There's a new paradigm in valuing stocks and bonds. The change in the relative value of stocks versus bonds – the two primary investments in a diversified portfolio -- has major implications for strategic retirement investors. Here's what's happening.
The commemoration of 9/11 and pullout of U.S. troops from Afghanistan marked the passing of 20 difficult years. Historians will debate the lessons to be drawn from this tumultuous time for decades to come. For investors, however, a crucial investment lesson to be drawn is clear: In the past 20 years, amid the tumult and difficulties, broadly diversifying paid off, and quite convincingly at that!
An income tax hike is widely expected, but the important question is how it would affect your personal situation. Here’s help in understanding and planning for the expected change in tax brackets.
Year-end tax planning is more important than usual because it occurs concurrently with a turning point in U.S. tax policy. For the first time in 40 years, taxes on income and wealth transfers are headed higher.
Tax law and estate planning might bore you to death, but this brief tip could make a life-changing financial difference to your surviving spouse, and other loved ones, including disabled and chronically ill family or friends, as well any minor children in your life.
Here's a retirement planning alert built for current financial economic circumstances - an explanation of the current situation followed by a timely and high-value retirement investing tip.
For the five years through June 30, U.S. stocks were the No. 1 performing investment of major securities indexes! The S&P 500 index more than doubled in value, despite the pandemic! Remarkably, U.S. stocks were No. 1, not only for this five-year period through June 30, 2021, but for the past FIVE five-year periods ended June 30! And today the S&P 500 closed at a record high!
If you suffer from financial fear and anxiety, talking about it is likely to help.
The most important measure of the financial strength of the United States is the Standard & Poor's 500 stock index. It’s widely watched but constantly surprising.
- Read More
Stocks Averaged A 7.35% Premium Annually Over T-Bills For Past Two Decades
Published Tuesday, July 13, 2021 at: 5:04 PM EDT
The stock market has been new breaking record highs for nearly a year now, and stocks are high-priced by some traditional historical measures, such as trailing 12-month earnings. With some pundits saying stock market risk is high, this is a good time to note how investors have been compensated for taking the extra risk of investing in stocks instead of parking cash in a so-called riskless asset like 90-day Treasury bills.
Stocks, as measured by the Standard & Poor’s 500, in the 20 years ended June 30th, 2021, averaged an 8.61% annual return, compared to the meager 1.26% annual return on a the risk-free 90-day U.S Treasury Bill.
Since the T- Bill is backed by the full faith and credit of the U.S. Government, it is considered a riskless investment -- while the value of stocks is subject to ups and downs and, in theory, your entire investment could be lost in stocks. Subtracting the return on T- Bills from the return on stocks, the resulting 7.35% is the premium paid for taking the risk of owning U.S. stocks over the 20-year period. To be clear, investing in America’s 500 largest publicly-held companies earned investors an average of 7.35% more annually than a risk-free investment.
This 20-year period encompassed three frightening bear markets -- the tech stock crash of 2002, the financial crisis of 2008, and the Covid downturn of early 2020. Past performance is no guarantee of your future results and that, paradoxically, is precisely why investors are paid a premium for owning stocks. Yes, stocks are risky and that’s why they have had a higher return than guaranteed investments throughout history.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
©2021 Advisor Products Inc. All Rights Reserved.