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The greatest danger I have faced in the mountains followed the willful disregard of a warning. Our Designer equipped us with a keen ability to perceive danger, most notably through fear, a healthy human attribute respect by the wise. The challenge with investing is fear instigates a herd mentality in a counterintuitive market, the most capital-destructive combination possible. Many notable investors, Warren Buffet included, profess the avoidance of catastrophic risk is the single most important aspect of successful investing. Let’s practice Mr. Buffet’s advice by recognizing and avoiding one of the biggest dangers in the market today.

In the 2010’s, following the Fed’s prolonged suppression of interest rates near zero percent, the risk/reward formation for Treasury Bonds was accurately described on Wall Street as “return-free risk”. A 10Year Treasury bond purchased at that time virtually guaranteed a loss of value against inflation for a decade, and was yet exposed to a large potential loss of principle should interest rates rise, which they did. The regional banks which failed in 2022 did so because they bought too many 10Year Treasury bonds. Consider the factors which might make today’s setup for High Yield corporate (‘Junk’) bonds even more dangerous:

• ‘Junk’ bonds are issued by companies with low credit ratings and the highest probability of debt default and are the riskiest bond type.

• The spread between the higher interest rate ‘Junk’ bonds must pay investors to compensate for default risk and the lower interest rate government bonds enjoy paying is just 3.26%, the lowest spread since Fed rate hikes began two years ago.¹

• An unprecedented wall of maturing corporate debt must be refinanced in the next three years at a far higher interest rate. Forensic accountant, Joel Litman, recently estimated 30% of these companies do not possess the earnings to support their debt at present rates.

• There’s a fair probability of recession in the next three years, which would cause the credit market to tighten, which would cause yields on ‘Junk’ bonds to rise, which would cause the value of existing ‘Junk’ bonds to fall, potentially a lot.²

The worst performing phase of the ‘Junk’ bond market cycle is the tight credit market recession, which might lie dead ahead. In spite of this risk, the yield on ‘Junk’ bonds, presently 5.78%,³ is insultingly low, which suggests that those who own them are misjudging risk. Why would an investor risk being stampeded in a mass exodus for less than 1% additional interest than a risk-free Treasury Bill? Let’s heed the warning ‘Junk’ bond owners are sending us, be happy with 5% risk-free interest, and reconsider an investment in ‘Junk’ bonds when they are on sale at a later date. Let’s also recognize a large discount may be forthcoming, and keep this asset class on our financial radar.

Think about it, Shaun.

“The prudent sees danger and hides himself, but the simple go on and suffer for it.” ~Proverbs 27:12

1 As measured by ICE Bank of America U.S. High Yield Index Option-Adjusted Spread 2 Daily Wealth, “The Worst Deal in All of Finance”, by Brett Eversole, February 29, 2024 3 Yahoo Finance, HYG Yield, March 8, 2024 https://finance.yahoo.com/quote/HYG

The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

The opinions expressed in this material do not necessarily reflect the views of LPL Financial.

High yield/junk bonds (grade BB or below) are not investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Bond yields are subject to change. Certain call or special redemption features may exist which could impact yield.

https://www.fivestarprofessional.com/spotlights/90982

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I remember well a particular White Mountain storm my buddy and I survived ten or so years ago. On the descent from Mt. Adams to camp, 90 mph winds tossed us about like rag dolls, froze our goggles and then pelted our eyeballs with flying ice, buried every trail marker in 5-foot drifts, which buried us to the chest on every fall-through, and had us both convinced we’d be spending the night in a snow cave. Then my eagle-eye buddy spotted a cairn and got us out of there and to a hot cup of tea in a heated cabin in 30 minutes! This story has strong parallels to the Fed’s grand monetary experiment during, and following the Covid lockdown, the 40-year high inflation it created, along with a 2022 bear market in stocks and some of the worst 24-month performance for bonds on record, and now the soft economic landing the Fed seems to be miraculously engineering. Let’s consider the implications of this unique case study.

