Our daily roundup of retirement news your clients may be thinking about.
Where are the good investments now?
As both stocks and bonds are expensive, investors should be more aware of and sensitive to financial risks, and should be prepared for low returns, says T. Rowe Price Equity Income Fund manager Brian Roger. When selecting stocks, the income fund prefers laggards, such as Mattel, and quality-oriented stocks like General Electric, he says. He discusses the performance of his Equity Income fund as compared with an S&P 500 index fund and talks about his impending resignation as fund manager next year.--CNN Money
5 Tips for avoiding investment bubbles
Investment bubbles are a recurring problem and the government appears to be doing more damage than good to avoid such a threat, according to Forbes. In order to reduce the impact of bubbles, investors should learn to focus on their own objectives, rather than jumping on the bandwagon just because everyone else seemed to be enjoying the benefits. Another way to avoid financial loss during bubbles is regular rebalancing of individual investments or asset classes. --Forbes
Real estate's epic rebound starts to cool
The real estate market is showing signs of slowing down after five years of post-recession growth, according to various industry indicators. This development provides both opportunities and warning signs for investors. The climate is good for individual homebuyers because rates are comparatively low and price gains are slowing. Investing in real-estate investment trusts, however, may get more risky, as it thrives on low-interest environments, and may be adversely affected if such rates start to rise. --Wall Street Journal
3 market warning signs predict 20% stock tumble
Strong bull market cycles, overvaluation of stocks, and excessive divergences across different market sectors have been good gauges in the past of impending stock market losses. In fact, each time that all three of those signs happened simultaneously in the past 45 years--as is the case today--the stock market subsequently declined 20%, according to MarketWatch. This market loss affects smaller market capitalizations the most and blue-chip stocks the least. --MarketWatch
Use alternative investments to hedge without hedge funds
More alternative investments are using strategies normally used for hedge funds. A portfolio consisting of stocks, bonds, and indexes with hedge funds and other alternative funds yielded a higher annualized return compared with a traditional portfolio, which included Standard & Poors 500-stock index and Barclays U.S. Aggregate Bond index, according to Kiplinger. When investing in alternative funds, it is important to pick those that have leadership potential. --Kiplinger
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