Crashing Up?

Justin Toedtman • Jan 28, 2020

Picking up where last year left off

There is one week left before all of January is in the history books and the bulls are definitely still on parade. The markets quickly metabolized the latest flare-up between the U.S. and Iran after Soleimani’s death and inking the first phase of the China trade deal injected more good news causing the markets to extend further. This past week was relatively flat with downward pressure Friday (1/24), likely caused by the spread of the Coronavirus. Both the Standard and Poors 500 (S&P) index and the Dow Jones Industrial average hit record highs intraweek. Both the S&P 500 and Dow Jones Industrial indexes are up 2% so far on the year. In January of 2019, the S&P 500 index had risen an incredible 6.3% by this same time and finished up 7.1% for the month of January. Can the markets keep this pace? What is fueling these historic highs?

No shortage of Stimulus

There is a real engine behind some of the market’s appreciation over the last few years: The Federal Reserve policy and corporate buybacks. Talking about the Fed can be confusing… and boring, so I’ll be brief. Liquidity in the banking and financial industries is vital. There is a practice of overnight lending between financial institutions that help cover expenses and loans, such as mortgages. The term for this practice is “repo” and the free-floating interest rate is incredibly low, usually less than 2%.

In September of last year, the rate spiked to near 10% because there was a scarcity of cash available between institutions. The Federal Reserve Bank of New York stepped in and injected $75 billion into the repo market. By the end of October, The Fed increased the infusion to $165 B.1 Hedge funds have access to these borrowed funds via the banks and are reportedly borrowing at the low interest rate and buying market securities. This obviously has contributed to the significant rise in the overall equities markets. The Fed’s policy is intended to boost the real economy (such as manufacturing), however, because of the market gains realized recently, much of this liquidity remains in the financial economy only.2

The Federal Reserve Bank of New York this past week injected another $74.2 B into the banking system as the overall balance sheet continues to grow.3 Heading into the weekend, there was another infusion of $77.3 B where approximately half of which was in short-term government securities.4 Here is an analogy of why this is significant and somewhat alarming. Sleep is a natural human requirement. We all require a certain amount of downtime to effectively function. Markets also ebb and flow and need to go down (sleep) from time-to-time to maintain an overall healthy appreciation. Let’s assume you were trying to avoid sleep. You could consume energy drinks with caffeine, which would provide a boost. The issue is, your body still requires the sleep, it is just being delayed. You start to feel tired again so you consume another energy drink, however, it has a damped effect because your body has become more tired. You need more stimulus to stay awake. The Federal Reserve infusion of funds is similar to the energy drinks and it is requiring more and more to maintain liquidity in the banking sector. Once you slow down or stop taking the energy drink, you are going to fall asleep because it is a natural function. If the Fed slows or stops the repo infusion, the ramifications could be similar.

Corporate buybacks are also a form of stimulus for the markets and have risen significantly over the last couple of years due to tax reform. Goldman Sachs estimated that stock buybacks declined by 15% year-over-year in 2019 and projects a decrease of about 5% in 2020.5 This is still a massive potential infusion of nearly $700 B for 2020.

Both corporate buybacks and monetary infusions by The Fed are enabling the markets to further advance at a somewhat unnatural pace.

Tulip Mania

In the 16th century, there was a bull market in Holland centered on tulip bulbs. Charles Mackay documented this floral bubble, along with other manias, in his book, Extraordinary Popular Delusions and the Madness of Crowds. In short, tulips had appreciated for a considerable amount of time, convincing many wealthy Dutch businessmen to abandon their normal trades and businesses and either grow, trade, or broker tulips. The flowers had become so popular that banks even accepted them as collateral. Of course, the bubble eventually collapsed, leaving many financially ruined.

