There’s a saying in our industry that Americans spend more time planning their summer vacation than they do their retirement.
Now most people probably hear that and think it’s a bad thing. But I look at it differently: You’ve got better things to do with your time today than worry about your financial picture. That’s where I come in.
Since the pandemic, more and more people have been sitting on higher cash reserves than they used to, and the current interest rate environment has provided a unique opportunity to grow that cash relatively safe and low risk. In this edition of Dave’s Inbox, I wanted to address a couple of questions I’ve gotten repeatedly.
As expected, the first few days of the year started with everyone selling off the stocks that did so well last year — large-cap tech. We did the exact same thing in our own investment accounts. The reason is simple — any gains from the start of January don’t have to have taxes paid on them until April 2025, and some of these stocks went up 50% or more in 2023.
With the new year comes New Year’s resolutions, and rather than telling you all about mine (you’re welcome), I thought I would set some resolutions for the American economy in 2024.
Lately, I’ve been thinking about why it is so ingrained in our human nature to worry. We’re a nervous species, fearing uncertainty, volatility, and anything that we can’t control. I’m in a business that exists primarily to take financial worry off the shoulders of our clients and manage it ourselves, but we live in a media environment that seeks to capitalize on fear without looking at the greater picture.
There’s an old trope in the financial planning industry — Nobody likes to work with engineers.
They say engineers ask too many questions. They come in with complex plans for exactly when and how they should retire to maximize their post-career income. They have dozens of spreadsheets taped together detailing every cent of their savings and budgets and interest payment projections. Heck, I’ve seen it myself. They’re trying to play financial advisor for the first time, and I can tell you that it’s not an easy job.
But at Family Financial Partners, we love working with engineers.
Next weekend we officially enter the fall — one of the best times of year that ushers in football, fire pits, and the beginning of the holiday season. As you watch the leaves turn brilliant red and orange and begin to blow to the ground, it’s easy to appreciate the natural beauty of the end of another life cycle before the cold winter months.
It’s much harder to appreciate nearing the end of our own life cycles. As a matter of fact, most of us probably avoid thinking about it altogether. And that’s perfectly understandable. None of us wants to consider that one day we won’t be around anymore and our loved ones will be left to pick up the pieces. Heck, I’m sorry for even bringing it up today. But it’s just the reality of the human condition.
Here in Lexington, Kentucky, we may be in the dog days of August, but it just feels a little different this year, doesn’t it? I can almost sense the coming fall air as folks around me are preparing to go back to school and talking about University of Kentucky football. The Family Financial Partners team is making its way back to the office, and clients are starting to answer our phone calls as they settle into a normal schedule.
This has been a really interesting year watching the discussion of artificial intelligence advance due to the rise of ChatGPT and similar machine-learning tools that have permeated daily life and business. In order to learn more about the subject, I recently invited Brad Watkins, a self-described “technology evangelist” to our podcast, “In My Day.” Ryan and I had a fascinating hour-long discussion with him where he broke down what AI really is and how it’s going to affect our lives moving forward. I thought that, for this month’s newsletter, you’d like to read an excerpt from that conversation.
Last week was a big one in the market. We had a new bull market declared, and we saw the Federal Reserve finally pause its year-plus campaign of hiking interest rates. Let’s deal with the Fed first:
No rate hike, but are more coming?
While it did not raise rates, the Fed did raise its terminal interest rate, which is its target for where it sees interest rates going, by 50 base points, or a half percent.
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