The holiday season is upon us; from story time with sorely missed grandchildren to laughter with friends and family over long-cherished memories, there’s little doubt that “the most wonderful time of the year” has arrived.

For my family, this season is a time of reflection and connection as we bid farewell to the old year and look, with hope, toward the new. As your family gathers, it may be a perfect opportunity to share your estate strategy and explain your decisions regarding your wealth. I’m always happy to help you structure that discussion and can help explain why we selected specific approaches with your overall financial management.

Discussing financial matters can be challenging, so please let me know if I can ever be of assistance, and don’t hesitate to share my contact information or let me know how I can help.

Happy holidays to you and your loved ones.

It appears that America’s corporate leaders are preparing for the worst while hoping for the best.

Almost half of S&P 500 CEOs in second-quarter conference calls pointed to “recession” as a potential headwind in 2023. In response, some companies have chosen to trim headcount while others are managing budgets and looking for operational efficiencies.

Across the board, however, the focus on a potential recession is taking a toll on CEO confidence. The Conference Board’s Measure of CEO confidence is at its lowest since 2008.

Remember, it’s healthy for companies to prepare for a challenging economic climate, and CEO confidence may grow once we see more green shoots in the economy.

After all, by this time next year, the buzzword of the quarter could be something else entirely, like “recovery,” “rebound,” or “growth.” That type of language can only help boost confidence.

Do you need a life insurance policy in retirement? One school of thought questions this decision. Perhaps your kids have grown, and the need to help protect the household against the loss of an income-earner has passed.

If you are thinking about dropping your coverage for either or both of those reasons, you may want to ask yourself a few additional questions before moving forward.

Remember that several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

Does your policy have a cash value? If you have a whole life policy, it may have built a cash value over time. Whole life insurance is designed to remain in force for your whole life, as long as you remain current with your premiums. Before surrendering a whole-life policy, be certain you understand the policy’s features and limitations.

This article is for informational purposes only and is not a replacement for real-life advice, so you may want to consider asking for guidance from a financial professional before modifying your life insurance strategy. Life insurance is not insured by the FDIC (Federal Deposit Insurance Corporation). It is not insured by any federal government agency, bank, or savings association.

Do you anticipate paying estate taxes? If the value of your estate exceeds federal or state estate tax thresholds, you may owe estate taxes. Life insurance proceeds may help your heirs manage the tax situation, and could prevent the need to sell other assets. Estate tax laws are constantly changing, so you may want to consider speaking with a legal professional, who can provide information on potential legislative changes.

Are you carrying a mortgage? If you borrowed to purchase your home or have refinanced and are carrying a mortgage, the proceeds for a life insurance policy may help your heirs manage the mortgage payments.

When you read about money matters, you may see the phrase, “getting your financial house in order.” What exactly does that mean?

To some, when your financial “house is in order,” it means it is built on a solid foundation. It means that you have the “pillars” in place that are designed to support your long-term financial well-being.

#1: A banking relationship. Having a relationship with a bank can play a role in many financial strategies. You have many different choices when deciding on which bank is right for you. Some banks are larger and nationally-based, while others are smaller and community-based. Different banks may have unique advantages and disadvantages, so it’s important to look around and see what each one can offer you.

#2: An emergency fund. You know that label you see on fire extinguisher boxes – “break glass in case of emergency?” Only in a financial emergency should you “break into” your emergency account. What is a financial emergency? Everyone’s definition varies, but it can range from a broken water heater to major car repairs to unemployment help.

#3: A workplace retirement strategy. At some point, you may want to consider when is the right time to start saving for retirement. Workplace retirement plans can offer you a convenient way to get started, if one is available.

#4: An eye on Insurance. Like the other decisions you’ll need to make while building your financial foundation, choosing the appropriate insurance program is going to be influenced by your own individual life circumstances. For example, if you’re supporting a family, you may want to look into an insurance program that is designed to protect you in the event that something happens to you or prevents you from working for a period of time.

#5: Estate Strategy. It’s never too early to start thinking about your legacy. For some, this can mean providing some financial support to your loved ones. For others, it might mean creating a program that supports charities and organizations. Whatever your aspirations, it’s important to ensure that your assets transition smoothly in accordance with your wishes.

Over the years, the Fed has followed a similar pattern with interest rates. It raises interest rates, then pauses, so it can see how the economy is adjusting to the higher rates. The chart below shows the Fed’s pattern with short-term rates during the past 30 years.