The Fed’s experiment in 2020 involved fabricating an unprecedented volume of new currency units with a keystroke, and then working with government agencies to deliver cash directly to individuals and institutions in need of a bailout due to the financially incapacitating lockdown. This process deviated from the normal distribution channel for newly printed dollars, which formerly kept those dollars in the possession of member banks, and rather placed them directly into the hands of spenders. The exercise taught regulators and Fed members that consumers more eagerly spend free money than earned money, and that when you force businesses to close their doors, they don’t just turn the lights off, they often shut the operation down.

While most of the resulting inflation from this experiment was associated with hyper-enabled consumer spending, now largely alleviated, some of it is entrenched in the resulting, yet unresolved, broken global supply chain. Investors are wise to recognize the danger of this entrenched inflation, just as we did those 5 foot deep, life-threatening snow drifts. Consider the probabilities:

• The Fed will likely leave interest rates higher for longer, and later reduce them less than the market believes.

• Homeowners with high mortgage rates will have less opportunity to refinance at lower rates in the near future than they realize.

• There is a massive wall of corporate debt which will mature in the next 30 months, and which must be refinanced at a far higher rate than the present interest rate. This will likely lead to a credit event and economic recession which will introduce market volatility. Big investment opportunities will accompany these events.

In summary, it is not time to dig a snow cave! Policy is generally favorable, a big plus for quality stocks. Bonds issued by companies with controlled debt and solid balance sheets look favorable. Maintain a strong cash position but be sure to receive the going interest rate. The Fed seems to be engineering a remarkable soft landing, but like our mountain ordeal, it is mostly attributable to God’s mercy, not the Fed’s intelligence. No one can defy principles indefinitely without due consequence, and honest Fed members admit the present path is unsustainable long-term, so remain vigilant.

Think about it, Shaun.

“My God shall supply all your need according to his riches in glory in Christ Jesus.”  ~Philippians 4:19

The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

The opinions expressed in this material do not necessarily reflect the views of LPL Financial.

https://www.fivestarprofessional.com/spotlights/90982

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A mountaineer’s decision of whether to trek in snowshoes or crampons involves numerous factors. How deep is the snow, and is the trail beneath it packed? Is the snow crusted on top, and if so, how much weight can it support? How hard is it snowing, and how fast is the fresh snow firming? Is the terrain too steep for snowshoes, and can you safely swap traction? At first glance, choosing between a Traditional and Roth Conversion IRA seems straight forward, but proper due diligence reveals that, like with the climber’s selection of traction, the implications are a bit more complex than they first appear.

The basics

Traditional IRA contributions are tax-deductible, earnings grow tax-deferred, and withdrawals are fully taxable as income. Withdrawals are penalized 10% if taken before age 59½, and required minimum distributions (RMD’s) begin at age 73 (increasing to age 75 in 2033).  

Funds converted from a Traditional IRA to a Roth IRA are taxed as income in the year of conversion, earnings grow tax-deferred, and withdrawals are tax free (when the rules are obeyed). Roth Conversions have no RMD’s, but earnings withdrawn prior to age 59½ are taxed and penalized, and each conversion requires a five-year holding period (to avoid a 10% penalty) and must be tracked.

The macro question is, will you benefit more by deducting contributions to retirement accounts (Traditional), or by avoiding taxes on retirement account earnings (Roth)? While advanced financial planning software can quickly find the apparent answer, even keeping ‘all other factors’ constant, there are additional factors.

The ‘not so’ basic

By reducing taxable IRA withdrawals, a Roth Conversion can keep you in a lower tax bracket in retirement and reduce the taxability of Social Security benefits. Additionally, beneficiaries will pay income taxes on Inherited Traditional IRA withdrawals, but not on Inherited Roth Conversion withdrawals (provided the five-year rule is met), enhancing the multi-generational aspect of your wealth-building.

Conversely, for those already receiving Social Security and Medicare benefits, a Roth Conversion will increase taxable income, which can raise both Social Security taxes and Medicare premiums. The Roth Conversion can also be problematic for those already receiving taxable distributions from Traditional IRA’s, and for those without sufficient non-retirement savings to pay the Roth Conversion tax due. It is inadvisable to have the Roth Conversion tax taken from the IRA itself, especially for those under age 59½, as the amount withheld will involve an early distribution 10% penalty. ¹

The strategic approach

Capitalize on strategic Roth Conversions and help minimize the taxation of your total retirement savings without increasing Social Security taxes or Medicare premiums by having your investment adviser work through the Roth Conversion option with your tax preparer annually. Never miss a highly beneficial Roth Conversion opportunity to neglect!

