Investment Strategies for Likely Events in 2017

Investment Strategies for Likely Events in 2017

There are nearly as many investment strategies as there are investors. Some are better than others. If you are looking for consistent income with minimal risk, join the club. Everyone is. As we have said before, reaping high returns on your investments, be they equity appreciation or income, is impossible without taking on a certain level of risk. And the best investment strategies are those that have a broad and diverse base of investments.

Investment Strategies and a Grain of Salt

But that doesn’t mean that occasionally tweaking your investment strategy based on likely occurrences is a pointless endeavor. The key words are occasionally and tweaking. Massive portfolio changes should not be made without the help of an experienced financial planner that knows your financial situation, knows your investments, and most importantly knows your life goals and is committed to helping you achieve them. So, without further ado, here are several investment strategies for likely events in 2017.

Likely Occurrences that aren’t Certainties

Many experts agree that the Federal Reserve will increase short-term interest rates several times in 2017. If this indeed is the case, bond markets will be volatile and several long-term investments like Treasury bonds may decrease in value for the short term in 2017. The flipside is that Treasury inflation-protected securities as well as mutual funds or ETFs that invest in them may do well if interest rates continue to rise – as will investments in high-quality bank loan portfolios that that receive income based on variable interest rates.

Bonds, Sectors and Stocks for 2017

Though the prognosticators would like to seem certain, nobody is sure if stock investments will outperform bonds this year. If the corporate tax rate is reduced by the new Congress, corporate profitability may increase. That being said, price-earnings ratios are currently at an incredibly high level. The Dow Jones Industrial Average rose above 20,000 on Wednesday January 25th before retreating again on Monday the 30th. Sometimes bonds outperform stocks, and sometimes stocks outperform bonds. No analyst is correct 100% of the time. That’s why a balanced portfolio of stocks and bonds is the winning ticket.

As far as sectors go – one can find somewhat convincing bullish and bearish theses for nearly any sector of the market. A better approach is to invest in low-cost, well-diversified index mutual funds or ETFs. The Vanguard Total Stock Market Index Fund, for instance, provides exposure to the entire U.S. equity market, “including small-, mid-, and large-cap growth and value stocks.” Other index funds are known for their broad base of investments and their long history of increasing dividend payments.

Before making any decisions about your investments, make sure to sit down with a financial planner or wealth management advisor. OptiFour Integrated Wealth Management can help.

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