With a negative yield curve, trade wars and slowing growth in the economy, a poll showed that majority of business economists believe we will enter a recession in the next 2 years (National Association for Business Economics). While this seems inevitable with the facts in front of us, there is no litmus test for a recession or market drops and they have been wrong before.
What is the difference between investing and having a financial plan? While investing can be fun and invigorating, especially when everything is going well, there will inevitably be a time when performance suffers and this is when having a financial plan is critical. A financial plan provides a “purpose” to your investing.
The pain being inflicted by a diversified set of asset classes in 2018 hasn’t been witnessed since Don Mclean’s American Pie was #1 on the Billboard charts. Ned Davis Research organizes assets into eight major categories from large US stocks to commodities and not one of them is slated to gain more than 5% for 2018, a feat not duplicated since 1972.
In my 13 year career as a financial planner I have not typically condemned certain products. All products have a purpose and if used in the correct situation for the correct person can add return or protection to a client’s plan. You may often hear people say you should never use annuities or you should never use a reverse mortgage. These two have been very divisive between the people who sell them and the people who don’t.