On two occasions, I have been endangered in the mountains by the wrong choice of traction. How you navigate the tax terrain with your retirement accounts is as financially consequential. God bless your planning efforts!

Shaun.

“Render to Caesar the things that are Caesar’s, and to God the things that are God’s.” ~Matthew 22:21

1 Smart Asset, “Ask an Advisor: Help Me Understand the ‘Best Way’ to Manage an IRA. Is It Better to Pay Taxes Now or in Retirement?”, by Michelle Cagan, CPA, February 2, 2024

The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

https://www.fivestarprofessional.com/spotlights/90982

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2012/2022 Five Star Wealth Managers.

History offers the investor reliable assistance to navigate the counterintuitive stock market, an enterprise adequately equipped to dispense the maximum amount of pain on the largest number of investors possible. Mark Twain observed that “History doesn’t repeat, but it often rhymes”, and from a world operating under the principle that “What has been is what will be, and there is nothing new under the sun” (Ecclesiastes 1:9). This principle was not lost on January, which has a history of accurately predicting the behavior of the stock market for the remainder of the year, but proceed with caution, for there is a greater principle at work which renders great suffering to non-observing investors. Let’s first consider January’s message:

• Over the past 74 years, stocks, as measured by the S&P500, have appreciated 11.4% over the remainder of the year following a positive January, while all 11-month periods averaged 6.9%. Stocks also rose 86% of the time following a positive January, and only 76% for all periods.

• Of the eleven times since 1950 a positive January followed a 20%+ return year (like 2023), the average remaining 11-month return was 14.8%, and stocks rose 100% of the time (vs. 6.9% and a 76% rise rate for all periods).

• Newton proved, “A body in motion tends to stay in motion”, and the stock market, in a new bull market following the bear market low in October, 2022, rose another 1.6% in January and set a new all-time high.¹

An investor can get excited adding to January’s impressive record the fact election years have enjoyed a very bullish history of their own, and the fact Fed policy (2024 rate cuts) is now favorable to the stock market, but remember Warren Buffet said, “an investor’s emotions are the primary enemy”! More importantly, observe an even greater principle: there are exceptions to principles. Exceptions do not invalidate principles, but they do radically alter the outcome in instances. King Solomon put it this way, “Give a portion to seven, or even to eight, for you know not what disaster may happen on earth” (Ecclesiastes 11:2).

The stock market is a brute that routinely destroys unwary investors. Be intimately familiar with your investment objective and risk tolerance level, and be sure your investments reflect both at all times. Stay diversified. Practice position sizing. Have an exit strategy and honor it. Be bullish, but remain vigilant.

Think about it, Shaun.

1 Stansberry Research, “Review of Market Extremes”, Brett Eversole, February 7, 2024

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

All investing involves risk including the possible loss of principle. No strategy ensures success or protects against loss. Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. Investors should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not insure a profit and does not protect against loss in declining markets. 

https://www.fivestarprofessional.com/spotlights/90982

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2012/2022 Five Star Wealth Managers.

For my first 31 years in the investment business, and until the “Covid Lockdown of 2020” (‘The Lockdown’), college tuitions increased consistently faster than the national inflation rate, to the extent a higher annual increase was built into financial planning models for future education costs, like future health care costs. While ‘The Lockdown’ had an overwhelmingly negative impact on nearly every aspect of American society, it was the impetus that awakened millions of citizens who were being duped into paying a ridiculous sum of money for, at best, a marginal education. This in no way reflects upstanding colleges and universities which soundly educate students in fields useful to society, like science, medicine, nursing, mathematics, engineering, info tech, and architecture, institutions which remain in high demand and continue to raise tuitions today; rather, it refers to the thousands of lesser-known schools capitalizing on the misguided demand for college degrees offering little practical use, institutions now slashing tuition rates and scrambling for economic relevancy.¹ Consider the facts as you plan the funding of your own family’s future education:

• ‘The Lockdown’ forced students into a digital setting, exposing the cost and distraction of college entertainment. For serious students, this raised a wonderful question, “what is the marketable value of the education I am receiving in the workplace?”.

