As the final quarter of the year begins, markets are grappling with rising interest rates, reaccelerating inflation, and continued economic uncertainty. These factors led the S&P 500 to decline 3.3% (with reinvested dividends) during the third quarter, while the U.S. Aggregate bond index lost 3.2%. These issues echo the many concerns investors faced last year when inflation and higher rates resulted in a bear market. Other factors, including the narrowly averted government shutdown and cracks in China's economy, have also added to investor fears. Amid the seemingly constant stream of negative headlines, how can we prepare for the final months of the year?
We discuss in this episode of The Wealth Effect Podcast:
📊 Stock and Bond Market Returns
📈 Real Interest Rates at 16-year Highs
📊 GDP Growth Stronger Than Expected
🏦 Monetary Policy Higher for Longer
🎛️ Investors Have Control Over Financial Outcomes
Matt Faubion, CFP®
Founder - Wealth Manager
Show notes and charts:
1. Stocks have held onto strong gains while bonds have struggled
2. Interest rates have risen to 16-year highs
3. The economy has been stronger than expected
4. The Fed expects to keep rates higher for longer
5. Investors are fully in control of how and when they save and invest
So, while it's natural to be cautious when markets are seemingly moving sideways, and there are negative headlines, history shows that investing earlier - and staying invested - are the best ways to increase the odds of financial success. This fact highlights the importance of crafting and executing a tailored wealth strategy aligned with one's unique circumstances, goals, and risk preferences so that there is thought, intention, a "why," and ultimately confidence behind every financial decision, from savings rates to asset allocations.
The bottom line: Despite the many reasons to be negative, the reality is that the market and economic environment have outperformed expectations. However, challenges still remain ahead, and a wide range of economic outcomes are possible. Investing is always a matter of decision-making in the face of uncertainty. Now more than ever, it is time for investors to maintain perspective, diversify, and mentally (and in portfolios) prepare for both positive and negative market outcomes.
What is the proper portfolio strategy for you as an investor and your wealth plan? Let's find out - Reach out through the link below to start the first step in our complimentary risk and portfolio evaluation!
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