FOMO, or Fear Of Missing Out, can be a real phenomenon. The Dutch had observed the tulip bulb price appreciation for several years leading sensible men to chase profits for fear of missing out. Herd mentality in the markets is a real thing. From a historical perspective, most equities today are trading at prices that far exceed sensible market valuations, yet, the markets continue to rise and rise quickly. Fear of missing out on potential profits has many leaning into this rally and even employing leveraged instruments to maximize gains.

Into Thin Air

Several recent news headlines frame the market as “melting up” or “crashing up”. Whatever term you prefer, the market is appreciating at a seemingly unsustainable rate. Collectively, the S&P 500 companies are at 90.2% of their 52-week highs, many of which hit all-time highs mid-week. This is slightly down from the prior Friday (1/17) where the same companies were at 92% of their 52-week highs.

In past newsletters, I have highlighted a few proprietary indicators that aid my analysis of the market. Once such indicator measures the strength of a trend. For this particular indicator, values can range between 0 and 100. I have found the ideal zone is between 35 and 65 - this is when the market is trending strongest and is, therefore, most predictable. Low values signify a choppy, sideways market. Values above 65 can indicate a market that is overbought and in need of a pullback.

The chart below is a weekly chart of the S&P 500 index. The red down arrows illustrate peaks before price pulls back and correlate with values from the indicator in the sub chart near 65 (the green line). The blue arrow also lines up with a value near 65. Price does pull back on the next bar but recovers (thanks to a strong daily formation) to continue the up-trend. You can see the value of the indicator is now above 80. The value of the same indicator on the daily chart is currently above 80.

To provide context on why this value is significant and may be pointing to an overbought market in need of a pullback, I examined the charts dating back to 1950. The S&P 500 index has had an indicator value greater than 75 on the daily chart less than 3% of the time. If the daily and weekly charts are paired, both having a value over 75 occurred about 1/2 of 1% of the time (0.5%)!

The last time both the daily and weekly indicator was greater than 75 was in January of 2018. To illustrate a pullback may not be immediate, the gray shaded section of the chart below has indicator values greater than 75 between October of 2017 and late January 2018. These elevated levels were achieved because the quarterly and monthly charts had very bullish patterns. Between this period, price appreciated 11%. Once the timeframes fell out of phase, led by the daily chart, prices fell rapidly and the indicator values also effectively reset. We are currently in a very rare chart pattern.

Calling market tops is very difficult to do. In addition to the trend identifying indicator highlighted above, several other indicators are referenced to indicate the underlying strength of the market. One thing I continually look for is divergence between indicators and price. Divergence occurs when price makes a higher high but the indicator does not make a corresponding higher high. This often indicates underlying strength is waning pointing to the likelihood of a pullback. A week ago, there was only divergence of the monthly chart. Surprisingly, the quarterly, weekly, and daily charts showed no signs of divergence as new highs in price were accompanied by new highs on the indicators. After this week’s close, there is divergence on the monthly, weekly, and daily. Selling off into a weekend is also not a positive sign so I will definitely be watching very closely to see what the markets do this next week.

Should I stay or should I go?

If you are not fully invested, it may be tempting to buy the markets as to not miss out on potential gains (FOMO). As highlighted earlier, the companies comprising the Standard and Poors 500 are at a collective 90% of their 52-week highs. This indicates the market is expensive and few bargains are to be found. Conversely, if stimulus continues to be infused into the financial markets, we still might be at a relatively “cheap” price point. In addition, the higher timeframe indicators do suggest this year could be a strong one for returns.

The technical analysis approaches I use are to increase my odds of making successful investments. There are clear chart patterns where chances of success are significantly increased. The current market environment is less clear. As mentioned earlier, the daily and weekly trend indicators being at such overbought levels has occurred less than 1% of the time over the past 70 years. Where I am currently long (buy) the market, I will remain but I am definitely not looking to add to positions at this price point. In fact, as stated earlier, I will be watching the coming week very closely. Nearly half of the Dow Jones Industrials companies will be releasing Q4 earnings over the next two weeks and The Federal Reserve Open Market Committee meets mid-week. Earnings, the Fed meeting, and further Coronavirus uncertainty could make for a very news-heavy week.

