Ask Triangle – Feb. 3, 2023
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Article by
Kendra Erkamaa, CEO & Financial Advisor Triangle Financial Services, Inc.

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During this “Ask Triangle” session, we clarified the status of 2023 nontaxable accounts, provided a Federal Reserve update and gave a 2023 Outlook before answering your specific questions.

2023 nontaxable pensions and retirement accounts:

  • Historically, Iowa has always required state taxes on pensions and retirement accounts, so we are still waiting for a nontaxable implementation. The Triangle Financial team has been contacting state legislators and custodians to encourage implementing the change as soon as possible.
  • In the meantime, there is still the option of paying the tax and receiving a refund without penalty of overpayment. The loss risk would be the opportunity for interest growth.

Federal Reserve Update

  • The Federal Reserve raised interest rates by 25 basis points on February 5, 2023, increasing their target range to 4.5%-4.75%. We expect ongoing small incremental increases similar to this one.
  • With the Federal Reserve rate increase, we’ll also see an increase in credit card and auto loan rates, and mortgage rates will remain higher.

2023 Outlook:

  • CDs, money markets and multi-year guaranteed annuity rates are currently higher, between 4%-5%.
  • Annuity companies are experiencing unusually high application volumes and expect 3.5 times the numbers they are used to, so a backlog in applications is expected.
  • Schwab Yield accounts are seeing 4%-5% returns.
  • For the 2023 market outlook we may see a little bit of growth or loss but overall, we should see a pretty flat trend.

Ask Triangle:

Question: With this 2023 marketing outlook, what should I do?

Answer: There is not a blanket response to this question; any action an individual takes depends on many unique factors specific to that person, such as risk level, state of life, etc. How you respond or not needs to be appropriate for your unique situation.

That being said, our team is always planning for the long game—we don’t recommend any knee jerk responses. The Triangle Financial team monitors the market and your portfolio so you don’t have to. We know we have time to make some decisions. What you can do is know your game plan and priorities to feel confident you have long-term strategies in place.

Back in 2020 and 2021, we were already thinking about what could/would happen this year. We have individualized distribution and safety plans in place for our clients so they can continue working toward long-term financial goals, especially through short-term market volatility.

If you are concerned about what you are hearing or unsure how it affects your portfolio, we encourage you to call us or schedule a meeting.

Additional Resources:

Securities and Advisory Services offered through Harbour Investments, Inc. Member SIPC & FINRA.