No matter who you voted for last November, the next four years will likely present a different investment climate than the previous four. From the economy to interest rates to trade to taxes, all the pundits can really commit to is that things willchange, but no one knows exactly how. It's only fitting that we look to the timeless words of Roman philosopher and military commander Pliny the Elder, "In these matters the only certainty is that nothing is certain." For this article, we turn to John Palazzetti, President of Park Avenue Securities, to add some perspective on the current state of uncertain affairs.
It's the Economy, Sparky
By historical standards, stocks are expensive, and the business cycle is entering its eighth year of a bull run. For some, this indicates a market top. But it's not as clear a case as you might think. The stock surge we've seen since the election could keep going for some time. "If you're thinking about trying to time the market, know that this is a classic mistake," says Palazzetti. "Stick with your long-term strategy, and if you don't have one yet, now would be a good time to work it out." A financial professional can both help you to create a long-term strategy and stay the course when things get bumpy.
Such Interesting Rates You Have
We have already heard that the Fed plans to raise the central bank's key benchmark short term rate a "few times a year" through 2019, with an end-goal of 3%. What this means in real terms is that credit cards, mortgages and loans-all forms of debt-go up. "You might want to consider paying down any short term debt, locking in any low fixed-rate loans, or refinancing your mortgage while it still makes sense to do so," says Palazzetti.
There's been a ton of speculation as to what Trump is planning in regard to trade. Some have suggested the new president's tough talk is a bargaining tactic to create more favorable terms with trading nations. This could be a boon for American businesses, from small to gigantic. Others have opined that this is a prelude to a trade war, which could lead to a reduction in global business, GDP, jobs, and incomes. According to Palazzetti, "One thing that people and small business owners can do is to look into insurance options. An advisor can help to protect both earned and unearned income, and insurance was invented to protect against risk."
Taxes, Taxes, Taxes
The new president has said he plans to cut the corporate tax rate from 35% to 15%, which could attract businesses to US soil and boost hiring. Then, your personal tax rate could drop, increase, or stay the same, depending on your tax bracket, family structure and which deductions are modified. (Oh, tax code, how capricious you are ... ) But, reminds Palazzetti, "There are always tried and true techniques that people can use to reduce their tax burden. Charity donations and retirement planning are, of course, some of the most popular, but it doesn't end there."
So, you may be feeling even more uncertain now than before you clicked on this article, but, it seems, these are the times in which we live. If you are feeling particularly uncertain, it could help to discuss your options with a financial professional. Once you have a lay of the land and a plan of action, it's much easier to feel as if you're the commander of your destiny.
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This material is intended for general public use. By providing this material, Guardian is not undertaking to provide investment advice for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact a financial professional for guidance and information specific to your individual situation. Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. Past performance is not a guarantee of future results.
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