Do you feel like the Fed is challenging your portfolio with the rapid interest rate increases? Considering that the bond aggregate is down by 12.4%, with a yield of only 1.98% year-to-date, it’s not surprising that you’d be feeling nervous. Additionally, the S&P 500 is down by over 20%, and a 60/40 portfolio is off around 17.5% for 2022. While Chief Economist at First Trust, Brian Westbury, is predicting some bear market rallies may come and go, he’s not expecting a lot of positivity out of the market in the near future. What’s a retiree or a pre-retiree to do with that forecast? When people are going through challenging times, you need the clarity that comes with a sound, thought-out financial plan. If people don’t have a comprehensive retirement plan in place, that’s when you need to worry.

A saying I often hear is that stocks make you rich, and bonds keep you rich. But, when bonds are down 12.4%, that’s a significant number to swallow – especially since bonds are typically believed to be  a safe investment. If bonds are down, theoretically, stocks should be up because they’re negatively correlated. That’s precisely why we don’t recommend that clients have all their eggs in one basket.

In the last 10-12 years, there hasn’t been any prolonged downward movement in the markets. Back in the early 2000s, the market went down three years in a row. There  were spurts where it was going up, but they were short-lived. I think that we could now be in for a longer-term decline. Through the 2008 recession and everything that’s taken place since then, any threat of a market correction or slowing economy was going to be corrected by “The Fed.” The Fed’s going to come in and save the day. The Feds will stop this by raising interest rates alongside an easy monetary policy and stimulating the economy. The problem we have is runaway inflation, and the only way to stop it is to tighten the money supply, and rapidly raise interest rates. But that could also cause a recession.

The last time we were in a scenario like this one was during the late 70s and early 80s. We had a period then of stagflation. Many economists now believe that a stagnating economy with high inflation or a stagflation environment is the most likely outcome in the future. Because of that, my Osiwala Financial Group Advisors will your current portfolio allocations back to that time to see how they would have performed. What would have done well during those time frames? Are there any losses you will reap if those historical conditions repeat themselves? That stress-test process may provide the clarity people need to understand if their portfolio will hold up under similar conditions or if adjustments need to be made. (To get your free, no-obligation stress test, click HERE.) That clarity may help provide some comfort as the world goes through this painful financial period.

People who are retiring or preparing to retire amidst a recession are asking questions like these:

  • Have I saved enough?
  • Should I cut back on spending?
  • Is it OK to increase my spending because of inflation?
  • Do I need to cut back on discretionary expenses I initially planned to spend?

All kinds of emotions go through people’s minds during challenging times like these. But Osiwala Financial Group Advisors can bring financial clarity.  By stress-testing your existing portfolio or building a retirement plan from the ground up, people can start to see the impacts inside of their portfolios.  What do you have to lose?

I want to stress that it’s not solely about the portfolio. It’s about a person’s life. The truth is, we don’t know what tomorrow will bring, and there’s no guarantee that we will be around tomorrow. Therefore, having clarity, confidence, and control of your financial life is essential. That way, you can live what we refer to as your one best financial life.

Do you want to know if you’re on pace to enjoy your retirement life regardless of a recession, soaring inflation, or a stock market correction? Contact Osiwala Financial Group to schedule a free, no-obligation stress test for your current portfolio and find out. Click HERE to schedule online or call us at (248) 828-8000.