• Lacking an encouraging answer, scores of serious Gen Z students are rethinking the whole process of their secondary education and taking a good look at the alternatives, discovering a highly marketable, credentialed trade or skill can be acquired in a specialized field of interest for a tiny fraction of the cost and time!

• This development has led to 14 colleges being closed in 2023 alone,²  many more slashing tuition drastically,³ and is the most encouraging development in America’s educational system in generations. Go Gen Z!

Free enterprise has re-entered the setting of secondary education and is having a profoundly positive effect, showing promise of a more competitive future for America. Encourage young people everywhere to understand the basic principles of finance and economics, and the importance of a valuable, marketable, specialized education, and warn them well in advance not to pay a penny more than is required to obtain it.

Think about it, Shaun.

“Do you see a man skillful in his work? He will stand before kings; he will not stand before obscure men.” ~Proverbs 22:9

“An investment in knowledge pays the best dividends.” ~Thomas Jefferson

1 The JOLT, by Stephen McBride, “College tuition prices dropped for the second year running”, January 31, 2024

2 Inside Higher Ed, “A look Back at College Closures and Mergers”, December 21, 2023 https://www.insidehighered.com/news/business/financial-health/2023/12/21/look-back-college-closures-and-mergers-2023

3 Inside Higher Ed, “Tuition Resets Continue Amid Public Skepticism of College’s Value”, September 15, 2023 https://www.insidehighered.com/news/business/revenue-strategies/2023/09/15/amid-skepticism-colleges-value-tuition-resets-keep

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

https://www.fivestarprofessional.com/spotlights/90982

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2012/2022 Five Star Wealth Managers.

Effectively planning one’s retirement often requires going beyond the question of the extent to which that retirement is funded. It involves mapping the logistical intricacies of a puzzle with many moving parts, each with financial, tax, and estate ramifications. The initiation of Social Security benefits is a piece of this puzzle. Consider the key issues:

• The pre-requisite to receiving Social Security benefits is to work and pay taxes for 10 years.

• Social Security benefit amounts are based on income, years worked, and the age benefits begin. The retiree’s most financially beneficial ‘start date’ results in the maximum lifetime benefit, including inflation and the time value of money. Advanced retirement planning programs can run these calculations and convey results in simple terms.   

• Full benefits are received at Full Retirement Age (FRA), which for most people is age 67. Benefits can commence as early as age 62. The earlier benefits begin the lower the monthly amount is, but benefits also continue to increase after FRA until age 70, as this chart shows:

Claiming Age         Benefit Adjustment¹

  62 -30%

65 -13.3%

67* 0%

68 8%

70 24%

*Full Retirement Age

• It’s noteworthy reduced benefits for pre-FRA claims compound  indefinitely, even for surviving spouses; in other words, annual increases are based on the reduced monthly benefit, and are, therefore, also proportionately lower.² 

• Genes and longevity, lack of program funding and the possibility of future ‘means testing’, age/benefit charts, and other income sources all factor into the strategic and important decision of when to initiate Social Security benefits.

The decision to initiate Social Security benefits will likely impact: i) the allocation of your retirement capital, ii) the decision of when to initiate income streams from investment accounts, iii) your withdrawal and depletion rates on those investment accounts, iv) your tax return the year benefits begin and thereafter, and v) the ultimate value of the estate you leave to your beloved heirs. Put your time in on this one, and blessings on your decision! Don’t be afraid to ask for help, and be quick to share your success with those in need.

Think about it, Shaun.

“Give, and it will be given to you. Good measure, pressed down, shaken together, running over, will be put into your lap. For with the measure you use it will be measured back to you.” ~Luke 6:38

1,2 Smart Asset, “Social Security Benefit Reduction for Early Retirement Chart”, August 3, 2023, written by Mark Henricks

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

https://www.fivestarprofessional.com/spotlights/90982

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2012/2022 Five Star Wealth Managers.

