As we close 2019, many investors in a diversified portfolio find themselves with an account balance significantly above the close of 2018, especially with no withdrawals. But can we leave our portfolios on automatic pilot?
As planners, many of us do not spend time worrying about bear markets for our clients. We are working with the client’s income streams, annual expenses, a living expense cash bucket, risk tolerance, and then projecting the long-term rate of return that particular client needs from their assets. Once we know that rate of return, and with the clients risk tolerance in mind, we develop a portfolio based on long-term asset class returns to achieve the client’s goals.
That being said, we do see issues with a U.S.-centric stock and bond portfolio over the next decade. Looking at forecasts from Research Affiliates, GMO, and W. Blair, the projections for U.S. stocks and bonds are in the low single digits.
Reading that may leave you scratching your head after an S&P 500 return of 31.48% for 2019, but storm clouds are gathering. Consider the following:
Risk Management and Insurance
