Save – April 2017

Good news! This year, April 15 is on a Saturday. Emancipation Day is observed on Monday, April 17. Therefore, the tax filing deadline is April 18. Still, the window to fund an IRA for the prior year (2016) is closing. Please reach out to your advisor if you haven’t already funded your IRA for 2016 or to calculate a funding shortfall.

Setting aside funds for the future is obviously easier when earning power is strong and the scales are tipped towards abundance. But even in the face of scarcity, the job still needs to be done. Saving and investing isn’t an on again/off again proposition. It is done for our entire adult lives. The only question is how we allocate hard won savings to the major asset classes of stocks, bonds, cash, real estate, and alternatives. A key role for ASG is to provide crystal clear asset allocation advice that is unique to your individual circumstances, your risk tolerance, and your age.

The US stock market was already expensive last year from a valuation standpoint. Since then, there have been so many new records set that it is hard to keep count. The economy will have to expand at a higher rate to justify current valuations. Previously, monetary policy provided tailwind to the stock market with low interest rates. This may further unwind in 2017. We will keep a close watch on rate decisions made by the FOMC (Federal Open Market Committee) this month and again in June. If rates rise, and the interest paid to bond holders exceeds the dividend paid to stock holders, stocks will have competition for the first time in many years.

Recent research by Morningstar points out that higher prices for stocks and bonds today suggest that investors can likely expect lower returns in the future. Saving more is an elegant cure to lower expected future returns except that it means spending less. Working longer also solves the lower future return problem and many older citizens have chosen to do just that. But accepting a lower standard of living when we are old is a suboptimal outcome and we favor a little belt tightening today to better support ourselves in the future.

Now is as good a time as ever to meet with your advisor and refresh your goals. Nothing beats the value of meeting face to face. We look forward to seeing you.

Asset Strategies Group, LLC / an Independent Investment Advisor Firm

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