Sharing my latest thoughts on money and life, with an eye to empowering more women to financial confidence.

I'VE BEEN PONDERING

As you might imagine, my email inbox has been deluged with summaries of the One Big Beautiful (??) Bill Act. While there are a LOT of provisions in the new law that do all kinds of things🙄, the biggest financial planning impact is likely around taxes. It has taken away the tax uncertainty we were facing (see TAX TIME below), and, whether you find it good or bad, at least we know what we’re working with.

In other areas, I think it’s fair to say that Trump 2 has brought us plenty of uncertainty. For example with tariffs — will he or won’t he? And the conflicts in Ukraine and Gaza — which side is he on?

I’m afraid I don’t have any answers for you, and I don’t know how it will all turn out. But I do know one thing for sure. Uncertainty is to be expected. It is the rule, not the exception.

For our investments, the last five years have offered a powerful lesson in the routine nature of uncertainty and the market’s ability to overcome it. Just as all of history has shown.

In this decade alone, we’ve experienced a pandemic, multiple concerning wars, debt ceiling debates, election surprises, a Chinese spy balloon, a crypto boom to bust, two bear markets, rampant inflation, recession fears, tariffs, and a wide variety of other alarming headlines that caused some level of panic again and again. And yet, the market has thrived through it all.

This is important because there seems to be a common misconception that uncertainty equals risk, which can lead some investors to make regrettable mistakes.

I say misconception because I believe, from an investment perspective, risk is not a result of unexpected events happening, but from inappropriately reacting to those events. Those are two very different things.

Today, the market uncertainty—that is inevitably perceived as a significant risk—is a strange combination of forces: Stocks are at all-time highs, valuations of publicly-traded companies are stretched, and both economic and geopolitical tensions are running high.

Understandably, I keep hearing some version of the same question, “How can stock prices be so high when uncertainty feels equally high?” I mean, something has to give…doesn’t it?

A common metric for professional investors is stock valuations. Today they are historically high. That being the case, it’s worth revisiting something that respected investor and writer Howard Marks pointed out in his book The Most Important Thing Illuminated,

So, where does this leave us? Is there a risk that stock prices will fall?

Of course. That possibility is always present.

But we must also acknowledge the possibility that stocks will continue to rise, just as they have done, seemingly against all odds, for quite some time now. That, too, has been an unexpected and surprising “risk” for those who have been betting against that happening, and may well continue to be a risk as we move forward.

Nobody knows what will happen next. And that’s kind of the point.

When both of these distinct possibilities are in play, that stocks may rise or fall (and they always are), how should we respond amid the uncertainty?

Naturally, I don’t think we should try to avoid uncertainty by exiting the market to wait for clearer skies. As I just alluded to, that’s a well-worn path to disappointment, so it’s probably best not to try.

Since uncertainty isn’t going away, we’d be wise to focus on building resilience rather than striving to avoid the unavoidable.

That’s the kind of planning that we do every day. We don’t and won’t attempt to predict the future, which is a fool’s errand. Instead, we work hard to create financial plans—and investment portfolios that stand in service to that plan—that can withstand whatever the future holds. And we will continue working to that end.

If you would like to review your plan, I’m happy to talk anytime. As always, stay the course!

TAX TIME

On the tax front, the headline from the OBBBA is that the tax brackets we have been living under since the previous Trump administration, which were set in the original law to “sunset” or expire at the end of this year, have been extended.

Taxes are something we here in financial planning land pay a lot of attention to, because paying 22% to Uncle Sam on your IRA withdrawals is a lot different than paying 39.6%.

That is no ethical judgment on the idea of taxes or where the money goes or the philosophy behind it. It’s just dealing with reality — and helping you be as intentional as possible in navigating this landscape. Which, truly, is our goal in all your money dealings -- to help you increase intentionality.

Clean energy tax credits on electric cars and energy efficiency investments for your home (such as solar panels) are being repealed or phased out really soon. So if one of those purchases was in your plan, pay attention and adjust accordingly.

There are a couple of other tax provisions of the OBBB that have planning implications, affecting areas like charitable giving, federal deductibility of state and local taxes. Know that we're paying attention and will discuss with you at the next meetings!

TOPS FROM OPS

You may email with Fran and/or Terry and/or Janice and/or me. You may feel confused sometimes on who to contact for a specific question. Here’s an idea: you could email our “universal” address that goes to everyone!

SOFIA@SOFIAFINANCIAL.COM goes to each of us — then we can sort out who takes the lead. And you don’t have to worry if someone is on vacation or getting unpleasant dental work done all day. 😁

RECENT SIGHTINGS

• Have you heard of Financial Therapy? Yes it’s a real thing (and I am not a therapist!), which delves into the intersection of money and emotions - with a trained mental health professional. Hear all about it on episode 115 of Take Back Retirement with our guest Wendy Wright.
• In mid-July I was invited to participate in a type of think-tank on the future of the delivery of financial advice, in this age of technology and artificial intelligence. It was a great group of both financial advisors and tech company leaders, thinking deeply about how we stay human and keep the essential connection in what we do. When the white paper is ready I will share it.

PERSONAL

Saturday I will head for our family’s annual two-week vacation to Nantucket. The car will be full (but not as full as the old days when we had the baby accoutrements!). There will be beach chairs and umbrella, …. And even my stand-up paddleboard. I will likely bring more books than I will read, more clothes than I will need, and forget something essential that will require an immediate trip to the pharmacy.

The goal is to spend as many hours as possible with a view like this one. Vitamin Sea for the win!

LET'S CONNECT!

How about you? Have you been able to get away this summer? What’s your favorite view? Bonus points for pictures! We love your pictures (and promise not to share them!).

Be careful out there,

Stephanie

Whenever you're ready, there are three ways we can help:

1. Download our free Roadmap for Financial Clarity.
2. Schedule a no-strings-attached meeting with us to see if we're a good fit by scheduling an appointment here: link to calendar.
3. Feel free to reply to this email with any questions you might have, and we'll do our best to provide a helpful response.

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