Financial Market Update – Week of June 23 2025

Presented by Marc Aarons

Last week brought a decision by the Fed on its key interest rate and no respite in the Israel-Iran conflict, making it an opportune time to share a quick rundown of what happened and highlight what’s ahead. Here’s a snapshot of what you should know.

Stock Index Performance

• The S&P 500 dipped by 0.15%.
• The Nasdaq 100 fell by 0.02%.
• The Dow Jones Industrial Average was lower by 0.02%.

Federal Reserve & Interest Rates

• The Federal Reserve kept its main interest rate steady at a range of 4.25% to 4.5%, though Fed officials still see two quarter-point rate cuts in 2025.
• Federal Reserve Chair Jerome Powell said that tariffs will likely push inflation higher in the months ahead, citing early signs of price pressures and business plans to pass along higher costs from tariffs.
• The Fed lowered its U.S. growth forecast for 2025 from 1.7% to 1.4% and raised its inflation forecast to 3.1% from its 2.8% forecast in March.
• While the Fed is waiting to see if tariffs do spark those inflationary pressures, it has indicated it will sit tight as long as the labor market is stable.

Israel-Iran Conflict

• The attacks between the two countries ended week one with Iran’s supreme leader, Ayatollah Ali Khamenei, saying that Iran won’t surrender and warning that the U.S. will “undoubtedly be met with irreparable damage” if it enters the conflict.
• Brent crude oil closed last week at $77 a barrel, an 11% jump since Israel launched its air campaign against Iran.
• Financial markets are on edge with a worst-case scenario: Tehran could cut off ship traffic carrying oil and gas supplies through the Strait of Hormuz, potentially shocking the global economy.

Home Builder Sentiment & Retail Sales 

• Home builder sentiment reported a reading of 32, the lowest since December 2022, according to the National Association of Home Builders (NAHB). Any reading below 50 is considered contractionary.
• Homebuyers have been on hold due to higher mortgage rates, tariffs, and economic uncertainty. Builder confidence helps track the pace of home buying.
• Retail sales fell for the second consecutive month, declining by 0.09% in May, below the forecasted 0.06% decline.

The Week Ahead 

• This week’s attention will likely start with the level of U.S. involvement in the Middle East conflict, with the U.S. launching air strikes on Iranian nuclear facilities over the weekend.
• Early Purchasing Managers’ Index (PMI) survey data for the U.S. and eurozone will give insight into global economic trends and business confidence in June. Note that the data collected amid ongoing tariff uncertainty may also be exacerbated by tensions in the Middle East.
• Fresh inflation numbers will help guide expectations of monetary policy, as will consumer confidence surveys from both the Conference Board and the University of Michigan. U.S. trade data should also reflect the impact of tariffs.

That’s it for this week’s update! If you’d like to explore any of these topics further or have other questions as the week unfolds, don’t hesitate to reach out. I’m always here as a resource for you.

Please don’t hesitate to reach out with any questions or concerns.

Marc Aarons may be reached at 714-887-8000 or Email Marc

Money Managers inc. Website

Investment advisory and financial planning services are provided by Money Managers, Inc. a registered investment advisor.  Our CRD Number is 151602.  To access our most recent version of our Form ADV, Form ADV Part 2A and privacy policy, visit https://adviserinfo.sec.gov/. This information is for educational purposes only.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.

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Financial Market Update – Week of 4/21/2025

Presented by Marc Aarons

Hope you are doing well. Last week brought more tariff and interest rate developments, along with strong retail sales numbers. Read on for a bite-sized overview of what you should know.

Weekly Stock Index Performance

Major U.S. stock indexes traded modestly lower last week as tariff uncertainty persisted and export restrictions on semiconductor chips were announced.

• The S&P 500 finished the week lower by 1.50%.
• The Dow Jones Industrial Average fell by 2.66% for the week.
• The Nasdaq 100 declined by 2.31% last week.

Retail Clearance Sale

• The advanced estimate for March Retail Sales data showed a rise of 1.4% for the month, beating Dow Jones estimates of 1.2% — a large increase from February’s monthly increase of 0.2%. Motor vehicles and parts dealers in particular saw a surge in sales.
• Some analysts described it as akin to a “gigantic clearance sale” before tariff-impacted pricing, with the broad expectation for prices to be higher a year from now.  Could consumers be overly fearful of higher prices to come?

