The Advisor, October 2023

What’s New at GPW

Andrew Carnegie is quoted as saying “I resolved to stop accumulating and begin the infinitely more serious and difficult task of wise distribution.” This month’s newsletter features important information about Required Minimum Distributions (RMDs) and charitable giving for end of year planning.

We also dive into Private Equity opportunities in our second podcast episode. Take a look below for the link to the video.

As always, if you have any questions or would like to discuss anything further, please reach out to our office at (316) 613-7570.

Jeff Wetta, RPS and Dustin Jackson, CFP® RICP®
Managing Partners


GoalVest October Outlook

The economy has been very resilient this year. Although marginal, GDP growth has been better than expected, labor statistics are coming in higher than anticipated, and inflation is trending down. Oil prices have rallied, reaching year-to-date highs (as of 9/22/2023) amid concerns about global supply. Additionally, the Fed paused interest rate hikes in September and instead held the federal funds rate at 5.25% – 5.50%. It’s possible that the Fed won’t raise rates again this year due to risks in the economy such as the UAW strike, government shutdowns, higher gas prices, student loan repayments and potential pressure on commercial real estate. In his press conference, though, Fed chairman Jerome Powell suggested that they are still prepared to raise rates further if inflation ticks up. We’re inclined to believe that we’ll see one more rate hike this year and then for rates to stay elevated into next year.

While no single risk mentioned above would be enough to push us into a recession, there is a scenario where a number of these could decrease consumption and lead to a more severe slowdown. If this happens, the Fed may decide to switch tactics and begin reducing rates. One reason for elevated interest rates is the Fed’s ability to reduce them in the face of a recession. For a long time this “tool” wasn’t available to the Fed because rates were near zero. That’s not the case now.

Regarding consumer spending, more than 50% of respondents to Bloomberg’s Markets Live Pulse survey said that personal consumption is likely to decrease in early 2024. The consensus among bank executives is that extra consumer savings built up over the pandemic have either run out or are close to running out. Rising wages, low unemployment, and the wealth effect are powering the still strong economy. However, over time there appears to be some pressure building on the US consumer via reduced
purchasing power, rising credit balances, and falling personal savings rates. This can be seen in the inflation numbers that were reported last week. Inflation came in slightly hotter than expected with headline CPI at 3.7% (driven mostly by rising energy costs) and core CPI excluding food and energy at 4.3%. Month over month, headline CPI and core CPI rose by 0.6% and 0.3% respectively.

So how do we prepare for this? We have been refining our models in preparation for 4th quarter portfolio rebalancing. We seek to drive risk-adjusted returns by continuing to diversify, ensuring cash needs are covered, taking advantage of higher rates in our core fixed income allocation, and holding neutral equity exposure with a slight tilt towards quality and dividend/defensive stocks. We are also looking at alternatives such as structured notes that have targeted, more predictable outcomes and additional alternatives such as private equity offerings that have high growth potential while reducing volatility from public markets.

Sevasti Balafas, CFA, CPWA®
CEO & Founder
GoalVest Advisory

Sources: JP Morgan Asset Management, Carlyle, Sevens Report, Bloomberg, Invesco


Important End of Year Reminders

Where has this year gone? It seems like just last month we were wishing you a relaxing summer and safe travels. Now the leaves are changing, and we are preparing for the holidays. October is also an opportune time to prepare for year-end financial and estate planning decisions, though. Below you will find several important reminders related to your investments. Please take a few moments to read through this full article, as some of these deadlines may apply to you.

Required Minimum Distributions (RMDs) – For Ages 73+
In 2019 and then again in 2022, the IRS updated the requirements for taking an annual distribution from your retirement account. Below is a chart outlining when you must start taking your distributions. We can gladly assist with this calculation of your Required Minimum Distribution (RMD) amount upon your request.

Qualified Charitable Distributions (QCDs) – For Ages 70½+
While you may use your RMD for income, holiday gifts, special projects, etc., it is possible that you don’t need these funds. If this is the case, you may consider reinvesting the aftertax proceeds of your RMD or giving this money to charity. Gifting these funds directly to charity is considered a Qualified Charitable Distribution and allows you to take advantage of special tax savings. Don’t hesitate to contact us and your accountant if this is something you are interested in doing.

Retirement Contributions and Roth Conversions
Don’t forget to evaluate your retirement accounts and consider if you would like to contribute to your accounts this tax year, or possibly even utilize a Roth Conversion. Our team is happy to help you evaluate these options further and coordinate with your accountant at your request.

Annual Gifting
Lastly, annual gifting for estate and tax planning purposes is another item that typically arises this time of year. If you are interested in taking advantage of your annual gift exclusion or donating appreciated securities to your favorite charity, give us a call. We can coordinate with you, your attorney, and your accountant to help accomplish your charitable, tax, and estate planning goals for this year.


GPW Podcast
Episode 2: Private Equity
Our second podcast episode is here! Episode 2 features Jeff Wetta, Dustin Jackson, and GoalVest Advisory’s Blair Cohen, head of Private Equity, as they discuss what Private Equity is, what opportunities we are looking at for clients, and how these opportunities can be incorporated into clients’ portfolios.