an IRA. The longer lifespans of these young beneficiaries meant that required minimum distributions (RMDs) could be very small. Taxes would also be minimal, and the bulk of the IRA could continue to grow on a tax-deferred basis.
Gen Z Is Getting an Early Start on Financial Independence
Gen Z, the generation born between 1997 and 2012, is making its presence – and preferences – known. As of 2023, The U.S. Census Bureau reports that about 20% of the U.S. population falls into this cohort. According to a 2023 trend forecast report by Glassdoor, It is expected that in 2024, the percentage of the U.S. workforce comprising its youngest workers (Gen Z) will outnumber its oldest workers (Boomers).
The older members of this generation are in their late twenties. They are becoming established in their careers, against a global and economic backdrop unlike any generations before them. They have faced the highest levels of inflation and interest rates seen in decades, at a point when they are at the most vulnerable stage of their careers and financial lives.
The older members of this generation are in their late twenties. They are becoming established in their careers, against a global and economic backdrop unlike any generations before them. They have faced the highest levels of inflation and interest rates seen in decades, at a point when they are at the most vulnerable stage of their careers and financial lives.
Fixer-Upper or Money Pit?
The combination of a strong housing market, high mortgage rates, and meager inventory is forcing some would-be homebuyers to settle for less in the home or neighborhood they prefer. But others are approaching the homebuying process with an entirely different mindset. Buying a home in less than move-in condition, or one that requires significant work, can result in a bargain. But there are very distinct trade-offs, and there’s a fair amount of risk involved. What seems like a way to save money or get a good deal could be very expensive in the long run. It’s not just money at stake – time, relationships, and mental health can all suffer from a long renovation process.
Entire streaming channels and social media feeds are full of DIYers doing everything from undertaking trash-outs in hazmat suits to uncovering hidden rooms and dealing with decades-old vegetation. Along the way, they seem to find historic fireplaces, vintage tiles, and all kinds of amazing treasures.
Understanding Self-Directed IRAs
The speed of change in the investment markets seems to be accelerating, and for many investors, traditional investments may not provide the risk-adjusted return they seek.
Investors who access the markets through a taxable brokerage account often may have access to investments outside traditional stocks and bonds. These alternatives such as real estate, private equity, private credit, infrastructure, and other asset classes can help to diversify a portfolio.
But what about retirement investing? Alternative asset classes may not be available through an IRA account. A self-directed IRA (SDIRA) may be the solution.
July Market Commentary A Disinflationary Trend Re-emerges
At the FOMC meeting in mid-June, the story was the drop in expectations for multiple rate cuts in 2024 to potentially only one rate cut later in the year. However, positive data around inflation and labor markets appears to have counteracted market pessimism about the cautious nature of the Fed’s messaging.
As we hit the mid-point of the year, the economy appears to have been able to sustain a soft landing so far. With a Fed still undecided on rate cuts and waiting on data, as well as continued heightened geopolitical risk and an election season that is already dramatic, what is in store for the balance of 2024?
As we hit the mid-point of the year, the economy appears to have been able to sustain a soft landing so far. With a Fed still undecided on rate cuts and waiting on data, as well as continued heightened geopolitical risk and an election season that is already dramatic, what is in store for the balance of 2024?
June Market Commentary A Fragile Balance at the Mid-Point of the Year
May saw a return to more confidence in the economy and the markets. The Fed met early in the month, and Chairman Powell managed to curb market pessimism by stating that it was unlikely that the Fed’s next move would be a rate hike.
The reversal of the upward mini-trend of inflation in February and March, as well as other slowing economic data released throughout the month, provided a backdrop that the economy was cooling and inflation would begin to trend down again.
The reversal of the upward mini-trend of inflation in February and March, as well as other slowing economic data released throughout the month, provided a backdrop that the economy was cooling and inflation would begin to trend down again.
Growing Wealth Means Managing Spending, Saving … and Debt
Getting serious about reaching your financial goals means keeping a handle on what you’re spending, so you can maximize what you’re saving.
Budgeting focuses on your outflows and can help you ensure you are meeting your obligations and not overspending. Building savings into your budget keeps your savings goals front and center, so you can consistently increase the amount you save.
Budgeting focuses on your outflows and can help you ensure you are meeting your obligations and not overspending. Building savings into your budget keeps your savings goals front and center, so you can consistently increase the amount you save.
Marriage and Money: A Newlywed’s Guide to Joint Finances
Getting married is a milestone unlike any other. It signifies partnership and shared responsibility, now and in the years ahead. Joint decision-making on everything from dinner plans to where you will live, and what your family will look like in the years to come, is at the core of a successful marriage.
Money, budgeting for your life now, and financial planning for the future are a big part of your new shared life. Marriage brings many advantages, but it also requires you to decide how to spend, save, and invest during your life together.
Money, budgeting for your life now, and financial planning for the future are a big part of your new shared life. Marriage brings many advantages, but it also requires you to decide how to spend, save, and invest during your life together.
May Market Commentary: A New POV Takes Hold
April had it all, and most of it was not so great. Inflation is proving sticky again, which forced the market and the Fed to reassess the timing of interest rate cuts.
Conflicts intensified in Ukraine and the Middle East, and in the U.S., protests on college campuses hit a crisis point as police were called in to clear building takeovers and encampments. The protests recall the summer of 2020 and may have an outsize impact on policy in an election year.
Although equity markets struggled, the S&P 500 remained over the 5,000 level, usually a key psychological as well as market threshold.
Conflicts intensified in Ukraine and the Middle East, and in the U.S., protests on college campuses hit a crisis point as police were called in to clear building takeovers and encampments. The protests recall the summer of 2020 and may have an outsize impact on policy in an election year.
Although equity markets struggled, the S&P 500 remained over the 5,000 level, usually a key psychological as well as market threshold.
Keeping Seniors Safe From Financial Scams
The “Sandwich Generation” are Gen-Xers and older Millennials who are raising children while also helping their Boomer parents navigate aging.
There’s a lot to think about, plan for, and organize, but one of the things that can be overlooked is keeping them safe from financial pitfalls. This older generation has embraced technology in amazing ways, but the combination of incredibly rapidly changing technology and a desire to remain independent and not be a burden on their children can result in increased financial vulnerability.
There’s a lot to think about, plan for, and organize, but one of the things that can be overlooked is keeping them safe from financial pitfalls. This older generation has embraced technology in amazing ways, but the combination of incredibly rapidly changing technology and a desire to remain independent and not be a burden on their children can result in increased financial vulnerability.
Required Minimum Distribution Rules Are Updated – Again
Similar to the limits placed on contributions to retirement savings plans when you are working, the IRS also has regulations for how to take money out.
Because contributions are made with pre-tax dollars, the government doesn’t get their bite until you withdraw funds in retirement. Required minimum distributions (RMDs) were created to ensure that the funds are withdrawn, so the taxes can be paid.
Because contributions are made with pre-tax dollars, the government doesn’t get their bite until you withdraw funds in retirement. Required minimum distributions (RMDs) were created to ensure that the funds are withdrawn, so the taxes can be paid.
April Market Commentary What a Long, Strange Trip It’s Been
In his comments at the press conference at the March FOMC meeting, he affirmed that we will see rate cuts this year, even if the timing is, as of now, uncertain. If rates do fall, it will mark the end of a monetary policy tightening regime that started out weird as Powell delayed rate increases in the face of spiking inflation, and then quickly became almost surreal as the Fed raised rates higher and quicker than has been seen in decades. All of this has been accompanied by intense speculation around rates, which led to a lot of market volatility.
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