Expect Lower Returns for Several Years

The recent market volatility from the Brexit decision by the UK is just the latest event to cause investors to worry about their portfolio’s. And while the markets rebounded fairly quickly the pattern of slight gain, stagnant, slight loss, slight gain, etc. continues. Worries about the economy in China, what will happen with the rest of the EU, our own political issues and sluggish economy, it seems to be a never ending cascade of poor news which keeps those nest eggs from getting the growth people were told they would be getting. So what is an investor to do?

To start, prepare for lower returns than the historical average. Rosy projections of 7–10% returns on balanced portfolios just isn’t in the near-term future. Investors need to be prepared for 4-5% returns and that is with fairly aggressive 70-30% type portfolios. However, the volatility in such portfolios can be rather severe and many don’t have the stomach or the time to wait for the comeback.

The need for more guaranteed income is becoming apparent. That is not going to come from CD’s, Money Markets or bond portfolios. Annuities with income riders can offer some relief from the volatility and long term income concerns. One needs to be cautious regarding the variable annuities, however they have as much volatility as traditional investment portfolios and the expenses are generally quite high.
There is a need to do some planning in order to figure out the right mix of guaranteed income versus the traditional investment portfolio as you need the mix to make sure your retirement income never runs out. There should be flexibility built into your strategy so as conditions change you are not locked in and unable to take advantage of opportunities as they arise.

So if you are seeking unbiased, holistic advice and desire to create a plan that will provide for the best mix for your situation, contact me and let’s put a plan together for you!