The country is opening again after the severe disruptions we saw over the last year. But, the stimulus of the past year, coupled with the growing economy and some of the shortages we have experienced are causing rising prices. In fact, the Labor Department is reporting the fastest pace of inflation since 2008. So, what is inflation, and how you can help protect your portfolio?
First, let’s go over the differences between reflation and inflation. Reflation is more akin to what we are seeing now –price increases due to the reopening and growing economy, as the economy works its way back to full employment. Inflation is generally increasing prices in a more stable situation – when an economy is at full capacity, and unemployment is generally low.
To most of us, higher prices affect us negatively, regardless of the root cause. Shopkick, a retail marketing app, surveyed 19,000 con-sumers to see what their experience with inflation was. Of those, 86% have noticed increased prices, and 83% plan to tighten their belts because of it.
Inflation is a problem because it eats at the value of your retirement savings. Average inflation is about 2.9% according to trading-economics.com. So, even in optimal economic conditions, you’re losing 2.9% or more of your savings most years. But there are some strategies you can use to help protect yourself, your family, and your hard-earned money.
First, there are certain asset classes that are historically more resistant to inflation, like real estate. If you do not want to own property yourself, there are Real Estate Investment Trusts, ETFs, and other strategies that act as a good inflation hedge. Commodities are also often considered a classic inflation hedge because Inflation means rising prices. Commodity prices usually rise the most, as it takes a long time to build new capacity to satisfy the demand.
Second, Treasury Inflation Protected Securities, or TIPS are another classic option because they are designed to increase in value to help keep up with inflation.
Finally, it may seem counterintuitive, but continuing to invest in the stock market is generally a good hedge against inflation because the market tends to outpace inflation. Stocks with low pricing power can be especially effective – even though this is the exact opposite of what investors usually look for. Companies with in-demand products can raise prices any time, and attract exceptional valuations. But when prices are rising everywhere, the weaker, less popular companies can also price more aggressively, and pricing power becomes less important. In such an environment cheap, or “value,” stocks in fiercely competitive sectors such as telecommunications or cable TV become more attractive.
These are just a few of the steps and strategies we’re using with clients to help them outpace inflation. As markets and economic conditions continue to evolve, we’ll continue to update our strategies and help clients adjust to changing and often volatile markets.
Posted By Lineweaver Financial Group
September 18, 2025
Category: Tax
By Mark Sipos, LFG Tax Director Federal Reserve interest rate drops indirectly impact taxes by influencing the economy, which can affect how and what you're taxed on. Lower rates can lead to higher asset values or increasing potential capital gains taxes, but they also reduce inflation's effect on tax bracket adjustments, potentially pushing more income into higher tax brackets. Additionally, lower rates encourage borrowing and spending, which can be inflationary and impact future tax policies, and can make certain charitable giving strategies more attractive. Impact on Income and Capital Gains Taxes Inflation and Tax Brackets: Lower interest rates are often linked to slowing inflation. Since federal tax brackets and standard deductions are adjusted for inflation, a slowdown in inflation means smaller adjustments, potentially pushing more of your income into higher tax brackets and increasing your tax liability. Asset Values and Capital Gains: Lower borrowing costs from rate cuts can boost asset values. This increased value can lead to higher capital gains when those assets are sold, potentially resulting in higher capital gains taxes. Higher Interest Income Tax: Lower rates mean lower interest earned on savings accounts and investments, but this lower interest income is still taxable at ordinary income tax rates. Tax-free investments or qualified dividends may be more tax-efficient. Impact on Tax Policy Shifting Tax Structures: Sustained low
Posted By Lineweaver Financial Group
September 18, 2025
Category: Market Commentary
By Chad Roope, CFA ®, Chief Investment Officer This month, we highlight the key outcomes of the Federal Reserve (Fed) interest rate decision announced on Sept. 17. Overall, the decision was what we expected. Here is a brief summary: Interest rate cut: The Fed cut its federal funds rate by 0.25 percentage point, lowering the target range to 4.00%–4.25%. This is the first rate cut since December 2024. Voting: The decision was mostly unanimous: 11 out of 12 voting members supported the 0.25-point cut. The sole dissenting vote came from Stephen I. Miran, who preferred a larger cut of 0.50 percentage points. Balance of risks & stance: The Fed noted that growth has moderated, job gains have slowed, and unemployment has edged up, though it still remains low. Inflation remains elevated but isn’t accelerating at the same pace; there’s more concern now about economic weakness and risks to employment. The Fed emphasized that it will carefully assess incoming data and adjust policy as appropriate. Projections / Outlook From the Fed’s Summary of Economic Projections released alongside the decision: GDP growth: The median projection for U.S. real GDP growth in 2025 is about 1.6%, rising modestly in subsequent years. Unemployment rate: The unemployment rate is expected to be around 4.5% in 2025, with slight declines in 2026-2027, barring worse-than-anticipated weakening. Inflation (PCE): Inflation (the PCE m
Posted By Lineweaver Financial Group
August 12, 2025
Category: Tax Planning
By Mark Sipos, LFG Tax Director The passage of the One Big Beautiful Bill Act has been one of the most discussed topics coming out of Washington in the past few weeks. LFG Tax Services is diving into the new legislation, deciphering what it means for our clients, and keeping a close watch on tax planning opportunities and IRS interpretations of some of its components. Here are a few highlights we think will be of interest to you: The TCJA rate schedules for tax years beginning after December 31, 2017, are now permanently extended, as well as several key parts of the 2017 Act. No Tax on Tips: A temporary deduction of up to $25,000 in tip income for workers in “customarily tipped” occupations. Individuals phased out for MAGI above $150,000 and Joint filers at $300,000. Expires December 31, 2028. No Tax on Overtime: Temporary above-the-line deduction of $12,500 (single) / $25,000 (joint). Deduction phases out at $150,000 of MAGI (single) / $300,000 (joint), expiring at the end of 2028. The lifetime estate tax exemption has been permanently increased to $15 million (indexed for inflation) per US person. The Act stopped short of a full repeal and would essentially extend the current generous lifetime estate tax exemption. The limit means that only the wealthiest 1% or fewer taxpayers would ever face a tax on their estate after death. The qualified business income deduction under IRC Section 199A is now made permanent at 20%. The phase-in of the limit
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