Interest(ing) Rates

• The European Central Bank (ECB) cut interest rates last week, leaving a feeling that the central bank has left the door open for more rate cuts while President Trump is urging Federal Reserve Chair Jerome Powell to do the same here at home. The drama between the two continues to pick up steam.
• Looking at rate cut probabilities in the U.S based on futures markets, there is an 86.2% chance of no change in interest rates at the May Fed meeting, leaving only a 13.8% chance of a quarter-point rate cut according to the CME FedWatch Tool at the close of last week.
• The ECB’s benchmark deposit rate sits at 2.25%, while the U.S. benchmark overnight lending rate currently sits at 4.33%.

Trade Tensions: Dollar Down, Gold Up

• The gold rally continued amidst trade tensions last week, with all-time highs made last week as the shiny yellow metal crossed the $3300 level. That’s a nearly 25% gain this year alone for the price of spot gold.
• On the other hand, the U.S. dollar has fallen somewhat sharply in 2025, with the U.S. Dollar Index (DXY) falling to three-year lows. The U.S. Dollar Index measures the U.S. Dollar’s strength against a basket of six major currencies. Trade tensions and uncertainty are factors.

The Week Ahead

• It’s a quiet week for economic data releases this week, with some Flash Manufacturing and Services data on Wednesday. Eyes will continue to be glued on tariff-related developments and earnings season in its early stages.

Please don’t hesitate to reach out with any questions or concerns.

Marc Aarons may be reached at 714-887-8000 or Email Marc

Money Managers inc. Website

This communication is from Money Managers, Inc.; a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here

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Retirement- Should You Leave Your 401(k) With Your Employer?

Presented by Marc Aarons

I thought I’d quickly reach out about an interesting trend I’ve seen with my retiring clients. More and more plans are offering retirees the option of keeping their funds in their employer-sponsored 401(k) upon retirement. Since this is relatively new, I wanted to explain the shift in thought and offer a few pros and cons as you think through your options.

The Shift in Thought

Plan sponsors are changing how they view 401(k)s. What used to be thought of as solely a vehicle for savings is now becoming a potential source of income during retirement. To facilitate that shift, more plan sponsors are adding in-plan annuities to their employees’ investment options.

As you near retirement, you may have the option to leave your assets where they are. Here are a few things to keep in mind as you decide.

Pros and Cons of Not Rolling Over Your 401(k) to an IRA

Pros:

• Leaving your 401(k) account with your employer may help you save on fees, since they can buy funds at institutional pricing rates.
• Company 401(k) plans have access to stable value funds similar to money market funds but with better interest rates.
• Funds in a 401(k) are protected by federal law from creditor judgments (other than IRS tax liens and spousal or child support orders), including bankruptcy.
• If your plan includes an annuity option, you could potentially receive guaranteed lifelong payouts similar to a pension.

Cons:

• You can’t make new contributions, nor will you be eligible for any employer contributions.
• You may have fewer investment choices. A typical 401(k) plan has a few dozen funds to select from, while an IRA can provide thousands of options.
• You might have a hard time managing and tracking your savings if you have multiple accounts. Consolidating your retirement accounts by rolling your 401(k)s into a single IRA can simplify your financial life.

This is a lot to consider, but I’m here to help. As soon as you know your retirement date, start asking about your options, or better yet, give me a call, and let’s review them together. As always, I’m just a phone call or email away.

Marc Aarons may be reached at 714-887-8000 or marc@ocmoneymanagers.com

www.ocmoneymanagers.com

This communication is from Money Managers, Inc.; a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.

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Third Quarter Financial Market Update 2023

Presented by Marc Aarons

I hope you are enjoying these last few months of the year. As we head into the final stretch of 2023, I wanted to reach out and offer a review of the third quarter’s key market and economic developments.

S&P 500: A Breather After Three Straight Positive Quarters

Overall, stock market bulls were on the retreat during the third quarter of 2023 as several major stock indexes traded lower in response to rising interest rates and a strong dollar.

In fact, after three consecutive positive quarters for the S&P 500, the large-cap index found some sellers in the third quarter. Utilities and real estate contributed to the selling, while the energy sector surged.

Tallying the numbers, the S&P 500 decreased by 3.65%, the Nasdaq 100 fell by 3.06%, and the Dow Jones Industrial Average fell by 2.62%.

Economy: Soft or Hard Landing?

