👩🏼‍⚕️💲 Planning For What Worries Us Most: Health & Wealth

What’s on the Menu 🍴

Worry is a natural part of life…

But without proper planning, it can quickly spiral out of control.

Today is all about helping you get prepared to grow your dough!Brief 1 🥊 June CPI Versus The Fed

• What to Watch This Week 👀

• Why Are New Homes Everywhere?

• Planning For What Worries Us Most: Health & Wealth

Today’s newsletter is a 5 minute read.

What to Watch This Week 👀

We sound like a broken record, but once again large cap tech stocks led the way higher last week while small cap stocks faltered.

Tesla was the standout, as the stock surged over 25% after reporting better than expected quarterly EV deliveries.

Meanwhile major crypto assets like BTC and ETH remain in a major correction:

The US unemployment rate ticked up slightly last week and other economic data such as GDP forecasts have also softened recently:

This week investors will focus on the CPI inflation report in the US, as well as Fed Chairman Jerome Powell’s testimony in front of Congress.

Assuming the CPI and PPI don’t surprise to the upside, the discussion about interest rate cuts could intensify.

The Q2 earnings reporting season will also officially kick off towards the end of this week with several of the big banks including Citigroup and JP Morgan:

The heaviest part of earnings season will kick off in about two weeks time.

Here’s the major macro data releases we’ll be tracking this week:

• Germany trade balance (Mon)

• Australia consumer & business confidence (Mon)

• China inflation (Tues)

• US CPI inflation (Thurs)

• UK May GDP (Thurs)

• US PPI inflation (Fri)

• US consumer sentiment (Fri)

Energy and metals prices rose last week and are up quite a bit year-to-date, so we’ll keep an eye there this week.

We’ll also keep an eye on the following assets & sectors:

📈 Rising Recently:

• Big Tech (QQQ / TSLA / NVDA)

• Semiconductors (SOXX)

• Internet & Software (IGV)

• Gold Miners (GDX / GDXJ)

• Momentum (MTUM)

📉 Falling Recently:

• Small Caps (IWM / IJR)

• Energy (XLE / XOP)

• Homebuilders (XHB)

• Solar (TAN)

• Retail (XRT)

• Airlines (JETS)

Why Are New Homes Everywhere?

The U.S. housing market is a tale of two inventories:

1. Existing homes are as rare as hen’s teeth…

2. While new homes are flooding the market like there's no tomorrow.

Existing Homes are Slim Pickings

If you’re in the market for an existing home, brace yourself - The inventory of existing homes for sale is at a historic low, with only about 1.1 million homes available.

• That’s one of the lowest levels on record, and it translates to a months' supply of just 3.7 months.

• For context, a balanced market typically has about 5.5 to 6 months of supply.

• This tight supply is putting upward pressure on prices, making it a seller’s market.

• Buyers are feeling the pinch, with affordability taking a hit as mortgage rates climb.

New Homes are Abundant

On the flip side, the new home market is awash with options.

• There are approximately 479,000 new homes for sale, leading to a months' supply of 9.3 months.

• This oversupply is leading builders to cut prices and offer incentives like mortgage rate buy-downs to attract buyers.

• About 29% of builders are cutting prices, with an average reduction of 6%.

• Additionally, 61% are using sales incentives to boost demand.

What’s Driving These Trends?

The disparity between existing and new home inventories is largely driven by a combination of supply chain issues, labor shortages, and changing buyer preferences.

The new home market is also affected by the fact that many of these homes are still under construction.

Only 20% of the 479,000 new homes for sale are completed, with the rest either under construction or not yet started.

Economic Implications

The broader economic implications of this inventory situation are significant.

For one, the construction sector might face headwinds if the oversupply in the new home market leads to a slowdown in new building permits.

Builders are already pulling back, with permits for new homes falling dramatically since early 2022.

This pullback could lead to job losses in the construction industry if builders continue to struggle with moving their existing inventory.

Planning For What Worries Us Most:
Health & Wealth

Have you ever been told that you “worry too much?”