The New Year is a perfect time to review your portfolio and talk to a professional you trust to ensure your investments are working toward your long-term goals. The most important thing is to have a solid plan. If you currently have no plan or feel your current plan can be improved, MPWM can help!

counterpunch.org (https://www.counterpunch.org/2020/01/14/the-fed-protects-gamblers-at-the-expense-of-the-economy/)
wccftech.com (https://wccftech.com/federal-reserve-giving-direct-access-to-repo-lending/)
wsj.com (https://www.wsj.com/articles/fed-repos-add-74-2-billion-but-net-liquidity-declines-modestly-11579793755)
wsj.com (https://www.wsj.com/articles/fed-adds-77-3-billion-in-weekend-liquidity-11572010041)
cnbc.com (https://www.cnbc.com/2019/12/16/goldman-has-a-worry-could-hit-earnings-cause-volatility-in-2020.html)

Justin Toedtman is a market strategist and contributing editor to Momentum Private Wealth Management. For the last 20 years, his focus has been on technical analysis and market strategies.

If you are not having frequent conversations with your wealth or investment advisor about market strategies, investment management, or financial planning opportunities, you should be. Momentum Private Wealth Management specializes in Wealth Management as well as Comprehensive Financial Planning. Feel free to reach out to Austin directly at 512.416.8085 or austin@momentumpwm.com. You can also find out more information about MPWM at: www.momentumpwm.com.

The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Momentum Private Wealth Management, LLC (referred to as “MPWM”) disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
MPWM does not warrant that the information will be free from error. None of the information provided on this website is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk. Under no circumstances shall MPWM be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the materials in this site, even if MPWM or a MPWM authorized representative has been advised of the possibility of such damages. In no event shall MPWM have any liability to you for damages, losses, and causes of action for accessing this site. Information on this website should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

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Mastering the Backdoor Roth IRA: A stealthy strategy for smart investors

10 Apr, 2024

You’ve been eyeballing the Roth IRA and like the idea of tax-free growth but there's a problem: your income exceeds the limit for contributing directly to a Roth IRA. Enter the ‘Backdoor’ Roth IRA strategy- a clever maneuver that allows high earners to enjoy the benefits of a Roth IRA without income limits. There are some important caveats so let’s dive into the strategy. Roth IRA Contribution Limits If you file taxes as a single person, your Modified Adjusted Gross Income (MAGI) must be under $153,000 for tax year 2023 and $161,000 for tax year 2024 to contribute to a Roth IRA, and if you're married and file jointly, your MAGI must be under $228,000 for tax year 2023 and $240,000 for tax year 2024. If your Modified Adjusted Gross Income is above these limits then you are ineligible for a direct Roth IRA contribution and might consider utilizing the backdoor Roth IRA strategy. Step by Step Guide to Executing the Backdoor Roth IRA Contribution Step 1: Open a traditional IRA at your custodian of choice. Ensure they are aware of, and allow for Backdoor Roth IRA conversions. Step 1.5: If you do not already have a Roth IRA, then also open a Roth IRA at the same custodian. Step 2: Make a NON-DEDUCTIBLE contribution to your traditional IRA for the tax year of your choice. Reminder- you have until the Tax Filing Deadline to make a prior year IRA contribution. The contribution limit for 2023 is $6,500 for individuals under 50 and $7,500 for individuals over 50. Important Notes: DO NOT MIX tax-deferred IRA assets with Non-Deductible IRA assets. If you have a rollover IRA or Traditional IRA with tax-deferred assets in them, at ANY custodian, then you must be aware of the pro-rata rule for the conversion amount. Step 3: Instruct the custodian to convert your contribution from the Non-Deductible IRA to your Roth IRA. Important Notes: If you are subject to the pro-rata rule, you WILL owe taxes on any converted amount that is pre-tax. Timing: it is advisable to convert the non-deductible contribution to the Roth IRA as soon as possible. Benefits of the Roth IRA Roth IRAs enjoy a lifetime of tax-free growth! Building up what I call the ‘triad’ of investment accounts- Taxable, Tax-Deferred and Tax-Free will provide you with the greatest flexibility once in retirement for distributions and tax management. No Required Minimum Distributions Unlike Traditional IRAs, Roth IRAs are not subject to Required Minimum Distributions over the original owners lifetime. This gives you the ability to let the assets grow and use only if needed. ·Estate Planning Benefits Even with SECURE ACT 2.0 changes, Roth IRAs are a fantastic estate planning tool. In Conclusion The backdoor Roth IRA. Strategy is another useful tool that allows high earners to continue saving in tax-free accounts. It is essential that you work with a financial professional to review the pro-rata rule as well as help determining the future legislative changes that may limit the future ability to perform backdoor Roth IRA contributions. When you need reliable financial planning for your small business in Cedar Park, TX, contact Momentum Private Wealth Management at 512-416-8085 today!

