America has had a tumultuous few years when it comes to financial markets, and 2017 has been off to an exciting and unpredictable start. As a result, many people are wondering what kinds of trends they should be tracking to plan ahead and make the right financial decisions going forward.
The Financial Educators Council found that only 64 percent of Americans are financially literate, which means that 36 percent of people surveyed may be missing out on the main opportunities to plan their financial future. This test was administered to all age groups and demographics. Additionally, Gallup found that only 30 percent of Americans have a long-term financial plan, which means there are a good number of people who have assets that they have not made a plan to manage or maximize.
Investing is different and more involved today than ever before. Savvy investors who are planning for retirement should be aware of the evolving landscape. The following are three significant economic trends that will change financial planning for consumers in 2017.
Dip Your Toe Cautiously in the Digital Currency investment Pool
While still a developing space, the popularity and success of digital investment alternatives is on the rise. Bitcoin’s price has now hit close to all-time highs twice this year alone, and other currencies like Dash and Ethereum are seeing regular price increases as well. Many consumers are turning to these currencies as a part of their investment strategy, banking on continued price increases.
While these new currencies have been incredibly volatile, generally they have continued to appreciate in value since their start just a few years ago. As with any investment, caution is always advised, especially when there is not national or global oversight on the investment, as in the case of Bitcoin. Watch the development of these assets in 2017 and be cautious with your investments.
Integrate Financial and Retirement Planning to Grow Your Money
Research shows that the average 50-year-old only has $42,000 saved in some sort of retirement account. That kind of nest egg will barely last most Americans a full year of retirement, let alone anything near the 18 year average retirement period. That is just one of the problems surrounding retirement investing.
Jeffery David Katz, of JDKatz, a law firm specializing in tax and estate planning shares, “Most concerning is that many attorneys don’t systemically follow up with their clients as a scheduled and integrated part of the planning process after they’ve executed their estate planning documents. They do not ensure that implementation of the plan was successfully completed. Financial advisors also may not be getting feedback from the attorneys to complete the implementation, and as a result, the assets are being titled improperly.” Katz has a point, as tax and healthcare policy continues to fluctuate the need for updating plans has never been greater.
Fortunately, there are more alternatives on the market, like Stretch IRA Trusts, and Retirement trusts to help people distribute their assets and plan ahead. Katz says, “Financial planners who do know of these trusts, may be disinclined to recommend them as planning tools because, simply put, there is little financial incentive for financial planners to promote these low-cost trusts, despite their long-term benefits. An attorney working in conjunction with a financial planner can ensure the client has the best planning options available to them.” The advent of more integrated software platforms for financial management is helping people coordinate their financial plans with both their financial advisors and attorneys helping plan their estate. The best personal financial strategies will require planning for not just your retirement disbursements, but also what kind of taxes you will have to pay and what services will still be available to you.
Collect Market and Political Intelligence for Effective Investment Decisions
The current political climate has left a lot of people uncertain about how to invest without worrying that their investments will be regulated, or devalued in the coming months. This is still a developing trend, and every investor should watch the regulatory landscape to stay ahead of changes that the Trump administration, Congress, or other world leaders enact.
Rumblings in China against Bitcoin triggered fluctuations in its price. Donald Trump saying he plans to give tax cuts to businesses created a spike in market value. An increasing number of industries are directly impacted by political in-fighting: energy, finance, automotive, etc.
Reports like the one issued by UBS about Airbnb’s regulatory struggles are piling up. Regulations, whether from the federal, state, or local levels, are likely to have greater influence on markets in the years ahead, not less. That makes investing strategy both an outcropping of market intelligence and political intelligence.
Whether you are already wealthy and trying to keep things that way, or if you are living frugally and trying to invest in a more secure future, it is important to include a proper mix of strategies to help you be successful in retirement. As Robert Kiyosaki, famous author of Rich Dad Poor Dad, put it, “It’s not how much money you make, but how much money you keep, how hard it works for you and how many generations you keep it for.” Remember seeking out partners and experts to help is a great way to cut through the noise and find the right strategy for you.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.