via Forbes: 2018 has been a great year to be invested in stocks, especially in FANGs — which have been driving US equities to new highs; and in Cannabis stock, which have been the new Bitcoin.
But not a good year if you were invested in US Treasuries and gold, both of which have been heading south.
What about 2019? What’s the best place to be?
Experts have different tips as to where that place will be in the new investment universe of rising interest rates, trade wars and a growing political divide at home.
For Zach Gray, the Chief Retirement Strategist and Founder of Wall Street Financial Group, the number one tip to investors is to scale back bond holdings. “As we close in on the end of 2018, my number one tip for 2019 is be aware of interest rate hikes &how they affect your portfolio,” says Gray.” Many retirees/pre-retirees approach retirement by becoming a bit more cautious with their investments. Many times, this means increasing the bond holdings in one’s portfolio. With rate hikes affecting bond portfolios negatively (as rates go up, bond performance falls), please be aware of how this could adversely affect what many thought to be safe returns. The feds are projecting three rate hikes in 2019, and that could very well ensure some loss to many bond portfolios.”
Brian Decker, a financial planner and founder of Decker Retirement Planning Inc., agrees. “It’s not bonds since interest rates worldwide are starting to trend higher,”says Decker. And he doesn’t like stocks either. “It is not stocks since market valuations have ONLY been higher in 1999 and earnings comps are going to be tough with the Trump tax breaks baked into to last year’s numbers.”
But he likes commodities like gold and silver as a protection to equity gains.
“I believe the people who thrive in 2019 will have 25% exposure to commodities like Gold and Silver…..for two reasons,” he adds. “First, the US Dollar should start to trend lower with the world economies slowing down which will be great for precious metals. Second, commodities, as an asset class, are a hated group and extremely shorted right now. These markets go up quickly and I believe there are large gains to be made in this group next year.”
Kathy Longo, the president and founder of Flourish Wealth Management®, believes that it is time for “portfolio rebalancing.”“Sitting at the end of a 10-year equity market recovery, this is the time where individuals should take risk off the table and balance market exposure. We recommend following the old adage of “selling high and buying low” by trimming position sizes in your winners (most likely US Equities, particularly in the Large Cap Growth space) to reinvest in International Equities, Emerging Markets, Small Cap Value, or Fixed Income. In addition, we think that individuals should have a plan for any cash needed from their portfolio for the next two years. We never know when a market correction might occur, so it helps to have a cash reserve ready to avoid being forced to sell stocks during a downturn to meet cash needs.”
David Brooks Sr., an Investment Adviser Representative (IAR) and the founder-president of Retire SMART, thinks it’s time for investors to take a close look at their tax bill. “My number one tip for 2019 would be to understand how your assets or income will be taxed once you decide to take income in retirement or the government makes you take your required minimum distributions,” says Brooks.
“Generally speaking, the markets have done well the last 10 years or so, therefore most folks have had healthy gains in their retirement portfolios. However, very few people have given much thought about how those gains will be taxed – much less made a plan to minimize those taxes. It’s important to consider your non-quailfied, traditional, and ROTH dollars will all be taxed differently. Depending on how each of your accounts will be taxed, you may decide to pull from one account over another in a certain year.”
Apparently, there’s no number one tip for everyone. There are number one tips for different investors, depending on their personal profile, an on their financial goals and constraints, all of which determine the suitability of different investments in matching them.