Are you experiencing stress from watching the news over the past few months? If so, you’re not alone. Media coverage has been filled with never-ending stories of the war in Ukraine, politics, inflation, and COVID. And, while you logistically know you should be keeping up with what’s happening in the world, you also realize that doing so may leave you anxious and worried. Negativity often breeds more negativity.
While there are many tricks to help lower anxiety, like limiting your news viewing or talking to others who can offer support, taking charge of your finances can help during times of uncertainty. I recommend booking an appointment with a trusted financial advisor to discover whether or not your retirement portfolio can hold up against the world’s uncertainty. And when I say financial advisor, I’m talking about a Certified Financial Planner (CFP) or an Accredited Investment Fiduciary – not a financial salesperson. Some financial salespeople do a decent job developing portfolios But they’re not always as accredited or as educated as a CFP or an AIF in retirement planning, tax planning, insurance, and estate planning . Relying on a financial salesperson may increase the client’s risk of experiencing a large void in their overall retirement plan. Most people aren’t aware of how creating a proper financial plan can increase their chances of experiencing a successful retirement. Anxiety is often the result of not knowing what you don’t know. And we don’t need to be more anxious than many of us are already. Creating a comprehensive financial plan requires planning and because of their extensive educational background, a CFP or AIF can shine.
Real personal finance involves planning and that’s where a CFP® can really shine. Because of their extensive educational background, CFP® professionals can advise on investment management, retirement planning, tax planning, insurance planning, estate planning, education planning, and much more.
Let’s switch gears and talk about the Chairman of the Federal Reserve and the Federal Open Market Committee (FOMC), Jerome Powell. If you’re not familiar with what the Fed does, it makes policy decisions to promote stable prices and economic growth. In other words, it managse the country’s supply of money. Last week, the FED increased interest rates by a quarter of a point. Personally, I wasn’t surprised. I wish they would have done it by half a point. Why? Well, the policies created by the Federal Reserve have current and future implications, and if theyare late in the cycle of moving rates higher, then they will need to make it up later on, potentially impacting consumers at a more stressful time. In its statement, the Fed included the possibility of six more increases. If that happens, 1.75 would be the federal funds rate by the end of the year.
Could the Federal Reserve dry up the growth of our economy because of the higher rates? Why would we not just start with .5 to get to the root of the problem sooner than later? Admittedly, when the Fed said we could experience six hikes, I was surprised. I wish they would have started this last year. However, a few federal chairmans favored the half-point raise, including Esther George (Kansas City), and James Bullard (St. Louis). But, they didn’t get their way. Additionally, not everyone in the Federal Reserve banking system gets to vote. They can discuss and have influence with it, but only a certain number of members get to vote on whether or not they’re going to increase or decrease rates.
We’ll see how the market reacts to the interest rate hikes, but the markets are generally efficient, meaning that they’re reading into the future. The markets have expectations that are influenced by the amount of buying and selling inside the marketplace. Looking at one particular sector, such as technology, we’ll see it has incurred some damage since the first of the year. And the question is, is this the lowest that it will drop? I don’t know. But I know that technology will continue to move this economy into the future. If you already own any technology stocks, let’s say you’ve had a 20% decline in those shares. That’s a huge loss. So then the question becomes, should you lighten up the number of tech shares you currently own? In my opinion, what’s going to get us and the economy through the next 5-20 years will be technology stocks. But again, where’s the bottom? We don’t know that, so it’s crucial to be diversified in your risk.
With everything going on in the world, planning for retirement may seem more complex than ever before. How will all this affect your retirement plans? My Advisors at Osiwala Financial Group are ready to help you with that process. Click HERE to schedule a no-obligation, free consultation by phone, virtually, or in-office. Not prepared to talk to us yet? Download your free copy of The Retirement Plan Checklist, which includes 30 retirement topics to help determine your retirement readiness. To get your copy, click HERE.