So, when will the Fed be ready to pause? In the table below, you can see that speculators are anticipating it may start as early as March 2023 when the Fed funds rate is between 5% and 5.25%.

The Federal Open Market Committee gave an update on its outlook for interest rates when it released the minutes from its November 2022 meeting.

“In addition, a substantial majority of participants judged that a slowing in the pace of (interest rate) increase(s) would likely soon be appropriate,” the Committee said. “A slower pace in these circumstances would better allow the Committee to assess progress toward its goals of maximum employment and price stability.”

It’s an encouraging update that leaves plenty of room for interpretation. But when investing, it’s best to focus on what you can control and understand that markets will fluctuate over time.

The fees that investors pay to financial professionals for their advice and services come in two basic forms: transaction fees and ongoing fees. While professionals may differ in what fees they charge, they are required to fully disclose them.

Transaction Fees

These fees are generally one-time fees assessed at the time a transaction is made. Examples of transaction fees include:

Commissions

Paid on the purchase and sale of a stock.¹

Mark Ups / Mark Downs

Occur when a broker-dealer sells or buys an investor a position that it owns. FINRA guidelines ensure the prices paid by investors are reasonably related to the market for the security.²

Sales Loads

The sales charge for buying a mutual fund. They may either be front-end (charged when you buy the fund) or back-end (charged when you sell the fund). Mutual funds are sold only by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.

Surrender Charges

This fee is assessed when an investor sells an annuity prematurely. Generally, it is a percentage of the amount withdrawn.³

Redemption Charge

A charge some mutual funds assess if a fund position is not held for a prescribed period of time.

Ongoing Fees

These fees are levied for as long as an investor remains in a particular investment or investment platform. They typically are calculated as a percentage of assets. Examples of ongoing fees include:

Fees for Professional Investment Services

These are the fees an investment professional charges to manage assets.

Annual Operating Expenses

Mutual funds and exchange traded funds (ETFs) have ongoing fees that pay for the management of assets and any administrative and service (or distribution) fees. ETFs also are sold only by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.

Annual Variable Annuity Fees

In addition to the annual operating expenses of the funds contained in an annuity, an annuity may have additional service fees, administrative charges, and insurance costs. Variable annuities are sold by prospectus, which contains detailed information about investment objectives and risks, as well as charges and expenses. You are encouraged to read the prospectus carefully before you invest or send money to buy a variable annuity contract. The prospectus is available from the insurance company or from your financial professional. Variable annuity subaccounts will fluctuate in value based on market conditions, and may be worth more or less than the original amount invested if the annuity is surrendered.

Combined Fees

Some products or investment platforms may charge a combination of transaction fees and ongoing asset-based fees. Examples include:

ETFs

When you invest in an ETF, there is a transaction fee at the time of purchase and when it is sold, as well as an ongoing fee to manage the fund.

Mutual Funds

Funds may be sold with a sales load and also assessed ongoing fees.

Investment Programs

While most programs offer an inclusive ongoing fee for advice and transactions, some programs may charge both forms of fees.

Don’t Be Afraid to Ask Questions

Investors should be aware of what they are paying for a professional’s services and advice. Don’t hesitate to ask questions like “How do you get paid?” or “Do I have a choice of how I pay you?”

Forty-four percent of Americans do not own any stocks or stock-related investments, according to a recent Gallup poll.¹

Individuals may cite different reasons for not investing, but with important long-term financial goals, such as retirement, in the balance, the reasons may not be good enough.

Why Invest?

• Make Money on Your Money

You might not have a hundred million dollars to invest, but that doesn’t mean your money can’t share in the same opportunities available to others. You work hard for your money; make sure your money works hard for you.

• Achieve Self-Determination and Independence

When you build wealth, you may be in a better position to pursue the lifestyle you want. Your life can become one of possibilities rather than one of limitations.

• Leave a Legacy to Your Heirs

The wealth you pass to the next generation can have a profound impact on your heirs, providing educational opportunities, the capital to start a business, or financial support to your grandchildren.

• Support Causes Important to You

Wealth can be an important tool for impacting the world in a meaningful way. So whether your passion is the environment, the arts, or human welfare, you can use your wealth to affect positive changes in your community or around the world.

A Framework for Investing

The decision to invest is an acknowledgment that it comes with certain risks. Not all investments will do well, and some may lose money. However, without risk, there would be no opportunity to potentially earn the higher returns that can help you grow your wealth.

