Health Sharing as an Alternative to Health Insurance
June 1, 2024
Margin of Safety
August 1, 2024
By Brett Freese
Return on Life
There is no denying that investment returns over a long period of time impacts one’s level of success in achieving long-term plans, goals, and dreams. However, in a world of constant uncertainty, a holistic approach to personal finance (including investment returns) that leads to true life planning and a high return on life (ROL), is significantly important.
What is true life planning and return on life? It involves an intentional and healthy approach to a plan for investing, budgeting, health, relationships, legacy, charitable giving, and many other aspects of life. It may be challenging and difficult, but taking the much-needed time to create and implement plans for all aspects of life are essential. As I have discussed with my boys (who are now in early adulthood), you can know what is important to a person by identifying their five closest friends, their calendar over the last 12 months, and where their money went the last 12 months. “For where your treasure is, there your heart will be also.” Matthew 6:21
Personally, I’m getting older everyday (no stopping that), but this year I made the choice to work with a fitness and nutrition coach. It has been challenging, inconvenient, and painful at times, but I’m three months in and have lost 14 pounds, my health “numbers” are the best since my 30s, and I have more energy than I can remember as an adult. I’m now almost 54 years old and I’m even running sprints without hurting myself and enjoying it (crazy, I know). It does take a lot of daily intentionality, but well worth the effort. What steps will you take today to a healthier, more joyful, less stressed you?
Take the time to assess your life plan and return on life (ROL) and please let us know how we can travel that journey with you.
Economic & Investment Highlights:
- The Federal Reserve (Fed) has kept the Fed Funds rate the same since the July 2023 meeting. With the Fed no longer hiking rates, the question then becomes about the amount and timing of future rate cuts. Note: The Fed governors now believe one 25 bps cut is likely to happen this year. Always keep in mind that The Federal Reserve has a dual mandate to achieve both stable prices and maximum sustainable employment.
- Inflation: Both the Consumer Price Index and Producer Price Index have cooled off substantially and that is a very healthy direction for inflation. Additionally, employment numbers are beginning to cool as well. However, there are some “sticky” inflation areas in some sectors of the economy like rent and insurance.
- Fiscal Policies – As stated last quarter, this will be stressful and very interesting to watch the fiscal policy positioning as we get closer to November when the American voter goes to the polls and gives us a President for the next four years, 100% of the House of representatives for two years, and 1/3 of the Senate for the next 6 years. I believe the market is pricing in a mixed result in November where no one political party takes control of all three.
- Recession Risks: Recessions are a painful (or at least a very uncomfortable) but a normal part of economic and financial market cycles. Unfortunately for those looking for certainty, predicting one is extremely difficult. Recessions have been predicted by market commentaries and political pundits every year for the three decades I have been in the investment management industry (in truth there have only been 13 economic recessions since World War II). We continually assess recession risk and the concerns it may bring. This uncertainty underscores the importance of diversification for both asset protection (as needed) and investment opportunities.
- Geopolitical Risks: The risk associated with our world leaders continue to be a focus. The continued war in Europe and Gaza, China’s ever-changing policies (including debt levels, tensions over Taiwan and AI chips), and other challenges will appear over time and keep the financial markets on their toes.
- Artificial Intelligence (AI) had been a great topic of investment discussion in 2023 and will continue throughout 2024 and 2025. The perceived winners and losers of such disruptive technology will constantly be updating and adjusting.
- Most of the major stock indices were all up this past quarter (see “Market Scorecard” below).
- Gold was up approximately 4.93% price per ounce, and the broad basket of commodities was up 1.69% for the last 90 days. Oil was down 1.16% for the quarter.
- Bitcoin was down 13.99% for the quarter.
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 air time. 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 06/30/2024:
US Equities:
+ 4.28% S&P 500 (Index of the largest US publicly traded companies)
+ 4.94% Large Cap Growth – Morningstar Category
– 1.45% Large Cap Value – Morningstar Category
– 2.92% Russell 2000 Growth (Index of Small-cap growth US publicly traded companies)
– 3.64% Russell 2000 Value (Index of Small-cap value US publicly traded companies)
International Equities:
– 0.27% Foreign Large Growth – Morningstar Category
+ 0.05% Foreign Large Value – Morningstar Category
– 0.97% Foreign Small/Mid Growth – Morningstar Category
+ 0.28% Foreign Small/Mid Value – Morningstar Category
Bonds:
+ 0.10% U.S. Aggregate Bond (Index representing intermediate term investment grade bonds in the U.S.)
+ 0.14% Corporate Bond – Morningstar Category
+ 0.89% Short Government – Morningstar Category
+ 0.25% Muni National Bond Intermediate Index – Morningstar Category
Other:
+ 4.93% Gold Price
– 13.99% Bitcoin
+ 1.69% Commodities Broad Basket – Morningstar Category
Current Annual Money Market Rates ending 06/30/2024:
5.14% Schwab Value Money Market
5.01% Schwab Treasury Money Market
Market Indicators:
Inflation:
3.36% as of 03/01/24 (Up 0.25% from 3.09% on 03/1/24)
Unemployment:
4.0% as of 06/07/24 (Up 0.1% from 3.9% in March 2024)
Fed Funds Target Rate:
5.25 – 5.50% as of 06/20/24 (Same rate of 5.25 – 5.50% as 03/26/23)
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).