Maximizing Tax Efficiency in Retirement: Harnessing the Power of Roth Conversions

15 Mar, 2024

Retirement planning isn't just about saving money; it's about optimizing your financial strategies to ensure your hard-earned savings go the distance. One powerful tool often overlooked is the Roth conversion. By strategically converting traditional retirement account funds into Roth accounts before required minimum distributions (RMDs) kick in, retirees can potentially save a significant amount in taxes while enjoying greater flexibility and control over their retirement income. Understanding Roth Conversions Before diving into the strategy, let's understand what Roth conversions entail. A Roth conversion involves transferring funds from a traditional IRA or 401(k) to a Roth IRA. Unlike traditional retirement accounts, Roth IRAs offer tax-free growth and tax-free withdrawals in retirement, provided certain conditions are met. The Pre-RMD Window of Opportunity Once you reach the age of 72 (or 70½ if you reached that age before January 1, 2020), the IRS requires you to start taking RMDs from traditional retirement accounts. These distributions are taxed as ordinary income, potentially increasing your tax liability in retirement. However, before reaching this age, retirees have a window of opportunity to strategically convert funds to a Roth IRA. Benefits of Roth Conversions Before RMDs 1. Tax Diversification: Roth conversions allow retirees to diversify their tax liabilities. By having both traditional and Roth accounts, retirees gain flexibility in managing their tax burden in retirement. 2. Tax-Free Growth: Funds converted to a Roth IRA grow tax-free, providing a valuable hedge against future tax rate increases. This tax-free growth can significantly enhance retirement savings over time. 3. Reduced RMDs and Taxable Income: By converting funds to a Roth IRA before RMDs kick in, retirees can potentially reduce the size of their RMDs and, consequently, their taxable income in retirement. This can help minimize tax implications and preserve more of your retirement savings. 4. Estate Planning Benefits: Roth IRAs offer attractive estate planning advantages, as distributions to beneficiaries are tax-free. By converting traditional retirement account funds to Roth IRAs, retirees can leave a tax-free inheritance for their heirs. Implementing a Roth Conversion Strategy 1. Evaluate Tax Implications: Before executing a Roth conversion, it's crucial to assess the tax implications. Consider factors such as your current tax bracket, future income projections, and potential impact on Medicare premiums. 2. Convert Strategically: Rather than converting all funds at once, consider a gradual conversion strategy over several years. This allows you to manage tax liabilities more effectively and stay within lower tax brackets. 3. Utilize Low-Income Years: Take advantage of years when your income is lower, perhaps due to part-time work, early retirement, or other factors. Converting funds during these years can minimize the tax impact. 4. Consider Partial Conversions: You don't have to convert your entire traditional IRA balance at once. Opt for partial conversions that align with your tax planning goals and financial needs. 5. Consult a Financial Advisor: Roth conversions involve complex tax considerations and financial planning strategies. It's advisable to consult with a qualified financial advisor or tax professional to tailor a conversion plan that aligns with your specific circumstances. Conclusion Roth conversions offer retirees a powerful tool to optimize tax efficiency in retirement. By strategically converting funds from traditional retirement accounts to Roth IRAs before RMDs kick in, retirees can potentially save a significant amount in taxes while enjoying tax-free growth and greater flexibility in managing their retirement income. However, it's essential to approach Roth conversions with careful planning and consideration of individual financial goals and tax implications. With the right strategy in place, retirees can harness the benefits of Roth conversions to enhance their retirement savings and financial security. Get in touch with us today to embark on your journey towards financial empowerment and prosperity. We are here for you and your family for years to come. Visit our website or contact us at 512-416-8085 today!