To manage investment risk, consider maintaining a broad diversification of your investments that reflects your personal risk tolerance, time horizon, and the nature of your financial goal. Remember, diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline.

Because investing can be complicated, consider working with a financial professional to help guide you on your wealth-building journey.

Anyone who has gone through the process of mapping out their retirement knows there can be a lot to keep in mind. Saving, investing, anticipating medical costs, and making sure you have enough tucked away for years to come is just the start. One question many people overlook is: “Should I pay off my mortgage before I retire?” The answer is more complicated than you may think.

Opportunity Cost

Imagine you have $300,000 set aside to pay off your mortgage. But rather than using those funds to pay off your mortgage, you instead invest that money. Sure it’s tempting to stop making a monthly payment, but what if that $300,000 earned a hypothetical 6% for the next five years. You would have a little more than $400,000. Yes, your house may appreciate in value over the same period of time, but you should consider all your choices for that lump-sum of money.¹

Eradicate (Other) Debt

Before you pay down your mortgage, any extra cash might be better suited to paying off other kinds of debt that carry higher interest rates, especially non-deductible debt, such as credit card balances.²

Make Your Mortgage Work

Some homeowners benefit from a mortgage interest deduction on their taxes. Here’s how it works: the amount you pay in mortgage interest is deducted from your gross income, which reduces your federal income tax burden. But remember, the further along you are toward paying off your mortgage, the less interest you’re paying. If you’re unsure if you’ll be able to take advantage of this mortgage benefit, it’s best to consult your financial professional.^3,4

Retire Your Mortgage

Don’t Throw Your Money Away

Your monthly mortgage payment may be a large part of your available capital, especially in retirement. Eliminating unnecessary subsidies can significantly reduce the amount of cash you need to meet monthly expenses.

Uninteresting Interest

Depending on the length of your mortgage term and the size of your debt, you may be paying a substantial amount in interest.

True, you may lose the mortgage interest tax deduction, but remember as you get closer to paying off your loan: more of each monthly payment goes to principal and less to interest. In other words, the amount you can deduct from taxes decreases.⁵

Home Is Where the Heart Is

There’s a value to your home beyond money. It’s where you raised your children, made fond memories, and you may want it to remain in the family. Paying off the mortgage may help make your home part of your legacy. Afterall, some things you just can’t put a price on.

The warmth of the holiday meal beckons. Thanksgiving is a time for gathering with loved ones and observing gratitude.

So, as you gather around the table, look around and give thanks for the family and friends surrounding you. Give thanks, too, for those who may be far away and those who have passed into memory.

The people in our lives make us who we are, enriching our experiences and giving our days meaning. Taking the time to share a special moment with them is one of life’s great experiences.

This is also true for the people who choose to work with us. Thank you for making me part of your team this past year and in the future. It’s a pleasure, and I look forward to speaking with you soon.

Information vs. instinct. When it comes to investing, many people believe they have a “knack” for choosing good investments. But what exactly is that “knack” based on? The fact is, the choices we make with our assets can be strongly influenced by factors, many of them emotional, that we may not even be aware of.

Investing involves risks. Remember that Investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

Deal du jour. You’ve heard the whispers, the “next greatest thing” is out there, and you can get on board, but only if you hurry. Sound familiar? The prospect of being on the ground floor of the next big thing can be thrilling. But while there really are great new opportunities out there once in a while, those “hot new investments” can often go south quickly. Jumping on board without all the information can be a mistake. A disciplined investor may turn away from spur-of-the-moment trends and seek out solid, proven investments with consistent returns.

Risky business. Many people claim not to be risk-takers, but that isn’t always the case. Most disciplined investors aren’t reluctant to take a risk. But they will attempt to manage losses. By keeping your final goals in mind as you weigh both the potential gain and potential loss, you may be able to better assess what risks you are prepared to take.

You can’t always know what’s coming. Some investors attempt to predict the future based on the past. As we all know, just because a stock rose yesterday, that doesn’t mean it will rise again today. In fact, performance does not guarantee future results.

The gut-driven investor. Some investors tend to pull out of investments the moment they lose money, then invest again once they feel “driven” to do so. While they may do some research, they are ultimately acting on impulse. This method of investing may result in losses.

Eliminating emotion. Many investors “stir up” their investments when major events happen, including births, marriages, or deaths. They seem to get a renewed interest in their stocks and/or begin to second-guess the effectiveness of their long-term strategies. A financial professional can help you focus on your long-term objectives and may help you manage being influenced by short-term whims.