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I’m a father of five children, and I’m in charge of guiding them to explore the world for the first time in their lives, with new experiences every day. While that can be exciting, it can also be scary. For example, when I took each of my older kids swimming at Severn River Swim Club for the first time, they were scared to jump in. What if they couldn’t swim, or if the pool was too shallow and they hit the bottom?
As a financial advisor, I sense the same uncertainty from clients as we await the Federal Reserve’s decision to cut interest rates later this month. It’s been nine months since their last cut, and since that time, inflation has remained stubborn and job growth has slowed.
People are concerned about the what-ifs. If the Fed keeps rates elevated, it can hurt borrowing costs for homes, cars or businesses. If the Fed lowers rates too soon, there’s the potential that it could trigger higher inflation and lead to an economic recession.
That’s why we work so hard to help ensure you have a well-considered financial strategy — one that’s prepared for whatever direction the economy takes next.
Uncertainty about the Fed’s direction can make it hard to know what the impact on your finances might be, and that can lead to financial anxiety. You can’t control their decision or the impact it could have, but you can control your finances. The best way to help relieve stress and achieve financial independence is to create a financial plan.
If you’re concerned about the short-term impact of interest rates and inflation, consider paying down any outstanding debt as quickly as possible. Using a monthly budget to track your income and expenses can help you better cope with rising prices. A budget can also help you avoid overspending.
You should also have a long-term financial plan in place that accounts for investments, retirement savings, and strategies for taxes, Social Security and health care costs.
Financial anxiety can be stressful, but it’s important to avoid letting that stress lead to fear-driven decisions. Market cycles are natural, and the decision of whether to cut interest rates later this month could shake up the stock market.
However, it’s normal for markets to go through cycles, and the market can rebound as quickly as it can crash. If that happens, don’t panic. In the last 20 years, the S&P 500 has lost value in just four years — 2008, 2015, 2018 and 2022 — with a 10% average annual return. Time and time again, the market has proven that it’s not a matter of if it will recover, but when.
The economy will go through cycles, but if you have a solid foundation, you don’t have to panic because we know our plan will continue to keep our finances upright.
There’s always uncertainty in the market, but that doesn’t mean we should be acting in fear. My kids eventually jumped into the pool and love swimming now, and they have taught us all a lesson. Even though there is uncertainty, embrace it. Now is the opportunity to create a plan that can help your finances weather the storm.
That’s where a financial professional can step in. An advisor can help ensure your finances align with your retirement goals, make sure your investments are properly allocated and match your risk tolerance, and, most importantly, help relieve stress. I recommend consulting a financial professional who can help you stay informed about economic news and help you stay on track to achieve your financial goals.
Jason LaBarge, financial advisor and president of LaBarge Financial
7 Riggs Avenue, Severna Park, MD 21146
443-647-4321
www.labargefinancial.com
Securities offered only by duly registered individuals through Madison Avenue Securities LLC (MAS), member FINRA/SIPC. Investment advisory products and services made available through AE Wealth Management LLC (AEWM), a registered investment advisor. MAS and LaBarge Financial are not affiliated entities.
Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. LaBarge Financial is not affiliated with the U.S. government or any governmental agency.
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