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IN THIS ISSUE: Rate update, new tax rules, and investing your HSA |
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THE HEADLINES
Making the cutWhat happened: Last week the Federal Reserve cut interest rates by another quarter percentage point. The result: The federal funds rate is at its lowest level in nearly 3 years. But a lack of data complicated their decision.
Here’s why: The Fed considers a broad range of data points when making decisions, with federal government data releases (think: the jobs report) being the gold standard. The government shutdown has delayed many releases, with the exception of the recent inflation report. Despite low visibility, the Fed continued on its rate-slashing path. This lack of new data may make it harder to predict what the Fed might do when they meet again next month. |
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What it means for you: Rate cuts typically mean lower interest payments on debt such as credit cards, adjustable-rate mortgages, and home equity lines of credit. That could save you money. It can also mean falling rates on short-term fixed income, like money-market funds and short-term Treasurys and CDs. With dipping yields, you may want to evaluate where you keep your money. Here are
7 ways to earn more on your cash. |
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Shutdown updateWhat’s happening: US gross domestic product (GDP) growth could currently be decreasing 0.1 to 0.2 percentage points each week, according to economists.1
Here’s why: Lawmakers still haven’t reached an agreement to fund the government, with Democrats calling for increased health care funding. When the federal government is closed, they spend less on goods and services, which could affect GDP growth. On top of that, many federal workers aren’t getting paid and companies are holding off on hiring. That could be leading some Americans to spend less. Consumer spending makes up a significant portion of US GDP.
What it means for you: The shutdown, which soon could become the longest in US history, hasn’t had a big impact on the stock market so far. That’s a good reminder: During times of uncertainty, it helps to be confident about your investing plan. Here are some ways to help stick to your long-term plan.
Speaking of, uncertain times can also be a good reminder to check on your emergency savings. Fidelity suggests starting with a $1,000 cash buffer, then working toward saving 3 to 6 months’ worth of essential expenses. Shooting for the higher end of that range may offer you more peace of mind. Need to build yours up? Follow these 8 smart tips to save more. |
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Share the wealthWhat’s happening: It’s giving season, so you may have charity on the mind. The tax legislation signed in July 2025 could affect how you choose to donate this year and next, and what you can deduct from your taxable income.
Tell me more: Changes are coming for tax-year 2026. Single filers can deduct up to $1,000 in qualified charitable donations ($2,000 for joint filers) without itemizing deductions. That’s on top of claiming the standard deduction. For itemizers, qualified charitable donations must exceed 0.5% of the taxpayer’s contribution base, generally adjusted gross income (AGI), to claim the deduction.
What it means for you: Continue to give according to your values and when it makes sense for you. If you want to factor in taxes, consider accelerating contributions in 2025, perhaps using a bunching strategy. Take
a 6-question quiz to find out whether a donor-advised fund—an investment account for charitable donations—might make sense for you for this purpose. A professional can help walk you through timing considerations.
Whenever you donate, learn how to evaluate charities to ensure your money is going to a good place. And don’t forget to check whether your employer matches donations to help yours go further.
(Resources linked above from Fidelity Charitable®, an independent 501(c)(3) public charity.) |
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WAYS TO HELP GENERATE RETIREMENT INCOME LATER |
WORTH A TRY?
Hit the limitWith a few months left in 2025, it’s time to check your progress toward your
IRA,
401(k) or
403(b), and
health savings account (HSA) contribution limits.
Maxing out your annual contributions boosts your savings, and, depending on the account and your eligibility, it could help you lower your taxable income.
Still room to contribute more? Here are 3 ideas:
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Think about setting up recurring transfers to these accounts or inching up the regular amount you’re already automatically contributing.
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Earmark part of any year-end bonus for these goals.
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Learn how to cut expenses by 10% and consider putting the money saved toward these accounts.
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HOW TO
Invest for rate and tax cutsWhen the Fed is reducing rates and corporate taxes are sliding, these investments could be poised to outperform, according to one Fidelity pro. |
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MONEY LIE DETECTOR
True or false? HSA dollars can be invested.
TrueWhile HSAs offer a tax-free way to pay for qualified medical expenses, they can be used for investing as well.2 If you’re enrolled in an HSA-eligible health plan and open an HSA, your contributions are pre-tax or tax-deductible (depending on your situation).
If you want to make the most of your HSA by investing some of the balance, consider setting aside a “cash cushion,” or some money kept in cash rather than in stocks to cover near-term expenses (here’s
how to figure out how much cash cushion you should keep).
For example, say you have $5,000 in your HSA. You may keep $3,000 in cash to use for qualified medical expenses now, and you could invest any money above that baseline for the future and even into retirement. Learn more about investing your HSA, plus
6 surprising HSA benefits you might not know. |