Navigating Economic Trends: A Guide to Investment Management in Austin

16 Feb, 2024

Investment management is a key factor regardless of the fluctuations of economic times. Staying abreast of economic trends is paramount. Whether you're a seasoned investor or just dipping your toes into the market, understanding how economic shifts can impact your investments is crucial for long-term success. Here at Momentum Private Wealth Management, we recognize the significance of staying ahead of the curve. Let’s delve into the impact of economic trends on investment management, focusing specifically on what you need to know in Austin, Texas. The Intersection of Economic Trends and Investment Management Economic trends play a pivotal role in shaping investment strategies and decisions. From fluctuating interest rates to changes in consumer behavior, various factors can influence the performance of investment portfolios. As such, investors need to be proactive in analyzing economic indicators and adapting their investment approaches accordingly. In Austin, a thriving economic hub renowned for its vibrant tech scene and rapid growth, staying attuned to economic trends is particularly important. The city's dynamic ecosystem is subject to both local and global economic forces, making it imperative for investors to navigate these fluctuations strategically. Key Economic Trends Impacting Investment Management in Austin Tech Industry Dynamics: Austin's status as a burgeoning tech hub has propelled its economy to new heights. With the presence of major tech companies and a robust startup culture, the performance of the tech sector significantly influences investment opportunities in the region. Tracking trends such as technological innovations, funding rounds, and industry disruptions is essential for investors looking to capitalize on Austin's tech-driven growth. Real Estate Market: The real estate market in Austin has experienced remarkable growth in recent years, fueled by factors such as population influx, job opportunities, and favorable business conditions. However, rapid expansion also brings challenges such as housing affordability concerns and infrastructure strain. Investors must monitor real estate trends, including housing inventory levels, rental rates, and commercial developments, to make informed decisions about property investments. Economic Diversification: Austin's economy is characterized by its diversification across various industries, including technology, healthcare, manufacturing, and entertainment. This diversification enhances resilience and mitigates risks associated with sector-specific downturns. Investors can capitalize on this economic diversity by building well-balanced portfolios that encompass multiple sectors, thereby reducing exposure to volatility in any single industry. Interest Rate Fluctuations: Like the broader economy, interest rate fluctuations can significantly impact investment performance in Austin. Changes in interest rates affect borrowing costs, inflation expectations, and the attractiveness of certain asset classes. For instance, rising interest rates may lead to lower bond prices but could present opportunities for sectors such as financial services. Investors should closely monitor monetary policy decisions and economic indicators to gauge the direction of interest rates and adjust their portfolios accordingly. Strategies for Navigating Economic Trends in Austin Diversification: Building a diversified investment portfolio is a fundamental strategy for mitigating risk and maximizing returns, especially in a dynamic economic environment like Austin. By spreading investments across different asset classes, sectors, and geographical regions, investors can minimize the impact of localized economic downturns and capitalize on growth opportunities in diverse industries. Active Monitoring: Staying informed about economic trends requires continuous monitoring of relevant indicators and data points. Investors should leverage resources such as financial news outlets, economic reports, and industry analyses to stay ahead of market developments. Additionally, partnering with a reputable wealth management firm like Momentum Private Wealth Management provides access to expert insights and personalized guidance tailored to your financial goals. Long-Term Perspective: While short-term fluctuations may create volatility in the market, maintaining a long-term perspective is key to successful investment management. Instead of reacting impulsively to every economic trend, focus on your overarching investment objectives and stick to a disciplined strategy. By staying committed to your long-term financial plan, you can weather temporary market disruptions and position yourself for sustainable growth over time. Flexibility and Adaptability: Economic trends are inherently dynamic, requiring investors to remain flexible and adaptable in their approach. Be prepared to adjust your investment strategies in response to changing market conditions and emerging opportunities. A proactive stance towards portfolio rebalancing, asset allocation, and risk management can help you optimize your investment performance and navigate economic uncertainties effectively. When it comes to investment management, understanding the impact of economic trends is essential for making informed decisions and working towards achieving financial success. In Austin, a thriving economic hub characterized by innovation and growth, staying attuned to local and global economic dynamics is particularly crucial. By leveraging strategies such as diversification, active monitoring, long-term perspective, and flexibility, investors can navigate economic trends with confidence and position themselves for prosperity in the dynamic landscape of Austin's economy. At Momentum Private Wealth Management, we're committed to helping our clients navigate these challenges and capitalize on investment opportunities tailored to their unique financial goals. Get in touch with us today to embark on your journey towards financial empowerment and prosperity. We are here for you and your family for years to come. Visit our website or contact us at 512-416-8085 today!

