Broker Check

The Weekly Wealth Report

September 26, 2022

Last week, Fed Chair Powell said the U.S. would not tame inflation without economic pain. This week heightened recession fears and sent stocks broadly lower.


On September 26, 1957, West Side Story, composed by Leonard Bernstein, opens at the Winter Garden Theatre on Broadway. For the groundbreaking musical, Bernstein provided a propulsive and rhapsodic score that many celebrate as his greatest achievement as a composer. However, even without the triumph of West Side Story, Bernstein’s place in musical history was firmly established. In addition to his work as a composer, the “Renaissance man of music” excelled as a conductor, a concert pianist, and a teacher who brought classical music to the masses.

For West Side Story, a reinterpretation of William Shakespeare’s Romeo and Juliet transposed onto New York’s West Side, Bernstein worked with the brilliant choreographer Jerome Robbins and the lyricist Stephen Sondheim. West Side Story tells the tale of a love affair between Tony, who is Polish American, and Maria, a Puerto Rican, set against an urban background of interracial warfare. With its gritty story and volatile dance sequences, West Side Story was the antithesis of traditional American musicals. Bernstein’s exhilarating, semi-operatic score runs throughout the play and keeps the tension and emotion high.

When it opened on September 26, 1957, West Side Story received a mixed critical response. Debuting one day after the forced integration of Central High School in Little Rock, the musical’s story of racial conflict was discomfiting to some. West Side Story won just two Tony Awards, for choreography and set design, but made an impressive maiden run of 732 performances. In 1961, a film version starring Natalie Wood, Rita Moreno, and Richard Beymer was an enormous hit and took home 10 Academy Awards, including Best Picture. The stage version of West Side Story was soon revived, and the musical is still performed today.


Yields Surge, Stocks Tumble

Last week’s meeting of the Federal Open Market Committee (FOMC) proved unsettling for the financial markets. It wasn’t only the widely expected announcement of another rate hike but a more hawkish message that rates may be heading higher for longer than anticipated. Fed officials indicated that any policy change might be further off than investors had contemplated.

The latest rate hike caused bond yields to rise, with two-year and ten-year Treasury note yields touching levels not seen in over a decade. Global central banks moved in tandem with the Fed, as the Bank of England, Swiss National Bank, and Norway’s Norges Bank, among others, also hiked rates.

Another Rate Hike

In its effort to cool inflationary forces, the Federal Reserve raised interest rates by 0.75% last week—the third consecutive rate increase of that size. Projections by FOMC members suggested that interest rates may increase by as much as 1.25 percentage points before year-end.

The FOMC also projects that unemployment will rise to 4.4% by December 2023. This projection is up from its current level of 3.7%, and that core inflation will be 4.5% by year-end. In June, Fed officials projected core inflation would be at 4.3% by year-end. They also indicated that interest rates may reach as high as 4.6% in 2023, without any rate cut likely until 2024.


You can thank Senator William Roth of Delaware for the creation of the IRA that bears his name. Senator Roth was known throughout his career as a fiscal conservative and consistent advocate for tax cuts during his 30-year career. So the main feature of a Roth IRA, introduced in 1998, shouldn’t be a surprise: tax-free withdrawals. What is a Roth IRA? A Roth IRA is a retirement savings account where distributions aren’t taxed, provided contributions are made with after-tax funds. Unlike a traditional IRA, withdrawals of both principal and interest occur tax free! This can amount to decades of tax-free growth. And just as importantly, it can result in decades of tax-free income during retirement.

Early withdrawals. Roth IRAs only penalize you for withdrawing investment earnings (not contributions) prior to age 59½. So if you need emergency cash, you can access some of the money penalty-free.

Home purchases. Once you’ve owned your Roth IRA for five years or more, you can withdraw up to $10,000 to purchase a home, penalty-free.

No Required Minimum Distributions (RMDs). Unlike traditional IRAs and 401(k)s, there are never any RMDs for Roth IRAs, so you can maintain the Roth IRA indefinitely.
Numerous funding sources. In addition to making regular contributions, a Roth IRA can also be funded by spousal IRA contributions, transfers, rollover contributions and conversions.

Income limits. There is an income cap for being able to contribute to a Roth IRA. However, there are no income limits on your ability to convert a traditional IRA to Roth IRA.

As one of the many valuable tools you should consider when building your path toward a fruitful retirement, the power of a Roth IRA is that it can help shelter your savings from taxes as it grows. Give us a call to discuss how a Roth IRA can positively impact your retirement planning. We're passionate about helping build a more fruitful retirement for folks just like you.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.

Have a great week!