Answers to Your Burning Financial Questions (2023 Edition)

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Here at Cedar Point Capital Partners, we field questions every day from our curious clients, and frankly, we love it.

That tells us our clients are engaged with their financial planning, and dedicated to building real wealth for themselves and their families. We, in turn, understand our responsibility to provide you with the fiduciary-grade insights and personalized service you need to build a “life well-lived.”

Depending on the events of the day, many client questions can take on a similar theme or tone, so we thought it could be helpful to share some (abbreviated) insights to some of the most popular questions in recent months.

Of course, every client and financial situation is different, so please reach out for a more personalized take if you’ve been noodling on the questions that follow.

Q. Did I miss 2023’s stock market rally? (Or: Should I get out now with markets dropping?)**

The U.S. stock market indeed has done better this year compared to 2022’s correction. Despite falling this past September, the S&P 500 Index remains positive for the year**. The U.S. economy, in particular, has proven resilient, undeterred (so far) by higher interest rates, persistent inflation, and geopolitical shocks around the world.

Will the S&P 500 Index get back on track and follow its historical trend of a roughly 4.2% gain in the fourth quarter? Or does its recent drop reflect the mounting headwinds that recently led The Conference Board to predict a “very short and shallow recession” in 2024?

As we’ve said so many times before, no one knows. The better question to ask is, do you have a long-term financial plan in place and the investment discipline to make it work?

Trying to get in on a stock market rally, or trying to get out and preserve your capital before a fall, is so often a fool’s errand. If you got out of the market after 2022’s punishing ride, you missed out on 2023’s ride back up. If you’re thinking about getting out before a potential recession in 2024, think about the forecasts for a recession in 2023 that didn’t pan out (so far).

No one has a crystal ball. Focus on building a high-quality diversified portfolio so that you can ride out market volatility and be ready for whatever comes next. We can help you do just that.

Q. Should I be investing in gold (or silver or oil)?

This is a question that comes up often during times of extreme market and political uncertainty (like right now), and we’re always happy to discuss it.

When you’re looking for hedges and safe havens, it can be tempting to buy physical assets like precious metals and commodities, which derive their value from their potential usefulness or relative scarcity.

Buying commodities has become even easier in recent years with the arrival of mutual funds and exchange traded funds (ETFs) that give you exposure without having to physically hold a bar of gold or barrel of oil. But don’t let fear drive you into these specialized investments blindly.

Purchases of real assets can be an effective piece of a diversified portfolio strategy, especially if your time horizon or goals demand differentiated correlations, but understand these assets also behave differently than traditional securities like stocks and bonds.

The prices of commodities can fluctuate quickly, making it a poor short-term hedge; costs like transaction fees and storage can also eat into your returns or principal if you don’t have the right strategy in place. For novice investors, these finer points can turn a supposed safe haven into a major headache.

We don’t say this to scare you away, but rather as fiduciaries putting your best interests first. If you’ve been thinking about getting into metals or commodities, let’s talk it through and help you chart out an evidence-based plan for your investment.

Q. It’s open enrollment time for my employee benefits—should I consider a high-deductible health plan?

We’re glad you’re thinking about this as part of your financial life plan, because too many people miss an opportunity to help build tax-free savings.

In case you’re not familiar, a high-deductible health plan (HDHP) is a type of health insurance policy with an annual deductible of at least $1,500 for self-coverage or $3,000 for a family, according to 2023 IRS rules. Policyholders are mostly on the hook for paying out of pocket up to these deductible limits before insurance coverage kicks in.

While that may sound like a significant cost burden, with most HDHPs, most of your qualifying medical expenses may be covered after reaching the deductible.

Here’s the real benefit, however: Because you are required to fund all of your health expenses up to your deductible in a HDHP, the IRS allows you to open a Health Savings Account, or HSA. These accounts allow you to save money on a pre-tax basis and use it for future qualifying medical expenses. Unlike its cousin, the Flexible Spending Account, or FSA, these funds never expire and often are able to be invested and grow tax-free (think: Roth IRA for future healthcare expenses).

Those with “self-only” healthcare coverage are able to contribute a maximum of $3,850 in pre-tax dollars to their HSA in 2023; those with family HDHP coverage can contribute up to $7,750. Those contributions may also lower your taxable income.

We should note that HDHP plans aren’t necessarily right for everyone. In practice, they work best for:

• Generally healthy people anticipating very little to no medical expenses for the year ahead
• Those with significant medical needs who anticipate hitting their deductible quickly, saving health insurance premium dollars over the course of the year (compared to a traditional health insurance plan).

It’s important to weigh these factors to determine whether a specific health insurance plan best aligns with your healthcare and financial goals. We can work with you and your benefits provider to help you understand your options and chart the best course forward for you and your family.

What other burning questions do you have about your financial life? We’re ready for all of them. Reach out today and let’s grow together.

**As of this blog’s publication on 10/16/2023

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