three women are sitting at a table in a restaurant looking at a laptop .

Financial Planning for Small Business Owners in Cedar Park, TX: Setting Up for Success

19 Jan, 2024

One of the most critical parts of long-term success is financial planning. Professional financial planning in Cedar Park, TX, keeps your business on track, creates plans for the future, and helps you reach sales goals.

Investment Management for Retirement Planning: Maximizing Your Nest Egg

22 Nov, 2023

Are you worried you won't have enough money for retirement? Investment management can help determine how much you need and the best approach to save enough money. Keep reading to discover how to maximize your nest egg. How Much To Save The first step to maximizing your nest egg includes knowing how much you should save. Decide what you want your retirement to look like and make a list of things you want to do and how you want to live. Then, do your best to estimate what things will cost once you retire, considering an average inflation rate of 3.22%. Once you know your projected expenses, determine any sources of income you'll have, including investments, pension funds, and social security. The difference between your expenses and your income is how much you should save. Generally speaking, some experts have suggested that you may need as much as $2 million to live a 'comfortable retirement,' those these numbers can vary wildly depending on your spending habits. Financial professionals may also recommend you spend around 70-85% of your current income per year once you are retired. Tips for Saving Enough Money Whether your goal is $2 million or more, saving enough money can feel overwhelming. However, with the following tips, you can maximize your savings potential. Set an Age Goal Determine what age you think you'll be able to retire. While working longer allows you more time to save, it also reduces the amount of time you have to enjoy retirement. Conversely, if you retire too early, you'll depend on your savings for a while before you can draw from social security, which means you'll need to save even more money. The average age of retirement is between the ages of 65 and 66 which is around the age at which the Social Security Administration assumes retirement. This gives you significant time to save, avoids drawing from your savings too quickly, and still gives the average person over a decade to enjoy retirement. Pay Off Your Debts While not always possible, prioritize paying off your debts before you retire. If you continue to pay off your debts after retirement, focus on the high-interest ones first, which often include credit cards, personal loans, and car payments. Also, prioritize student loan payments. If you still have student loan debt in retirement, the government can garnish up to 15% of your social security payments if you fall behind. Maximize Contributions Good investment management guidelines suggest you maximize your contributions to your retirement accounts. If you're traditionally employed, your workplace probably offers some form of tax-advantaged retirement account. IRAs and 401(k)s remain two of the best methods for saving for retirement. While contributing the maximum allowable amount gives you less money to live off short term, it sets you up for success after retirement. The maximum you can contribute changes each year based on inflation rates and other economic factors, but in 2023, the IRS allowed a maximum contribution of $22,500, and for those savers who are 50 or older may contribute up to $30,000 depending on the plan. This is called the 'catch-up provision.' But contributing to these accounts doesn't just have long-term benefits. When you contribute to your 401k or IRA, you may be eligible to deduct the amount from your total taxable income, meaning you'll lower your taxable income for that year. Use Employer Match As part of their benefits, many employers match your 401(k) contributions up to a certain percentage of your total paycheck. The average employee match equals just under 5%. This means if you make $2,000 every paycheck and opt to automatically deposit 5% of it, you'll contribute