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A Further Look | Jun 10, 2024

Decoding Clients’ Most Popular Questions of 2024

David B. Root, Jr.

CFP®

“The important thing is not to stop questioning. Curiosity has its own reason for existing.”Albert Einstein

We are a firm that prides itself on financial education. We strive to provide expert advice in a multitude of financial topics, and we have backed this up with a team of highly credentialed and experienced advisors.

That said, I would never profess to have all the answers when it comes to the markets and the economy. However, I always look forward to fielding questions and concerns from clients on these topics and others. There’s no disputing that today there is no shortage of potential disruptions and distractions that could impact our portfolios, retirement plans and peace of mind.

As we are now well into 2024, I wanted to share some of the more frequent (and poignant) questions I have been getting from clients and colleagues.

1. Should I still be concerned about inflation?

As consumers, yes. As long-term investors, not as much. We have smart clients, and they understand that the cumulative inflation we see looks better after some of the most volatile indexes like food, energy, shelter and even used car and truck prices have been excluded from the report. Those indexes are up substantially and all are at their peaks. So, while headline inflation rates are down materially from last year’s highs, it is easy to understand why many people think inflation remains a big problem, no matter what the economists say.

It's also understandable to question why the market reacted to the April CPI report with so much hope that inflation is finally heading back in the right direction after the report indicated that inflation had slowed only incrementally relative to the previous month (3.4% in April vs. 3.5% in March). In reality, this rate is fairly representative of the average inflation rate recorded over the last 30 years.¹ The fact is, inflation is correlated with the amount of government spending. Think about the guidelines your doctor provides for a healthy caloric intake – when you indulge too much, you become sluggish from consuming junk food. That may be what we are experiencing in the economy—and by extension, the inflation reports—now. With the Covid-era supply shocks behind us, it is now time to work the excessive spending and stimulative monetary policy kinks out of the inflationary system.

2. Should I stay invested?

Yes! It’s important for us to understand whether one is asking this question for fear of missing out (FOMO) or fear of losing money (FOLM). One thing I know to be constant - if you go to cash now because you’re afraid, then you may be making a short-term decision that may permanently take you off course from your long-term goals. Money Market rates are compelling, but have you considered where your portfolio would be if you weren’t invested over the last several months?

Remember, we are less than two years removed from 2022, one of the most challenging years for both stocks and bonds in 95 years. It’s been well-documented that the stock market has risen two out of every three years during its history. Can any of us read the tea leaves to know when that one down year will be? In our view, it is difficult to bet against American innovation at a time when technology will increasingly drive the markets going forward. It would be foolish to assume Apple is no longer a great company just because it is no longer the darling of Wall Street.

3. Should I be concerned about current Estate Tax laws going away?

Absolutely! I have to assume that as one of our clients, they have a comprehensive strategy in place for their estate. But unless Congress acts, on Jan. 1, 2026, the estate, gift and generation-skipping transfer (GST) tax exemption amounts will be cut in half. Although the clock is ticking down, there is still time to devise an updated plan that will relieve tax burdens by transferring assets and their appreciation out of the estate sooner rather than later. Gifting will likely take a more prominent role in the short-term.

4. How are we doing?

Great! But then again, I’m an eternal optimist. This is the most frequent question I receive, and the easiest to answer provided we are staying true to our plan. What does this question mean exactly? Although simple, it seems rooted in the rhetorical triangle of Logos (reason), Ethos (credibility) and Pathos (emotions). In the context of the client/advisor relationship, we can reaffirm that ‘we’ are doing well together in terms of staying on track. However, if ‘we’ refers to the broader world we are living in, that’s a tough one…

Feel free to reach out to discuss these or any other questions you may have. I also invite you to check our website on the resources tab to find information on a number of financial topics: https://www.dbroot.com/resources/

Thanks for reading.

Source:

¹ Investopedia U.S. Inflation Rate by Year, https://www.investopedia.com/inflation-rate-by-year-7253832

This material has been provided for general, informational purposes only, represents only a summary of the topics discussed, and is not suitable for everyone. The information contained herein should not be construed as personalized investment advice or recommendations. Rather, they simply reflect the opinions and views of the author. D. B. Root & Company, LLC. does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation. There can be no assurance that any particular strategy or investment will prove profitable. This document contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such sources, and take no responsibility therefore. This document contains certain forward-looking statements signaled by words such as "anticipate," "expect", or "believe" that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. As such, there is no guarantee that the expectations, beliefs, views and opinions expressed in this document will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. All investment strategies have the potential for profit or loss. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. The impact of the outbreak of COVID-19 on the economy is highly uncertain. Valuations and economic data may change more rapidly and significantly than under standard market conditions. COVID-19 has and will continue based on economic forecasts to have a material impact on the US and global economy for an unknown period.

David B. Root, Jr.

CFP®

Founder & Chief Executive Officer

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