Jeff Dixson’s interview with KXL’s Chris Brown from 11/8/17
Now that we’ve reached the one year mark since Donald Trump was elected President, many are reflecting on where we are as a country. Specifically looking at the markets and the economy there is a lot of good news.
Over the last 12 months the Blue-chip stock gauge has climbed 28.5%. This is the 4th largest gain in the first year of any President’s term. We have a strong dollar, corporate earnings have been healthy, and unemployment numbers are low. Furthermore, the US GDP showed 3% growth in the third quarter of 2017. To top it all off consumer sentiment is at its highest level since 2008.
Americans have reaped the benefits of the improving economy in their retirement accounts. According to Fortune, the total value of investment in 401(k)s and other defined contribution plans for average Americans have hit a new high.
Everything isn’t as Rosy as it Seems
For starters, American’s are not saving enough. According to NerdWallet, the average American between the ages of 45 and 54 has $993 extra per month. That adds up to nearly a potential savings of $12,000 over the course of a year. Despite this budgetary surplus, the median 401k balance for individuals in this age range is only just over $43,000. In September, it was reported that the U.S. savings rate fell to a 10-year low.
Many people Are Trying to Let their Investment Growth Do the Heavy Lifting
My team and I sit down with people every day and we go through a detailed questionnaire to discuss their risk tolerance. What we find almost every single day, is that the majority of the people we sit down with, have a portfolio that is twice as risky as their own personal risk tolerance. As the bull market we’re in has trekked along to be the 2nd longest in the history of the stock market, we have seen the risk in portfolios continue to increase.
When you put too much emphasis on investment growth, you often take on too much risk.
My advice is figure out what’s an age appropriate level of risk for you, let your savings to the heavy lifting, and seek a reasonable rate of return.
See our article on: Retirement Risks