By Jim Bruner, CFP ® , MPAS ® , CPWA ® , CEPA ® , Financial Advisor at UBS, Indian Wells, CA

Volatility and economic uncertainty may be good terms to describe the economy in 2022. The S&P 500 had its worst year since 2008, falling 19% in 2022; the Nasdaq fell 33%, and US stocks overall fell three quarters in a row—not encouraging for those in or near retirement, especially with more than 44% of Palm Springs households projected to include people 65 and over. Simultaneously, the Federal Reserve raised interest rates by 425 basis points, and inflation continues to be an issue.

59% of investors surveyed in a report from UBS say they expect higher inflation in 2023; 76% expect interest rates to increase, and more than half have already cut spending. Short-term investor optimism on the stock market decreased to 52% in November from 61% a year ago.

However, there are some positive signs for the economy. The S&P 500 moved up over 7% in the last three months of 2022; stocks overall have displayed some signs of rebound. The Fed has slowed the interest rate hike, most recently, to 50 basis points after four consecutive 75bp moves. The Greater Palm Springs Economic Report notes gains in employment over the past few years. And the most recent data from The UCR School of Business Center for Economic Forecasting & Development supports that 88,000 jobs were added back in to the Inland Empire since the pandemic; it expects business activity to rise between two to three percent in 2023.

We, at UBS, also anticipate a more favorable backdrop for markets as we progress into 2023, and key inflection points come into view with “A Year of Inflections”–– across inflation, interest rates, and economic growth. We are focusing on defensive investment choices, value, income, and diversification, overall.

What better time to reflect and reassess one’s financial plan than in a new year? Regardless of where you stand financially, each of us can benefit from pausing and reconsidering proven financial strategies. Following are 10 tips to consider.

1. Recognize how, and what, you are spending on – what is your current revenue or income after taxes? What are you spending on expenses? Are there trends on where you are spending and where you might save? How can you reduce credit card statements and other debt with a realistic plan? These are all questions to consider.
   
2. Develop a more informed budget – one option is to use the 50-30-20 rule. With this model, 50% should go toward “must-haves” such as food, rent, car insurance, and other expenses you can’t or shouldn’t live without; 30% should go toward discretionary expenses like entertainment or shopping; the last 20% should go toward savings and investments. The
   ratios can be adjusted slightly based on your personal income to reflect a strategy that works for you.
   
3. Pay down debt – reduce the constant worry of debt and growing interest. Make minimum required monthly payments, and pay more, if you can. Know the balances and interest rates for all of the credit cards and loans you have. Look for ways to refinance them at reduced rates, if possible, and shorten repayment timeframes.
   
4. Plan for retirement – you can never start too soon when it comes to saving for your golden years. The sooner you start, the more time funds have to grow. If your company offers a retirement plan, take advantage of it.
   
5. Invest for the longer-term as well – if you are looking for sustainable investments and/or are a younger investor with longer investment time horizons. These might include looking to smart mobility, automation, renewable energy. Some investors also leverage thematic investing, bringing together long-term trends and related social and environmental opportunities with their specific values.
   
6. Contribute to an HSA – Health Savings Accounts can provide tax advantages for individuals with high deductible health plans in saving for healthcare-related expenses. Often funds can be rolled over from one year to the next, to be used when you need them. There is usually no time limit on using these funds.
   
7. Increase financial knowledge – stay on top of the financial markets and how and why they might move to better understand your portfolio and investing strategy. Consider reading the local business section and other financial resources.
   
8. Ensure agreement on spending – talk with your spouse or partner, and even your kids, about money. Share stories about your experiences and what is important to you to get on the same page financially as a couple and as a family.
   
9. Invest in your and others’ well-being – local organizations are always looking for assistance, and especially in an unsettled economy. Consider donating time or money to organizations you believe in and want to support. These types of investments” often pay back in multiples, when it comes to one’s personal well-being and sense of giving back to others.
   
10. Invest in some things and experience in which you enjoy – if you are able, consider setting aside some funds to appreciate the benefits of money. Even better, consider doing so by supporting Palm Springs-area stores and restaurants.
    In taking steps to plan for spending, saving, and investing, investors are better able to know where they stand financially and can become more empowered.
    

Jim Bruner, CFP ® , MPAS ® , CPWA ® , CEPA ® , is a financial advisor with UBS Financial Services Inc. (Member FINRA and SIPC)  at 75 280 Highway 111, with over 30 years in the financial services industry. He joined UBS in 2007 and has helped to build a comprehensive wealth management business, serving professionals, entrepreneurs, retirees and their families locally with financial planning at its core. He is also on the board of the Palm Springs International Film Festival and a member of the Childhelp Palm Desert chapter. He has taught corporate finance at Cal State San Bernardino’s Palm Desert location. 

The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. The views expressed herein are those of the author and may not necessarily reflect the views of UBS Financial Services Inc.

The past performance of an index is not a guarantee of future results.  Each index reflects an unmanaged universe of securities without any deduction for advisory fees or other expenses that would reduce actual returns.  An actual investment in the securities included in the index would require an investor to incur transaction costs, which would lower the performance results.  Indices are not actively managed and investors cannot invest directly in the indices.

Investing involves risks and there is always the potential of losing money when you invest. Sustainable investing strategies aim to incorporate environmental, social and governance (ESG) considerations into investment process and portfolio construction. Strategies across geographies and styles approach ESG analysis and incorporate the findings in a variety of ways. The returns on portfolios consisting primarily of sustainable investments may be lower or higher than portfolios where ESG factors, exclusions, or other sustainability issues are not considered, and the investment opportunities available to such portfolios may also differ.

UBS Financial Services Inc., its affiliates and its employees do not provide tax or legal advice. You should consult with your personal tax and/or legal advisors regarding your particular situation.