Vanguard Warns of Worsening Odds for the Economy as well as also Markets
The forecast suggests opportunities, not just problems, Mr. Davis said. The 10-year outlook, for example, includes lower projected annualized returns, although still positive ones, for these two stock categories:
■ United States stocks, an expected 10-year return of 3.9 percent, annualized, down by a projection of an 8 percent annualized return, made in March 2013;
■ Stocks by markets outside the United States, 6.5 percent, annualized, down by 8.7 percent in 2013.
Non-United States stocks are more attractive for equity investors, on a relative basis, than they were all 5 years ago. (of which can be partly a reflection of the out-performance of domestic stocks, creating them far pricier than they were before.) What’s more, Vanguard projects much better 10-year annualized returns for these asset classes:
■ A diversified portfolio of United States bonds, 3.3 percent, annualized, up by 1.7 percent in March 2013;
■ Bonds by outside the United States, 2.9 percent, up by 1.8 percent;
■ Commodities, 5.9 percent, up by 4.2 percent;
■ United States Treasury bonds, 3 percent, up by 1.3 percent;
■ as well as also cash, held in United States money market funds, savings accounts or additional instruments, 2.9 percent, up by 1.5 percent. Short-term cash can be becoming more attractive — with greater liquidity as well as also, often, lower risk — compared with holding bonds.
Experienced investors who are “sophisticated enough to focus on these numbers as well as also act on them themselves” can benefit by creating their own adjustments, Mr. Davis said. Tried-as well as also true investments like balanced funds as well as also target date funds (which become more conservative as a given date nears) can make basic adjustments for you. Advisers can do This specific as well.
Tweaking investments can make the item easier to live with them — as well as also not panic — if markets fall, Mr. Kinniry said. At the moment, though, many Americans appear to be setting themselves up for trouble.