These Months are More Volatile Than Others

We’re entering a tricky time of year: September and October have a reputation for bringing an extra measure of market volatility.

Some of the stock market’s most challenging events have hit in September and October, and other seasonal trends can also play a part. Investopedia found that institutions start preparing for year-end distributions around this time. Plus, individuals tend to reposition their portfolios after the summer months.

This chart shows the average weekly S&P 500 performance since 1923. I’ve highlighted September and October so you can see how they compare to the rest of the year.

So what’s an investor to do? Just be prepared to roll with an uptick in volatility, and don’t let seasonal trading influence your overall strategy.

Working With A Financial Professional

An Everything Bagel of Good News

These days, an encouraging word can feel like a relief. Here are a few positive stories I’ve noticed lately – like an “everything bagel” sprinkled with good news.

• I saw a recent report in The Guardian about the Great Barrier Reef. It shows that despite concerns about pollution and other threats, scientists have seen record coral cover for the Australian aquatic wonder, the most in 36 years.
• I’ll admit I’m a little addicted to my phone. How about you? A University College London study says that smartphone use actually aids memory skills, by taking on mundane memory tasks and freeing your brain up to think about other things. Phew!
• Did you see the emu videos going around? Viral social media star Taylor Blake and her bird pal Emmanuel Todd Lopez are using their newfound fame to provide classroom supplies for teachers around the country.

Hope this makes your day a little shinier! As for the markets, the economy, and all the other financial news, I’m keeping an eye on those stories for you, too.

School’s Back. Who is Paying for It?

Schools across the nation are getting back to business. For students, it’s a return to education after vacations, summer jobs, and other activities.

For parents, grandparents, and guardians, “back to school” often means an outlay of cash. There are computers to upgrade, after-school activities to fund, and college planning to consider.

The White House recently forgave $10,000 to student loan borrowers as part of a larger debt forgiveness program. Further Presidential or Congressional action isn’t guaranteed to future borrowers, underscoring the importance of creating a wise college strategy.

If you look at the students in your life and think, “Time flies…” you’d be right! This is one area where you don’t want to be behind the clock. If you have questions, reach out anytime.

Recession or Growth Scare? Your Guide

I’m hearing a lot of mixed messages these days about the economy. Some headlines say we’re already in a recession; some say one is looming. Others hint that we’ll avoid a recession and have a soft landing. It makes you wonder who’s in charge of putting a label on the economy.

I did a little digging on the topic, and here’s what I found.

The National Bureau of Economic Research (NBER) is the official arbiter of recessions. A recession is a “significant decline in economic activity that is spread across the economy and lasts more than a few months.” You may be surprised that the NBER no longer defines back-to-back quarters of negative Gross Domestic Product growth as a recession–that’s considered old-school economics.

While the current economy includes inflation and rising interest rates, it’s also creating jobs. This economy created over half a million jobs in July alone. Given that indicator, I think it’s safe to say that our economy is expanding, not receding.

An old saying goes, “Don’t worry about the horse. Just load the wagon.” It’s a good time to stay focused on your goals and not worry too much about what you can’t change.

Three Ways the Inflation Act Could Impact You

Have you heard? The Inflation Reduction Act was signed into law on Tuesday, August 16. While the $430 billion package includes many provisions, I thought I’d highlight three key areas where you may benefit the most.

1. Tax credits for energy-related home improvements – The bill includes a 30% tax credit for installing energy-efficient windows, heat pumps, or newer appliances. There’s another tax credit for installing solar panels, and up to $14,000 worth of rebates for upgrading to new, energy-efficient appliances.
   
   
2. Expanded EV tax credits – If you have an electric vehicle, you’re in luck! New tax credits are immediately available, with up to $4,000 offered for used EVs and up to $7,500 for new EVs. There’s also a tax credit for installing an electric charger in your home (just read the fine print to ensure you qualify).
3. Prescription drug caps – Some changes don’t take effect right away. For example, insulin payments will be limited to $35 per month for Medicare Part D beneficiaries starting next year. In 2024, overall out-of-pocket drug costs will be limited to $4,000 annually, dropping to $2,000 in 2025.

New legislation can come with benefits as well as new complexities. If you have questions that we can help answer, please feel free to reach out.

‘Smart Money’ on Interest Rates

Have you ever heard the expression, “What’s the smart money doing?”
“Smart money” is an expression that often refers to experts and suggests that well-informed people have a better perspective on current events and what actions to take. However, there’s little evidence to suggest that “smart money” performs any better.

Still, some “experts” can be confident enough to take action based on their beliefs or opinion. The table below shows what the smart money zeitgeist thinks the Federal Reserve will do during its upcoming meetings on interest rates.

As a reminder, the current target Federal Funds rate is 2.25% to 2.5%. At this point, smart money appears to favor a 0.5% increase over a 0.75% bump at the September 21 meeting. But remember, these percentages can change as quickly as the fluctuating economy.

The Meeting Probabilities table is one of many data points I look at when considering what’s next for markets. But for you, the smartest move is to make sure you’re on track with the investment goals we’ve already outlined.

Strategies For Managing Student Loan Debt

If college were a party, then student loans are the hangover.

Unfortunately, the “hair of the dog” won’t cure this headache, but here are some ideas for managing your student loan debt.

The programs listed are not intended as tax or legal advice. They may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The programs are for informational purposes only, and should not be considered a substitute for a more comprehensive student loan evaluation.

