One Big Beautiful Bill Act Planning Strategies
September 1, 2025
2026 Contribution Limits, With Increases Across the Board
November 3, 2025
By Brett Freese
Stock Market in the 3rd Quarter: The S&P 500 hit a new all-time high during the trading day on September 23, 2025, at 6699.52. On September 17, 2025, the Federal Reserve lowered the Fed Funds interest rate to between 4% and 4.25%. This rate reduction of 0.25% move comes with the assumption that there will likely be more rate cuts to follow this year. Corporate earnings were strong this past quarter and strong earnings are expected to continue into the fourth quarter. Stock valuations are considered historically high, but they are not flashing a “bubble” in stock prices. The economy is slowing down but not experiencing a serious economic contraction.
Economic & Investment Highlights:
- Inflation: Increased prices on consumer goods and services have been more benign than critics have projected so far this year, but there are still a lot of unknowns (like the idea that corporations are eating most of the tariff costs for now) regarding the long-term effects of the Administration’s tariff policy.
- “One Big Beautiful Bill”: The final Bill was passed early in July of this past quarter. Please see our September Insight on the One Bill Beautiful Bill Act Planning Strategies. Very likely, we will get more IRS clarification statements here in the 4th Quarter on some of the details of the Act.
- The Federal Reserve (Fed): The Trump Administration continues to put pressure on Federal Reserve Chairman Jerome Powell. Trump wants interest rates lowered substantially, but the Fed Chairman Powell and most of the voting members of the Federal Open Market Committee (FOMC) are more interested in a measured approach to lowering interest rates. They just announced a .25 bp decrease in September and will be content with small decreases in rates and watch for the possible effects of tariffs on inflation and overall labor demand. The Fed has indicated that the path to more rate decreases will be data-dependent. Always keep in mind that the Federal Reserve has a dual mandate to achieve both stable prices and maximum sustainable employment.
- Mortgage Rates: When it comes to the real estate sector, the Housing and Banking industries continue to see a “wait and see” approach by consumers when it comes to purchasing a home and/or refinancing a currently owned home. Many are waiting on the Fed to lower interest rates, but there is a little bit of a misunderstanding of what a Fed rate increase or decrease does to mortgage rates. The Fed changes short-term interest rates, whereas mortgage rates are more tied to long-term interest rates. It is possible that short-term rates can go down, but longer-term rates could stay the same or even go up. It is all based on short-term and long-term expectations of both economic growth and inflation.
Historical Stock Market Declines:
Market declines and inclines rarely look the same or even feel the same, but they do happen, and the ups and downs are a part of the process. It is important to have a plan/strategy so emotions don’t dictate buying or selling.
A 5% or greater loss occurs about 3 times a year
A 10% or greater loss occurs about once a year
A 15% or greater loss occurs about once every 2 years
A 20% or greater loss occurs about once every 3.5 years
Please know that when stock prices go down, the “market collapse gurus” receive the most airtime. Likewise, when stock prices go up, all the “bull market gurus” talk about how the market will continue to be up BIG. Please know that most “gurus” are great with hindsight to justify how important it is to have their voice heard.
Market Scorecard for the last 13 weeks ending 09/30/2025:
US Equities:
+ 8.12% S&P 500 (Index of the largest US publicly traded companies)
+ 7.58% Large Cap Growth – Morningstar Category
+ 5.52% Large Cap Value – Morningstar Category
+ 12.19% Russell 2000 Growth (Index of Small-cap growth US publicly traded companies)
+ 12.60% Russell 2000 Value (Index of Small-cap value US publicly traded companies)
International Equities:
+ 2.15% Foreign Large Growth – Morningstar Category
+ 6.29% Foreign Large Value – Morningstar Category
+ 1.71% Foreign Small/Mid Growth – Morningstar Category
+ 7.60% Foreign Small/Mid Value – Morningstar Category
Bonds:
+ 1.51% U.S. Aggregate Bond (Index representing intermediate-term investment-grade bonds in the U.S.)
+ 2.48% Corporate Bond – Morningstar Category
+ 1.24% Short Government – Morningstar Category
+ 2.61% Muni National Bond Intermediate Index – Morningstar Category
Other:
+ 16.40% Gold Price
+ 6.17% Bitcoin
+ 5.33% Commodities Broad Basket – Morningstar Category
Current Annual Money Market Rates ending 09/30/2025:
3.97% Schwab Value Money Market
3.85% Schwab Treasury Money Market
Market Indicators:
Inflation:
2.70% as of July (up 0.35% from 2.35% in May)
Unemployment:
4.3% as of August (up 0.1% from 4.2% in May 2025)
Fed Funds Target Rate:
4.00-4.25% as of 9/29/25 (down 0.25% from 06/28/25)
Suggested Next Steps:
- Understand that market cycles are normal. The markets go up and down in mostly unpredictable directions and amounts. Many times, the ups and downs of investments seem to make sense only after they happen; however, market prediction is very difficult. (i.e., the next stock market crash has been predicted every year since 2008).
- Your investments are just one factor in the success of your life, money, and purpose. Make sure that you are confident in your full financial plan, so you can successfully have an amazing ROL (Return on Life).
- Your investment allocation and diversification are important factors in both risk management and future returns. Therefore, if you have questions about your investment plan, please schedule a phone or in-person meeting with your TrustWell Financial Advisor(s).