Rising interest rates and stubborn inflation remain front and center. The Federal Reserve has clearly communicated its “higher for longer” expectations on interest rates, and the message is starting to sink into the markets.

A recession induced by a rate-hiking Fed and pesky inflation is still a distinct possibility. Interest rates rose steadily across various durations and products throughout the quarter, and a tighter lending environment is a factor in the financial markets.

Inflation Mixed for Quarter, Ticks Higher

Inflation metrics were mixed in the third quarter, with consumer inflation reversing its previous downward trend and picking up in August and September data releases.

The last Consumer Price Index (CPI) release of the quarter showed a 3.7% rise year-over-year in August versus 3.6 % expected. This was much higher than the 3.2% rise year-over-year in July. The recent uptick in headline consumer inflation helps to support the higher-for-longer interest rate narrative that the Fed is broadcasting.

Core CPI (which removes volatile food and energy) ran a little hot in August but remains in its downtrend for 2023, providing a mixed theme on inflation.

With that said, we don’t need to be economists to realize that food and energy are the things that are hurting our pockets.

Labor Market: Goldilocks?

Labor market resilience persisted throughout the third quarter, with solid payroll gains (187,000 in August, 187,000 in July, and 209,000 in June). Two out of those three numbers missed analyst consensus expectations, but not by much.

Some analysts call it the perfect labor market for the Fed, even goldilocks-like, as a gradual cooling is noted, yet with continued strength. A continuation of this pattern in employment data could help to cool the Fed’s rate-hiking desires.

The unemployment rate also showed a mixed picture for the third quarter, but there was a notable spike in unemployment in the last monthly data release of the quarter.

Fed Summary & Outlook

The third quarter featured two Federal Reserve meetings, with the Fed raising rates by 25 basis points in July and leaving rates unchanged at the September meeting. The result is a current target overnight lending rate of 5.25 – 5.50%, a 22-year high.

While the Fed left rates unchanged at the most recent meeting, it did let us know that policy could remain “restrictive”. The Fed also indicated it would need to see more evidence that inflation is under control for these restrictive levels to be changed.

At the end of the third quarter, markets were pricing an 81.7% probability of no rate hike at the November meeting (18.3% chance of a 25-basis-point hike) and a 64.8% probability of no hike in December (31.4% chance of a 25-basis-point hike), per the CME FedWatch Tool.

The consensus at the start of the fourth quarter is that there will be one more hike in 2023. The Fed is heavily data-dependent, so probabilities may shift over this quarter in relation to key data releases.

How High Will Rates Go?

That is the million-dollar question (or billion-dollar, adjusted for inflation)!

Jamie Dimon, CEO of JPMorgan, notably said, “I am not sure if the world is prepared for 7%,” when referring to the Federal Funds Rate.

But, ultimately, opinions differ. Let us remember that the interest rate-corresponding 10-year note yield sat near 4.57% at the close of the third quarter, but it traded above 5.06% from 1967 to 1998!  Yes, it spent 31 years above that threshold, and it actually reached highs north of 15% in 1981.

So, while many want to be the Nostradamuses in the room and say that the Fed is done hiking or rates have peaked, there is always the other side of the coin to consider.

Looking Ahead

It was an eventful quarter in the financial markets, and it is still a highly Fed-centric market, with any clues presented by labor and inflation data being front-and-center.

Investors may have to get used to higher rates, potentially even higher than present levels based on historical patterns. The good news is that the fourth quarter is historically the best quarter for stocks. Time will tell if that pattern holds true this year.

With that said, if there are any third-quarter market developments on your mind, or if there is anything else I can help with, please feel free to reply to this email or call me.  I am always here as a resource for you.

Marc Aarons may be reached at 714-887-8000 or marc@ocmoneymanagers.com

www.ocmoneymanagers.com

This communication is from Money Managers, Inc.; a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.

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Is the Fed Ready to Pause?

Presented by Marc Aarons

Over the years, the Fed has followed a similar pattern with interest rates. It raises interest rates, then pauses, so it can see how the economy is adjusting to the higher rates. So, when will the Fed be ready to pause?  The Federal Open Market Committee gave an update on its outlook for interest rates when it released the minutes from its November 2022 meeting.

“In addition, a substantial majority of participants judged that a slowing in the pace of (interest rate) increase(s) would likely soon be appropriate,” the Committee said. “A slower pace in these circumstances would better allow the Committee to assess progress toward its goals of maximum employment and price stability.”