I vividly recall the horror of approaching the limits of my strength and conditioning while on a winter mountain climb years ago, and yet far from safety. It was a crushing revelation that I had overestimated my preparation and misjudged the physical requirement of the expedition, and as a result, was faced with an extremely life-threatening situation. It has been reported by Doc Eifrig, a retirement income specialist and partner at Stansberry Research, that the greatest fear of most American retirees is running out of money too soon, yet many do! Consider the following practices as you plan your own financial homestretch:

• Plan your retirement meticulously, giving consideration to every detail, for “which of you, desiring to build a tower, does not first sit down to count the cost, whether he has enough to complete it?” ~Luke 14:28.

• Consider part-time employment during the early to mid-years of retirement, realizing every dollar earned is a dollar not withdrawn from retirement capital accounts.

• Maintain a strict budget and practice counter-culture frugality, realizing every dollar not spent is a dollar not withdrawn from retirement capital accounts.

• Accelerate repayment of debt, and don’t fully retire until you “owe no one anything” ~Romans 13:8. Retiring in debt is like trying to swim the English Channel with twenty-pound boots on.  

• Keep investment expenses to a minimum, realizing every dollar of lower expenses remains invested and continues compounding!

• Avoid catastrophic risks, from which you may never recover. As Warren Buffet said, “Rule #1 is don’t lose money; Rule #2 is don’t forget Rule #1”.

• Consider strategic Roth Conversions in early retirement, in particular, after full employment and before Required Minimum Distributions (RMD’s) begin, when your tax bracket is likely lowest.

• After RMD’s begin, keep the money invested (after withholding occurs) when possible, realizing every dollar not withdrawn remains in your retirement capital accounts.

• If still employed after RMD’s generally begin, roll former retirement plans into your present employer’s retirement plan to further defer RMD’s.

• Refrain from buying and selling homes during retirement, an expensive endeavor which involves complicated planning and unpleasant financial surprises.

• If your only permanent fixed income source in retirement is Social Security, consider allocating a portion of your retirement capital towards a second permanent income source, which you can’t outlive.

Knowledge is power, and there is much you can do to avoid the horror I experienced on that mountain; that said, it’s even more important to know that “God is the provider for all of his creation and gives food to every creature” (Psalm 136:25). Blessings on your retirement planning efforts! Shaun.

“A wise man leaves an inheritance to his children’s children.” ~Proverbs 13:22

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

All investing involves risk including the possible loss of principle. No strategy ensures success or protects against loss.

Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

https://www.fivestarprofessional.com/spotlights/90982

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2012/2022 Five Star Wealth Managers.

There are noticeable parallels between the stewardship of one’s physical and financial health. Just as a consistent regimen of nutrition, sunshine, exercise, hydration and sleep tends to sustain a healthy person, the methodical practice of simple financial principles tends to produce financially healthy families. Employer-sponsored retirement plans, such as 401(k)’s, 403(b)’s, Profit-Sharing and SIMPLE Plans are venues well-suited to the practice of such principles, and to general wealth-building due to distinct and beneficial features. “Those who gather (wealth) little by little will increase it (Proverbs 13:11), and these plans are a great way to do it!

• Many companies match employee contributions made to these plans (to a certain percentage of annual pay). A 25% match to 3% of income, for example, equates to a guaranteed annual return of 25% on one’s investment before the money even gets invested. Contributing less than 3% of one’s pay in this example is synonymous with special requesting a pay reduction from the boss!

• The tax advantages of employer-sponsored retirement plans can exceed other investment options, especially for high income households, due to their high contribution limits*. Have a fiduciary advisor, in an advisory relationship, work with your CPA to find a smart mix of traditional, Roth, and taxable contributions based on your own long-term financial plan.

• The structure of employer-sponsored retirement plans lends itself to dollar-cost averaging, which forces participants to purchase more shares of a given fund when the price is low, and fewer shares when the price is high.

