Special Market Update: “Escalators, Not Elevators”

Why does investing in the stock market feel like taking an escalator up, and riding an elevator down?  Rising markets seem to be slow upward climbs, like an escalator; the rise occurs over extended time (months and years).  But, a correction or market pullback occurs quickly (days and weeks, or months), like riding an elevator down.   It’s quick.  It seems to take a year to earn 10% in a rising market, but a few days to lose 10%.  The elevator experience is always uncomfortable and creates anxiety.  Yes, anxiety for us too as we manage client accounts with great care and effort.

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“Goes Without Saying” and a “Stitch In Time” – Nvest Nsights Q1 Newsletter

After nearly two years of strong market gains, investors experienced their first meaningful pullback during the first quarter of 2022.  While it is typical for markets to experience pullbacks and a higher level of volatility after the initial 12-18 months of a new bull market, it is never welcomed or comfortable.  That is probably because the uncertainties that usually accompany them are always unique.  Present uncertainties include a still fractured global supply chain, a Federal Reserve that finds itself needing to raise interest rates and tighten monetary policy in pursuit of arresting inflation that is running at the hottest pace in 40 years; and of course Russia/Ukraine which muddies both challenges further.

This quarter our Nvest Nsights newsletter shares what we’re watching and perspective to the topics/questions we’re most frequently hearing from clients.  Perhaps it “Goes Without Saying” that the backdrop highlighted above implies 2022 will likely remain a challenging year; but there are also some important messages to be heeded from history.  There is also the saying that “A stitch in time saves nine”;  while ‘main street’ consumers may not welcome rising interest rates and the impact on the cost of borrowing (or the markets in the short term) it is nonetheless appropriate for the longer-term health of the economy.  The markets are adjusting to a changing investment landscape.  We close the update with our personal finance theme article with a change coming to employer 401k statements this year.  Will the new Lifetime Income Estimates being provided help you feel more secure?

A printer-friendly version of the full quarterly newsletter, including benchmarking and fund performance data, can be obtained here: Q1 Nvest Nsights

As always, please do not hesitate to let us know if you have any questions or would like to coordinate a time to visit.

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401k Lifetime Income Estimates… Will You Feel More SECURE?

If you are fortunate enough to have a company sponsored 401K plan, you will likely see some new (and potentially confusing) illustrations on your statements in the coming months.  The changes are related to the 2019 Secure Act passed by congress.  The mandate requires 401k administrators to provide an estimate of “guaranteed lifetime income” assuming your current 401K was completely “annuitized”.

What does it mean to “annuitize” your current 401k balance?  Continue reading