3 Things 9-16-24
Thing One
A Matter Of Perspective
As the Federal Reserve prepares to cut interest rates in anticipation of a softening economy (mainly as reflected by weakening employment numbers), we thought we'd reshare some reflections from market prognosticators on what they thought might happen a couple of years ago when a downturn started. See below:
From bankrate.com: “…As you can see from the table, the average bear market since 1929 has resulted in a roughly 37 percent decline in the S&P 500 and it has taken an average of 344 days, or nearly a year, for the market to reach its bear market bottom.
If these averages were to play out during the current bear market, investors could expect the S&P 500 to fall to about 3,017, or a roughly 22 percent decline from mid-July levels…”
From Reuters.com: “…Goldman Sachs has cut its year-end 2022 target for the benchmark S&P 500 (.SPX) index by about 16% to 3,600 points, as the U.S. Federal Reserve shows little signs of stepping back from its aggressive rate-hike stance…”
From bloomberg.com: “…The “inflation shock ain’t over” and an earnings recession will likely drive stocks to news lows, strategist Michael Hartnett said in a note…That suggests the current bear market, which the benchmark index confirmed in June, will end in October with the gauge at 3,020 points -- 23% below current levels, the strategist said…”
The consensus seemed to be that the market was heading down in the near term. Were the pundits right? Kind of, but not to the extent they predicted. The S&P got as low as 3600 before starting to climb again. It currently sits at 5600. For long term investors that should serve as a reminder. The question should really never be how low will it go but rather, how much time do I have to let my money grow, 5, 10, 15, 20 years or more?
If we took the lowest projected stock market bottom mentioned above, 3017, and extrapolated using the historical, long term average of roughly 10% (including dividend reinvestment), the market would've reach the following levels at the 5, 10, 15, and 20 year milestones:
Year 2027 - 4800
Year 2032 - 7825
Year 2037 - 12,602
Year 2042 - 20,296
And if it grew only half as fast, given all the “headwinds”:
Year 2027 - 3850
Year 2032 - 4,914
Year 2037 - 6272
Year 2042 - 8,005
In any case, it will likely go up in the long term. So rather than trying to figure out where the bottom is when the market gets ugly, remember you’re in it for the long term. And remind yourself that if you stay invested and the market just does what it always has over the next 15 years, for example, you might have 4 times as much as you do now. It’s all a matter of perspective.
Thing Two
Why People 50 and Older Should Have Life Insurance.
Many Americans have not taken critical steps toward protecting their family’s financial future if the unexpected happens. If someone relies on your income for their well-being, you need
life insurance.
Here are some additional reasons you may need life insurance
if you are 50 years old or older:
You have financially dependent children or grandchildren
You are paying off debts, like a mortgage or credit card balance
You are worried about covering your final expenses
You want to protect your existing assets
You want to supplement your retirement income with the cash value component of a permanent life insurance policy
You want assistance with estate or legacy planning
Best types of life insurance for people 50 and older.
Term life insurance is a good fit for people who are looking for coverage for a set period. For example, you may feel that you need coverage until your kids are finished with school or until your mortgage is paid off.
Permanent life insurance is a good option for people who want the security of lifelong coverage (as long as payments are made). It can be helpful with final expenses and legacy planning, and the cash value component can be beneficial to retirees. Due to the cash value component and the coverage duration, permanent life insurance policies are more expensive than term. Therefore, it is essential to ensure the premiums are within your current and future budget.
Thing Three
Just A Thought
“Never forget where you’ve been. Never lose sight of where you’re going. And never take for granted the people who travel the journey with you.” - Unknown
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