Last Month in the Markets

Happy Labor Day!!! Last month stocks fell as investors focused on the likelihood of more interest rate hikes from the U.S. Federal Reserve. There was also profit taking after July’s big rally. Only two (2) sectors were positive in August, Energy and Utilities. Interestingly, Healthcare was the second worst performer on the month, despite being a historically rate-proof sector.

Bulls or Bears. September will probably continue a focus on inflation with the next central bank meeting on September 21. An area of concern tied to both inflation and interest rates is the housing market where both new and existing home sales declined. While a concern, existing home valuations have increased albeit at a much slower pace. With so much going on, a silver lining can be found at the pump where the average price per gallon  has dropped to $3.94. For many, this is a sigh of relief with fuel contributing up to 5% of household expenditures. So in short, though the trend in recent weeks has been bearish because of hawkish policy, some data suggests price pressures have started to ease. Unfortunately, this creates a debate between bears expecting more pain as interest rates increase and bulls looking for improvement. But what does this mean for you?

Like other major geopolitical events, Covid-19 along with the conflict in Ukraine has created uncertainty in the world’s financial markets. It’s unfortunate that we find ourselves asking are we in or nearing recession? Though natural and inevitable, recessions are a part of the business cycle. Early on, we took measures to insulate our models to the defensive holding positions that tend to  weather financial storms. Even more, we raised cash values to levels that can create buying opportunities once prices are cheaper. But for now, we remain cautious.

Other types of Savings. As we move into the last few months of a volatile year, we want to share a few savings strategies that might help you keep more of your money.

Credit Card Payments: Should you ever carry a balance from month to month, consider paying your next payment prior to the close of your business cycle. In doing so more of your payment goes to the principle.

SBO hiring tax strategy: If you are self employed and need to hire, consider your child. Depending on your child’s age, wages paid to them could avoid taxation and create deducting opportunities. Contact your Tax Advisor to see if this strategy could help you.

Consider a ROTH conversion: With the market declining as it did this year, you may want to consider converting a portion of your retirement savings to a ROTH IRA. You will want to discuss this with your Tax Advisor, but with the markets at their lows you can convert some of your retirement savings to a ROTH possibly avoiding higher taxation when you actually retire.

DISCLOSURE: iPlan nor any of its employees are licensed tax professionals. Thus any content discussing tax strategies will need to be discussed with a tax professional prior to implementation.