Income-Driven Repayment Programs — There are four different types of income-driven repayment choices that may help to manage your monthly federal student loan payments:¹

• Revised Pay As You Earn Repayment Plan (REPAYE Plan)
• Pay As You Earn Repayment Plan (PAYE Plan)
• Income-Based Repayment Plan (IBR Plan)
• Income-Contingent Repayment Plan (ICR Plan)

You may be eligible for one or more of these payment choices depending on the types of student loans you have, your family size, your income, and certain other factors.

Under these income-driven repayment plans, any remaining loan balance may be forgiven at the end of the payment period. Payment periods vary depending on the payment option you enroll in, but typically range between 20-25 years.

A financial professional may help you to determine which of these income-driven repayment choices you might be eligible for.

Public Service Loan Forgiveness — Certain federal loans may be forgiven after 10 years of qualifying payments if you take a job with federal, state, or local government; a non-profit; or certain other public service organizations.

Volunteer — There are a number of programs, such as AmeriCorps, Peace Corps, and the military, in which service may accrue a benefit that reduces an outstanding loan balance in an amount that varies depending upon the program.

Pre-Pay Principal — Pre-payment of principal may help lower the lifetime interest costs of a loan. To raise cash to fund pre-payments, one idea is to ask that birthday and holiday gifts be cash to put toward pre-payments. You could also direct any raises, bonuses or overtime pay to pre-payments. If you do pre-pay principal, be sure to target the loans with the highest rate of interest.

Loan Consolidation — You can consolidate your federal loans through the Direct Loan program, or through a private lender if you have private loans. However, this may only make sense if you can obtain an overall lower interest rate.

Separating the Signal From the Noise

What kind of role can a financial professional play for an investor?

The answer: an important one. While the value of such a relationship is hard to quantify, the intangible benefits may be long-lasting.

There are certain investors who turn to a financial professional with one goal in mind: the “alpha” objective of beating the market. But even Wall Street’s brightest money managers can come up short.

At some point, these investors realize that their financial professional has no control over what happens in the financial markets. They come to understand the real value of the relationship, which is about strategy, coaching, and understanding.

A financial professional can provide guidance about today’s financial climate, determine objectives, and assess progress toward those goals. Alone, an investor may find it difficult to do any of these tasks. Moreover, an investor may make self-defeating decisions. Today’s steady stream of information can prompt emotional behavior and may lead to blunders.

No investor is infallible.

Investors can feel that way during a great year when every decision seems to work out well. But overconfidence may set in, and the reality that the markets have challenging years can be forgotten.

A financial professional can help an investor commit to staying on track.

Through subtle or overt coaching, the investor can learn to take short-term market volatility in stride and focus on the long term. A strategy is put in place based on the investor’s goals, risk tolerance, and time horizon.

As the investor-professional relationship unfolds, the investor begins to notice the intangible ways the professional provides value. The professional may help explain the subtleties of investment trends and how potential risk often relates to potential reward.

Perhaps most importantly, the professional helps the client get past the “noise” and “buzz” of the financial markets to see what is really important to their financial life.

The investor gains a new level of understanding, a context for all the investing and saving. The effort to build wealth and retire well is not merely focused on success but also significance.

Retiring Wild: National Parks and You

For many older adults, finding time to experience nature can be one of the greatest pleasures in retirement. And what better place to take in America’s splendor than one of our over 400 National Park Service sites? For over a century, generations of retirees have explored these stunning landscapes, marveled at the diverse wildlife, and discovered the physical benefits of a retirement spent in the great outdoors. But recent research suggests that the mental benefits could be even more important for retirees. Read on to learn more.¹

The Cortisol Connection

Have you ever had a stressful day? One that left you tired and irritable? Those feelings are most likely caused by the stress hormone, cortisol. Cortisol serves an essential purpose in the human body of helping to regulate your mood, motivation, and fear. However, when someone experiences sustained stress, their elevated levels of cortisol may greatly increase their risk of heart disease, depression, and even negatively impact their memory. Luckily, multiple studies show that connecting with nature for at least 20 minutes each day may be correlated to significantly lower cortisol levels. But the benefits don’t stop after 20 minutes. In fact, longer durations spent in a natural environment may further enhance feelings of peace and wellbeing as well as increased mental performance.^2,3

A Thrifty Option

The American National Park system is considered by some to be one of the healthiest and financially smart ways to vacation in retirement. After all, of the 417 current National Park Sites, roughly 300 allow free admission. For those who want access to everything the National Park Service (NPS) offers, the Lifetime Senior Pass ($80) or the Annual Senior Pass ($20) are both a steal. Regardless of which you purchase, remember that:^4,5

• The Senior Pass may provide a 50 percent discount on some amenity fees, such as those related to camping, swimming, and specialized interpretive services.
• The Senior Pass generally does NOT cover or reduce special recreation permit fees or fees charged by concessioners.
• There may be a service fee depending on how you purchase your pass. For more details, including the most recent ticket prices, visit the National Park Service website before planning your next trip.

A Prescription for Nature

Even though locations like Yellowstone, Yosemite, and Zion are the most-popular destinations for retirees, many communities benefit from smaller parks and nature preserves as well. For those who haven’t hiked or camped much, these local areas can be a great way to get started. Even those with more than a few years of national park experience stand to benefit, both physically and mentally, from visiting one of their local wildlife areas. So, before you pack your bags and load up the camper, do yourself a favor and look into what your home offers. You may discover that one of the best ways to stay happy, healthy, and sharp is closer than you think.