A year ago, at the end of March 2020, the US Stock Market1 was down over 20% and the world was scrambling into lockdown. Many experts wrote articles telling us where we would be in a year. I don't remember reading any that said the US Stock Market would be up over 62% over the next 12 months. But that's what happened.
Predicting any of that just won't happen. We should be prepared for market downturns once or twice a decade, while accepting we just can't know when they'll happen. We can't predict financial crises, but we should plan for them. That is our central role as a trusted financial advisor for our clients. To be a fiduciary who puts your interests first, helping you understand the range of possible outcomes to most reliably accomplish what matters most in your personal economy.
If you stayed in the market, it might be time for a victory lap. Q1 of 2021 has been up and down, but all Global equity markets finished the quarter in the black.
Q1 Global Equity Markets^
US Stock Market: +6.35%
International Developed Stocks4: +4.04%
Emerging Market Stocks5: +2.29%%
Global Real Estate6: +6.22%
Small Cap2 and Value stocks3 made a roaring return through Q1, up +12.7% and +21.17%, respectively. Suddenly reminding the masses why they've, on average, outperformed their counterparts (Large Cap and Growth stocks) through history. Conventional wisdom might expect that to continue as small businesses across the world inch toward full recovery.
However, as we forward-look to the rest of 2021, we'll stop well short of falling into "prediction-land". The focus will remain squarely on what we can control.
There are some big proposals coming out of Washington, with some seriously large dollar amounts attached (like, with 4 commas!). Let's keep a close eye on taxes, inflation, and a bit of momentum with interest rates. We can't change what comes in those realms, but we CAN affect how they impact YOU.
^Complete data contained within the full Q1 Market Review report. 1 US Stock Market represented by Russell 3000 index. 2 Small Cap represented by Russell 2000 Index. 3 Value stocks represented by Russell 2000 Value Index. 4 International Developed Stocks represented by MSCI World ex USA Index. 5 Emerging Market Stocks represented by MSCI Emerging Markets Index. 6 Global Real Estate represented by S&P Global REIT Index.
A Retiree's Guide to Key Dates in 2021
The 2020 tax-filing deadline was extended to May 17th, 2021, which means you have an extra month to make those 2020 IRA and Roth IRA contributions: Max of $7,000 for age 50 and older, $6,000 for everyone else.
*Check with your CPA to first understand your eligibility.
2021 Tax Guide
Social Security Changes to Expect in 2021
The Social Security Administration announced Cost-of-Living Adjustment (COLA) for benefits will be 1.3%. This results in the average retiree's monthly benefits increasing from $1,523 to $1,543.
Social Security 2021 Changes Fact Sheet
A Different Kind of Financial Advisor Problem is Looming...
The average age of Financial Advisors is about 55 and approximately one-fifth of advisors are 65 or older. An estimated 37% of Financial Advisors are expected to retire within the next 10 years. Meanwhile, the industry is struggling to attract and retain younger talent.
- What happens to your plans if your Advisor retires first?
- Are you passed off to the next rank-and-file firm employee?
- Are they grooming their eldest child to take over?
- Will the Advisor sell their practice and land you with a new firm entirely?
Does Replacing Some Bonds With Annuities Make Sense for You?
Some prominent names in retirement research believe so, but always consider carefully the needs of your own personal economy.