• Employer-sponsored retirement plans generally offer competitive, low-expense index funds. Every dollar of expense comes straight off an investor’s rate of return, and worse, is compounded indefinitely into the future!

Consider also the following issues regarding your employer-sponsored retirement plan accounts:

• Taking a loan on these accounts is generally inadvisable for several reasons. Loan repayments are usually reinvested at a higher price. The rollover option can become jeopardized. A plan termination can force loan repayment, which, if made from the account by a participant under age 59 ½, becomes penalized.

• Keep your beneficiaries updated, which avoids the unnecessary delay of probate, dodges threats to the tax advantages available, and allows an immediate, tax-deferred distribution to beneficiaries.

• Understand your personal investment objective and risk tolerance, and maintain an asset allocation reflective of these at all times. New regulations allow your fiduciary advisor, in an advisory relationship, to professionally manage your active retirement plan accounts for a modest fee. 

These and other features make the employer-sponsored retirement plan a fantastic option for a significant portion of your total retirement savings. Be sure to make the most of it, and may your efforts to be both physically and financially healthy be blessed! Shaun

“It is God who gives you the ability to produce wealth.” ~Deuteronomy 8:18

* Contribution limits vary by plan type. Over-contributions are penalized.

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.  

All investing involves risk including the possible loss of principle. No strategy ensures success or protects against loss. Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. Investors should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not insure a profit and does not protect against loss in declining markets. 

https://www.fivestarprofessional.com/spotlights/90982

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2012/2022 Five Star Wealth Managers.

Surviving a summit attempt on a world class mountain requires the use of every means available towards success, including proper clothing and gear, physical conditioning, mental preparation, technical training, route planning, team coordination, danger recognition, and, of course, sound and timely decision-making in every instance. Dwelling in such a hostile environment long enough to earn ‘the attempt’, and live to share the experience, is improbable for most ambitious climbers. An equally challenging adventure is the lengthy retirement in a high-inflation environment, a path fraught with perils maximizing the probability retirees will outlive their capital. We are slowly discovering the Fed’s recent rate hikes broke certain components of the economy while failing to fully subdue entrenched core inflation; let’s recognize and engage some inflation-fighting retirement strategies!

• Assume a higher inflation rate in your planning. An impactful and lasting financial dynamic must factor into planning and investment decisions; get this issue on your financial radar.

• Allocate retirement capital towards assets that appreciate, and produce competitive income streams in an inflationary environment (Prior Blog: HighInflationInvestments) Pricing power rules amidst high inflation.

• Live frugally and maintain strict budgeting. Most American retirees spend more money in year one than the final working year. Living on a fixed income with high inflation is serious business; don’t let the above be you.

• Optimize Social Security, which will impact the longevity and productivity of your retirement capital pool. Discover which Social Security option maximizes the probability of the greatest lifetime family financial benefit.

• Diversify sources of income. Use your God-given talents, have fun, and be creative. Every dollar you earn is a dollar that can remain invested, or freely given to another in need. Be a conduit of financial blessing because of your personal fiscal discipline. Will God not bless this profoundly?

• Manage health care costs prudently. Understand your health plan options, features, and costs, and comparison shop¹. Be your own primary health advocate with a solid regimen for nutrition, exercise, sun exposure, hydration, and sleep. Read daily to enhance your understanding of natural good health.

Any great mountaineer who does everything right can still in a flash be devoured by an avalanche, just as fixed income retirees in a fiscally reckless society can be left holding a currency with no meaning in God’s economy. I think this means we should strive for financial excellence but always hold it loosely, and to be thankful for what we have and generous with those in need.

God bless your efforts and Happy New Year! Shaun

“The point is this: whoever sows sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully. Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver. And God is able to make all grace abound to you, so that having all sufficiency in all things at all times, you may abound in every good work.” ~2 Corinthians 9:6-8

1 Smart Asset, “How to Account for Inflation in Retirement Planning”, October 27, 2023

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

All investing involves risk including the possible loss of principle. No strategy ensures success or protects against loss. Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

https://www.fivestarprofessional.com/spotlights/90982

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2012/2022 Five Star Wealth Managers.