It’s an encouraging update that leaves plenty of room for interpretation. But when investing, it’s best to focus on what you can control and understand that markets will fluctuate over time.

Marc Aarons may be reached at 714-887-8000 or marc@ocmoneymanagers.com

www.ocmoneymanagers.com

MMI Disclosure: This material was prepared by MarketingPro, Inc. for use by Marc Aarons. Money Managers, Inc.; is a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.  

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Unpacking the Summer Economy

Provided by Marc Aarons

In the financial world, some weeks are more important than others, and we just lived through a big one. Let’s unpack each of the four key stats:

The Fed. As expected, the Fed bumped up short-term rates again at its July meeting. But the markets breathed a sigh of relief in reaction. Investors believe the Fed is getting a handle on inflation, which may mean slower rate increases.

Inflation. It feels like inflation is trending lower – check out gasoline prices. But the Fed’s key inflation indicator, the personal consumption expenditures index, remained stubbornly high in June. Result? We’re still getting mixed signals.

GDP. The latest report showed a second straight quarterly contraction. Two quarters of negative growth would have been a recession by definition not long ago. Economists now look at more factors, such as jobs and hiring, before labeling an economy.

Company reports. They have been fantastic, with many companies checking in with better-than-expected results. In its July 29 update, FactSet reported that 73% of S&P 500 companies were surprised with earnings, and 66% were astonished by sales.

Enjoy the final weeks of summer!

Marc Aarons may be reached at 714-887-8000 or marc@ocmoneymanagers.com

ocmoneymanagers.com

MMI Disclosure: This material was prepared by MarketingPro, Inc. for use by Marc Aarons. Money Managers, Inc.; is a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.  

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Searching for the Goldilocks Economy

Provided by Marc Aarons

Last week, the Federal Reserve took an aggressive stance toward inflation by raising the key interest rate by three-quarters of a percentage point.  A move unseen since 1994.

With consumer prices soaring, pushing short-term rates higher is the Fed’s attempt to slow economic growth and rein in inflation, all while attempting to avoid a recession. Fed Chair Powell said that he expects rates to go up again at the July meeting and indicated that the Fed would take future decisions as they come.

Upon the news, investors initially seemed cheerful, but stock prices soon fell as the reality emerged that interest rates would continue to rise.

But it’s a tricky proposition.

Raise rates too much, and you may trigger a recession. Don’t raise rates enough, and you won’t be able to restore price stability. The Fed is looking for a Goldilocks moment when its monetary policy is “just right” to create a soft landing for the economy.

You may not have noticed, but early evidence shows inflation is starting to slow. I’m confident the Fed sees it, too. However, most people judge inflation by prices at the gas station and the grocery store, so inflation is genuine and painful until those prices trend lower.

But I remain an optimist. History shows that economies and markets move in cycles, so I believe the current trend is healthy in the long term. I also think smart economists at the Fed are making difficult decisions following an extraordinary couple of years.

In times like this, it’s good to remember that volatile markets should be considered when designing your financial strategy.

I’m excited for the second half of 2022 and expect things will look pretty different by year’s end. Meanwhile, I’m always on hand to answer your questions.

Marc Aarons may be reached at 714-887-8000 or marc@ocmoneymanagers.com.

ocmoneymanagers.com

MMI Disclosure: This material was prepared by MarketingPro, Inc., for use by Marc Aarons and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

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As inflation climbs, the Fed reacts.

 Provided by Marc Aarons

 At its June meeting, the Federal Reserve confirmed what many of us have suspected for some time: prices are rising. In fact, prices are climbing faster than many expected. In response, the Fed raised its inflation expectation to 3.4%, up from its March projection of 2.4%, effectively raising its inflation expectation by 42%.¹

The Fed’s course correction on inflation expectations and planned interest rate hikes unsettled the financial markets, with further volatility felt after St. Louis Fed President James Bullard said that the first interest rate hike could be as soon as 2022.²

The Fed also indicated that two interest rate hikes in 2023 were likely, despite signals last march that rates would remain unchanged until 2024.³

So, what’s an investor to do?

It’s important to remember that inflation is just one of the factors considered when creating a portfolio. If inflation trends higher than expected for some time, adjustments may need to occur.

Fed Chair Jerome Powell also said at the June meeting that he believes that inflation will be transitory. But as evidenced by the recent changes, the Fed remains ready to update its outlook as economic data continues to accumulate.

