Millionaires – September 2018

As we approach the second half of 2018, there is no shortage of signals merit worthy of attention among investors. Rising interest rates, tension regarding trade policy, and mid-term elections will surely hold our attention. Meanwhile, a strengthening US economy thankfully overshadows the noise of the Oval Office and politics in general.

A durable economic expansion has created abundant employment opportunities and the corresponding prosperity is amplified among workers that are also investors. The United States continues to be home to the most millionaires, followed by Japan, Germany, and China. The combined wealth of millionaires worldwide topped $70 trillion for the first time in 2017, according to Capgemini’s 2018 World Wealth Report. The report attributed the rise in wealth to an improving global economy and strong stock market performance.

Participating in the stock and bond markets has never been easier. A company sponsored 401(k) Retirement Plan is a logical starting point for most workers and Individual Retirement Accounts are available to everyone with an earned income. Unfortunately, a persistent, self-inflicted financial literacy gap continues to plague our society. A simple portfolio of stocks and bonds funded at a mere $500 per month and earning a 7.5% annual rate of return over 35 years generates a Maturity Value of $1,028,573.

A focus on growing assets and reducing liabilities does more for financial health than a large paycheck. After all, the country is littered with examples of high earners with low or even negative net worth. So, how do some low earners build high net worth? The answer is that they live within their means and invest a few dollars every month. As clients of ASG, you probably already have a good idea of your net worth. But if you don’t, ask your advisor to calculate it for you the next time you meet for a portfolio review. A mid-year review of the role of stocks, bonds, and cash in your portfolio is time well spent. We place high value on face-to-face meetings and always welcome your calls and text messages.

The record-setting stock market performance of last year seems unlikely to repeat itself, but it is reasonable to expect stocks to outperform both bonds and cash this year and beyond. What with the Federal Reserve now moving monetary policy from accommodative to neutral, cash and bonds offer higher yields. But, it is important for bond investors to remember that bond prices fall when interest rates rise. Rising interest rates and stock market volatility may create buying opportunities. We stand ready to assist you as you reach for your goals and build your net worth.

Happy summer to all the valued clients of ASG!

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