Congrats, you’re human.

There can be a healthy level of worry in life, but things can quickly spiral out of control if you don’t spend some time planning.

Most worries stem from just two main things:

1. Health

2. Wealth

Unfortunately, not every single worry can be eliminated. Some of us have much more difficult situations than others. That can’t be ignored.

As a financial planner, and just in my own life, I’ve learned you can only control so much.

Part of finding overall peace is accepting this hard fact.

Our goal in financial planning is to focus on things within our control to eliminate as much of what we worry about as possible.

Let’s start with mitigating worries related to health.

You may be worrying about your own health, or the health of a loved one. It may even be worrying about the health of your relationships.

Worries over health related issues can be planned for through a few different ways.

1. Changing health habits. This is an obvious thing in our control. While living a healthier lifestyle isn’t going to guarantee nothing will happen to us, it certainly is a way of avoiding regrets and feeling better about ourselves overall.

2. Avoiding high-risk activities (easy for you to do for yourself, but, hard to control what others may do). Of course, we can’t live in a bubble or force our loved ones to do so either. I was a medical insurance adjuster for many years handling car accident claims. It was probably my greatest lesson in life: we can get hurt just going for a routine grocery store run. So, we’re forced to find a balance between living life (getting that adrenaline fix), and avoiding high-risk activities.

3. Having insurance to protect against expensive & unexpected health issues. This is where health and wealth live together. It’s a double whammy of worry if you aren’t properly covered financially for a health event that ends up costing you a lot of your wealth. Be sure to check insurance coverages (including auto, life, disability and homeowners).

4. Having an updated estate plan. If you’re worried about something happening to you, and what will happen to your loved ones, an estate plan is vital to relieve some worry. You want to know your affairs will be in order and your loved ones will be taken care of (including planning for minor children). The truth is, estate planning is hard for many to do. It forces us to face that fact that we won’t live forever. However, once you get this done, it’s one less worry.

All of these things done together, can help you sleep better at night.

Now, moving on to mitigating worries related to wealth.

Most of our worries DO stem from wealth related issues.

How will you pay for unexpected expenses? Will you have enough money to retire? Will your career get you to your wealth goals? How will you find fulfillment in life? The list goes on…

Of course, there are many ways to plan against wealth worries:

1. Know your numbers! Sometimes, we’re worrying too much because we don’t know our numbers. Check in with your cash flow every month. It acts as accountability for what you can control within your spending. It’s also good to do net worth checkups every year. Tracking net worth helps you know that you’re making progress. If you’re not making progress on cash flow or net worth, knowing your numbers is the jumpstart to making change.

2. Use a retirement calculator. Many of us worry about aging and if we will be okay. If you’re not working with a financial planner who can show you if you’re on track with retirement and other parts of aging, using a financial calculator can help. My favorite one (which I have cross checked with my own financial calculator for accuracy) is https://www.calculator.net/retirement-calculator.html.

3. Focus on fulfillment. We all want to feel like we’re “living our best life”. Our wealth can help us do just that. It may allow that sabbatical to travel or be with family, or allow you to pull back hours worked to spend more time with family. A lot of times we focus so much on the money part, that we forget to focus on what our money can do to help us live better.

4. Stack professional skills. Build a moat to protect you from money worries by learning new skills. I like to call it “making yourself extremely hire-able”. This could also mean building a diverse set of income streams (work for a corporation and have a side business working for yourself for example).

5. Stop comparing yourself to others. Ever heard the term “keeping up with the Joneses?” Comparison is the thief of joy and it’s easy to “worry” that you’re not doing as well as you should. There is no “should be”. Your financial life is unique to you and YOUR needs!

You do have the ability to turn worry into mindfulness.

Worry has a negative connotation to it because it typical evokes stress. Mindfulness can evoke gratitude. This is where we want to be.

Food For Thought 🧠

"Experience is what you get when you didn’t get what you wanted.”
- Howard Marks

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.