So Now What?

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Two scenarios of Returns

Investors have been able to set aside the trade tensions and markets have climbed to historic highs. Those investors sitting on the sidelines may be kicking themselves and thinking they missed the rally. Markets care more about profits than politics and based on earnings growth projections for Q3 (19%), Q4 (17%) and 2019 (10%) the market has room to run. The continued strength of the economic outlook has been mistakenly downplayed. If you are in the market, regular rebalancing to lock in gains by selling your high flyers and buying your now cheaper holdings is always a good idea. If you are close to retirement, you may like what you see on your 401K statement but should always plan for market downturns by being globally diversified and remember that significant downturns in the early years of your retirement can derail your withdrawal strategy, which may extend more than 30 years. That’s where a good advisor can help you devise a plan. Your withdrawals won’t just be affected by market returns. Inflation, interest rates, taxes and liquidity needs will all play into your strategy. Please see page 91 of the Global Perspectives book for an example of two retirement portfolio withdrawal scenarios with markedly different terminal values based on a market downturn in the early years.

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