By: Edward Leone Jr. CFP RFC RIA MBA DMD
Contact Information: 303-478-6793 edleonedds@gmail.com
Emotion and concern appears to be growing over the potential direction of equity markets. Such factors as interest rate levels, tax reform legislation, international economic activity and the potential for growth in the US economy are all at play. None of us have the power to foresee or predict the future. We will do best to engage investments in a diversified portfolio asset allocation which can take advantage of growth potential but mitigate to some extent negative forces if they occur. A factor which is going to be in high-profile at the beginning of 2018 has to do with the composition of leadership at the Federal Reserve Bank. Will there be adjustments to monetary policy initiatives? Will they wind down the $4.5 trillion in assets held? Will there be some consideration for return to a gold standard or another Bretton Woods type effort to stabilize the relationship of currencies internationally? It is clear that the current status of the Federal Reserve has saved the banking industry and the economy in some ways; however, this body is not in any position to combat another recession in the near future.
All individuals saving for retirement must be concerned about protecting investment asset principal, the effects of inflation on the purchasing power of assets in the portfolio and the opportunity to generate income when that becomes necessary. These last ten years have presented challenges to these concerns. Interest rates are low, employee benefit structures are changing, government tax burdens are high and economic activity is increasing at a very slow pace. Savers are losing money after the effects of taxes and inflation. Social Security and Medicare are in poor financial condition. It may be necessary in the near future to reduce some of the benefits in these programs. It is projected that a retired married couple at age 65 will likely spend up to $270,000 in medical expenses above Medicare benefits through remaining living years. Strive to make your IRA or 401K the most valuable asset you possess. Plan to save 12% to 15% of annual income or more if possible for the purpose of retirement each year and plan a longer working career. Take advantage of such vehicles as HSAs to supplement health care costs. Employ tax advantaged strategies when possible.
It is my sincerest hope that our Federal and State legislative branches along with the executive entities which compose our government at these levels will cooperate and engage in long-term efforts to address many of the concerns expressed above!
For The Record:
DJIA 22,860.63
S&P 500 2552.12
NASDAQ 6600.41
Suggested Reading: “Business Relationships That Last” By Ed Wallace
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