MONEY MONDAY 4/9/18
March jobs number released on Friday: 103,000 (smallest increase since last fall)… BUT… February was a really strong month. So, the country added an average of 202,000 jobs a month in the first quarter. That's still faster than the average gains in 2016 and 2017.
Why does the stock market keep freaking out abut all this "chicken" that the US and China keep playing? Because every move inches us closer to a full-blown trade war. Escalation (and continued retaliation) is a real threat.
The big fear is that tariffs will result in higher costs for manufacturers of everything from computer chips to smartphones, leading to a slowdown in corporate activity and weaker global economic growth… and higher prices for YOU, the consumer. That is all really bad for stocks.
There are a lot of things that the media and Wall Street focus on that don't bother us at all… but a global trade war is the one thing that DOES keep us up at night.
So what does this all mean for your money and investments? First off, you don't want to make any knee-jerk decisions, no matter what stocks might do in a given day.
But it could be a good idea to use this stock downturn to check your investment mix of stocks and bonds… and even "rebalance" back to your long-term targets.
HERE'S THE SIMPLY MONEY POINT
This is something that we're continuing to keep our eye on here at Simply Money Advisors. We'll let you know if or when you should start becoming really concerned.
Every Sunday, Simply Money is answering your money questions in the Cincinnati Enquirer.
Steve and Mary in Fort Thomas: We’re both nearing retirement and starting to get concerned about how much we have saved. Should we be buying an annuity to help with our cash flow?
At Simply Money Advisors, we've been helping families protect their money and make it grow for more than 20 years. And over those years, here are a few incorrect assumptions that we've heard clients make time and time again.
Social Security won't be around in the future: Currently, the Social Security Administration projects the trust fund will be depleted in 2034 (just 16 years from now). This means you'd get about 79% of your promised benefit. But you're still getting SOMETHING. Lower your expectations, but don't get rid of them all together.
You should follow the "4% Rule:" Born in the 1990s, the 4% rule became a rule of thumb that stated you could stretch their funds by withdrawing 4% per year. And yeah, that was great when bonds AND stocks we generating high returns for you. But today, with interest rates low and bonds no longer being a growth contributor, the 4% rule is more like a "rule of dumb." Truth is, everyone's withdrawal rate will be different.
"The plan rules"
Investment returns are everything: Way too many people focus too much energy on their investment returns — mostly because they are an immediate and tangible way to gauge the success or failure of your financial plan. But investment returns should only be judged in the proper scope of a long-term financial plan and over decades. But you can't control what markets do - so focus on what you CAN control, like your spending and saving.
Small changes don't add up: Quite the contrary, actually. Small amounts of savings can add up over time. That's the beauty of compounding. If you and your spouse can collectively save $500 a month, that would grow to about $260,000 in 20 years earning 7%. And if you can boost this amount by a little each year - like when you get a raise - you'll only be helping your cause.
Attention to detail matters
HERE'S THE SIMPLY MONEY POINT
Check your assumptions about retirement planning. And consider working with a trusted financial planner to help you get on the right track - and STAY on track.