Quarterly review of financial planning assets

Quarter in Review

By Jeb Graham CFP©

Here we are, already in the first quarter of 2019. This last quarter and 2018 as a whole proved to be an interesting one. The third quarter of 2018 ended with S&P trading at record highs. As the fourth began, we started on a negative note in October, tried to bounce back in November, and ended the quarter with one of the worst Decembers in recent market history. As I always like to say, another buying opportunity may have presented itself!

The feds decided to raise interest rates for the fourth time of 2018 in December, which also created some instability in the markets. This coupled with the threat of government shutdown and the trade wars created the perfect opportunity for a market correction.

As all of this has happened, the underlying fundamentals of the economy have remained strong, and many believe that there is reason for optimism as we move into 2019. Where growth stocks have taken the front seat over the past few years, there is a strong argument that a shift to value investing and steady dividend payers may take the lead in the next few years. This also means that active management versus passively owning index funds might really show its value to investors over the next few years, especially if the markets struggle to produce the same types of returns that they have over the past five years. Investors are likely to continue to get creative in the search for bond alternatives over the next year as the Fed has indicated that there will likely be additional rate hikes in 2019, although there may not be as many rate hikes as were originally predicted.

As an investor, 2019 should continue to be a great time to focus on controlling the factors that are within your control, such as savings rates (saving as much as you can), making sure that your allocation fits your risk tolerance, and taking advantage of the tax deferred programs that are available to you. There is a new set of rules in tax deferred plans, such as 401Ks and IRAs, as the maximum allowable contribution has gone up in many of the plans, which gives you an opportunity to save more money for your retirement, while getting a little tax incentive to do so.

Contact Jeb at jeb.graham@metcalfpartners.com