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How to Get Ahead in a Low Rate, Low Growth Environment

     I don’t like to give in to negative thinking, but it’s hard to argue that the “new normal” of low growth and low interest rates are here to stay for an extended period of time.  Which means that, for savers and investors alike, it takes more careful planning to experience the same returns that history told us we could expect.  Here are four things to consider that will help you squeeze the most out of the assets you own:
     1) Put cash to work.  J.P. Morgan’s Guide to the Markets estimates that as of the 3rd Quarter of 2015 that the money supply was 67% of GDP which is 14 percentage points above the historical average, while annual income generated by $100,000 in a 6-month CD was $370 in 2015. In 2006, that amount was $5,240.  Numerous alternatives exist to holding cash that don’t involve the same risks as investing in stocks.  Find out what they are.
     2) Reduce taxes. There are lots of ways to make sure you don’t pay more in taxes than you need to. A few are tax loss harvesting, maximizing deductions, using health savings accounts and other voluntary benefits to reduce taxable income.  Take advantage of the tax deferral features of 401(k) plans, IRAs, life insurance and annuities.
     3) Use Professional Management and Advice.  Research firm Dalbar estimated that the average individual investor experienced investment returns of 3.49% at the same time the S&P 500 grew at a rate of 7.81%.  In a 2012 study, Morningstar estimated that the added value of a financial advisor is 1.82% per year.  Having professional advice doesn’t mean you don’t need to be engaged.  The services of professionals are not free and you need to know what you are paying for the advice, products and services you are getting.
     4) Manage your risk.  This refers to portfolio risk and also the risks we choose or choose not to insure like our income, our lives, health, the risk of needing long term care and the risk of outliving our assets.  Careful analysis of these risks and thoughtful decisions about how we choose manage these risks can make a difference.
     If you would like know more, please give me a call.


About LPL Financial
LPL Financial (Nasdaq: LPLA) was founded on the principle that the firm should work for the advisor, and not the other way around. Today, LPL is a leader in the markets we serve,* supporting nearly 20,000 financial advisors, and approximately 800 institution based investment programs and 500 independent RIA firms nationwide. We are steadfast in our commitment to the advisor-centered model and the belief that Americans deserve access to personalized guidance from a financial advisor. At LPL, independence means that advisors have the freedom they deserve to choose the business model, services, and technology resources that allow them to run their perfect practice. And they have the freedom to manage their client relationships, because they know their clients best. Simply put, we take care of our advisors, so they can take care of their clients

*Top RIA custodian (Cerulli Associates, 2020 U.S. RIA Marketplace Report); No. 1 Independent Broker-Dealer in the U.S (Based on total revenues, Financial Planning magazine 1996-2021); No. 1 provider of third-party brokerage services to banks and credit unions (2020-2021 Kehrer Bielan Research & Consulting Annual TPM Report); Fortune 400 Company as of June 2021. LPL and its affiliated companies provide financial services only from the United States.

Jones & Company and LPL Financial are separate companies.

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