If you’re concerned about inflation, please reach out. As the economy continues to strengthen, economic trends and themes are evolving quickly. We’d welcome the chance to hear your thoughts.

Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

^{MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment}

^{Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}

^Citations

1. ^{The Wall Street Journal, June 16, 2021}
2. ^{StLouisFed.org, June 18, 2021}
3. ^{The Wall Street Journal, June 16, 2021}

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What to know about interest rates and yields. 

Provided by Marc Aarons

One time-tested principle of investing is, “when bond yields move higher, bond prices tend to move lower.”

Investors are doing a “double take” on the 10-year Treasury yield, which recently topped 1.5% — its highest level in about a year. With the increase in yield comes a drop in price.¹

For some, the first time they experience a change in bond prices is when they open their monthly statement and review their investments.

But before you check your February statement, here is some background that may help put the most recent move in long-term rates in perspective.

The interest rate on the 10-year Treasury dropped steadily in the first half of 2020 and bottomed at 0.54% in late July. While rates remain at low levels, the yield on the 10-Year Treasury has nearly tripled in the past seven months. That’s a significant increase in a relatively short period.²

Bond yields may increase for several reasons—some of them good (strong economic growth) and some of them concerning (accelerating inflation). Bond Investors are anticipating a pick-up in economic growth and appear concerned about inflation due to the Fed’s easy monetary stance and federal fiscal spending in response to the pandemic.

The question is, at what point do stock investors begin to worry about higher bond yields. That answer may be if 10-year Treasury yields start to rival the dividend yield on the S&P 500.³

Remember, the Federal Reserve has reiterated its support for its zero-interest-rate policy, but much of the Fed’s influence is on short-term interest rates. Market forces play a larger role in determining long-term rates like the 10-year Treasury.⁴

Bonds can play an important part in any portfolio, but like any investment, periods of volatility are expected. If you’re concerned about the outlook for bonds or the macro-economic trends behind the bond market’s rally, please give us a call. We’d welcome the chance to hear your perspective, and hopefully, we can provide some guidance.

Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

^{The market value of a bond will fluctuate with changes in interest rates. As rates rise, the value of existing bonds typically falls. If an investor sells a bond before maturity, it may be worth more or less than the initial purchase price. By holding a bond to maturity, an investor will receive the interest payments due plus your original principal, barring default by the issuer. Investments seeking to achieve higher yields also involve a higher degree of risk.}

^{Asset allocation and diversification are approaches to help manage investment risk. Asset allocation and diversification do not guarantee against investment loss.}

^{MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}

^Citations.

1. ^{U.S. Department of Treasury, February 26, 2021}
2. ^{CNBC.com, February 26, 2021}
3. ^{Multpl.com, February 26, 2021}
4. ^{The Wall Street Journal, February 24, 2021}

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What you need to know.

Provided by Marc Aarons

With the Federal Reserve keeping interest rates at or near zero, you may wonder about your mortgage. Is it a good time to refinance or even pay off the debt entirely? After all, your mortgage is one of the biggest expenses you may have in life, so why not rid yourself of that debt as soon as possible?¹

Not so fast. There are many reasons why keeping your mortgage could be a better option than paying it off. Yes, you may eliminate one of the largest bills you have every month, but there are benefits to maintaining your mortgage as well.

1. Losing all your gains on your investments. Using funds from your investments to pay off your mortgage early may mean you lose out on potential gains. However, by keeping your portfolio untouched, you increase the chances of a return on your investment.²
2. Not having funds available for other debt. Your mortgage very likely has the lowest interest rate of all your debt. Consider paying off your other consumer debts or student loans with higher interest rates before you consider paying off your mortgage.²
3. Losing your tax deductions. Mortgage interest can be taken as a tax deduction. However, paying off your mortgage may mean your taxes could be higher.²
4. Risking changes to your home’s value. If you own your house outright and there’s a sudden shift in the market, your home may be worth less than what you initially paid. Conversely, if you own 20% of your home, and the mortgage company or bank owns 80%, your losses are capped at 20%.²

Are you considering paying off your mortgage or another large debt? Let’s talk about how to best leverage your investments to help meet all your long-term goals.

Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

^{MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}

^{The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.}

^Citations

1. ^{Finance.Yahoo.com, November 5, 2020}
2. ^{FoxBusiness.com, November 3, 2020}

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