The Ascend Letter

Planning Corner: Start With Why?

Yesterday I was at a birthday party for a friend of mine and found myself talking with a kid about what he should do with his savings right now.

(Yes, I know I was "That guy" at a party, but I seriously love what I do so it's hard not to talk about this stuff.)

The young kid was wondering if he should buy a home or invest the money. Valid question given mortgage rates right now.

So I gave him the classic advisor answer.

I know that isn't a sexy answer, but in this job it's the most honest. There are so many factors that go into financial decisions.

In reality, now can be a prime time to buy a house.

"Christian, but mortgage rates are at 7%!"

Yes they are. And there are also more sellers than buyers right now. Depending on geography, you can likely get a huge discount on price and still get seller concessions. That's your rate buy down.

But in his case, the question is WHY does he want to buy a house? The response I got was "wants to do something with the money."

When making important financial decisions in life, it's important to always start from why.

Rushing into something because you don't want your money sitting is how people get stuck in poor investment products. (Like the life insurance product being pushed at him by a friend that is a product primarily used by the ultra-wealthy but presented as his best solution.)

There are so many routes one can go and there isn't one single answer. Having a financial plan is crucial to understanding the WHY behind YOUR best path.

The Macro Environment

This has been the weirdest market environment I have ever seen in my career. Every indicator I look at tells me we should be seeing a larger pullback. But the market isn't cooperating. Are we surprised?

Over the last 10 years, Americans' stock portfolios have tripled from $20 trillion to over $60 trillion. $30 trillion came in just the last 4 years. That is an exponential shift in the game.

With so much of the American economy, tax revenue, and retirements dependent on stock prices, the Fed and Washington are stuck. They can't afford to have a prolonged sell-off, otherwise tax revenues shrink and it becomes extremely difficult to cover the interest on $39 trillion of debt.

The AI disruption is looking more and more like the next couple of years will be the last of its kind before society moves into a completely different looking era. The question will be if we get a quick opportunity to hop on the train before it leaves the station.