Trying to get a grip on 2019 finances is difficult at best. Terence Moll, chief strategist at Seven Investment Management, says that market volatility will continue. He thinks the world economy will be rather like it was in 2018. He thinks growth will be healthy, interest rates will drift upward and markets will be jumpy. Almost all the big financial markets sold off in 2018. Next year should be better and we expect equity markets to drift up overall.
The outcome for 2019 seems to hinge on three key issues: 1) rate hikes, 2) recession risk, and 3) resolution of trade disputes. Riverfront Investment Group heads into 2019 with asset allocation designed to be neutral in overall risk weighing. Most financial advisors are anticipating one to two rates hikes in 2019. The same advisors are predicting that the possibility of a recession in 2019 is low. There is anxiety around global trade and interest rates and the onset of the next recession. Most advisors believe there will be modest stock gains in 2019 and that concerns around trade relations and an impending 2019 recession will eventually fade.
In the U.S., we’ve seen interest rates normalizing to some extent with low unemployment and signs of inflation impacting companies. The minimum wage in twenty-one states has gone up. The only problem with this is that markets other than U.S. are not seeing it.
The trade-war between China and the US sent ripples causing the markets to fluctuate in 2018. Most advisors think growth will remain solid for a while yet, with no danger of recession until 2020 at the earliest.
Many advisors think the best advice for investors is to focus on what you can control. Mike Walker, with Priest Financial Planning, says investors should diversify. Ray Black, Financial Planner of Money Minder, says reacting emotionally is dangerous for investors. What goes down in value is cheaper to buy than it was before and losses are only secured when you sell. The best investments are almost never the ones that everyone is talking about.
Here at the Virginia United Methodist Foundation, we use Merrill Lynch and they seem to agree with the other financial advisors. Recession seems to be something to think about in 2020 and growth will be in single digits, not like 2017, but more like 2018. At the Virginia United Methodist Development Company, we have raised our rates as the Fed has raised theirs. We are offering 2.3% to 4.0% certificates and these certificates are offering a stable way for United Methodists and United Methodist Churches to invest. If we can help, please give us a call at 804-521-1150.