a total of $200 toward your retirement: $100 from you and $100 from your employer ($2,000 x 0.05 x 2). Keep in mind your employer won't match the maximum if you don't contribute that much. For example, if your employer offers a 5% match, but you only contribute 3% of your total paycheck, you'll receive a 3% match instead of the 5% match. While that extra 2% gives you less paycheck to live off, you have to think long-term and realize how much money you'll miss out on for retirement. If you make $2,000 every paycheck, that extra 2% equals $80 a month. Throughout a 40-year career, that's $38,400 from your employer you've missed out on ($80 x 12 months x 40 years = $38,000) plus the potential growth! Remember, employer matches are a guaranteed 100% return on your money.. Consider how good investing could multiply that money. Diversify the Investments Whether you invest in your retirement accounts or other investments, diversity is one of the first rules of good asset management. This means instead of putting all your money into one asset class, consider investing in a well diversified portfolio which may include different countries and sectors of the investable market. Financial experts consider a diversified portfolio a more impactful investment strategy as the goal would be to lower your overall risk for the level of return. Certain asset classes do not provide an equally higher level of return for the risk. Regularly Review and Adjust One key way to maximize your nest egg requires regularly reviewing your investments, assessing their performance, and adjusting as needed. If one area of your portfolio underperforms,determine whether or not you need to redeploy those assets into another area of the portfolio. Don't consider investments something you fund and then forget about. While you'll still likely grow your nest egg, you won't maximize it without purposeful attention. You can also vary your risk as you near retirement, and many people prefer to invest aggressively when they're young and take a less aggressive approach as they near retirement. Minimize Fees Many investments have underlying fees- called expense ratios. Depending on whether or not the investment is actively managed by the management company, these fees can often near or exceed 1% depending on the fund. Large underlying expense ratios can erode returns over a long period of time so be sure you are invested in a manner that suits your needs and if you are paying large expense ratios, the fund is producing excess returns to demand that fee. Keep Learning While your financial manager can handle most of your investments, stay informed by reading a financial journal or other reputable sources. This can help you understand your investment portfolio and help drive the conversation with your advisor about the risk you are willing to take vis a vis your goals. Contact Your Wealth Management Experts for Help At Momentum Private Wealth Management, we take our duty of investment management seriously. We take time to learn your goals and help you build wealth while navigating a volatile market. To learn more about our investment management services or to speak with a wealth management specialist, call 512-416-8085 today.

Choosing the Best Financial Advisor in Cedar Park TX: Key Qualities to Look For

20 Oct, 2023

Selecting a financial advisor is one of the most important decisions you'll make for your financial well-being. With many options available in Cedar Park, Texas, it can be overwhelming to pinpoint the right advisor for your unique needs.

Financial Planning for Young Families in Cedar Park, TX: Setting the Stage for Success

15 Sep, 2023

The right financial planning helps young families save for retirement and pay for future expenditures in the later stages of life. It also helps responsible parents or guardians manage the money the family relies on, ensuring there’s enough to cover important expenses or emergency costs.

Smart Investment Choices for Retirement Planning in Cedar Park, TX

18 Aug, 2023

Regardless of your age, you should be thinking about your plans for retirement. While the typical retirement age in America is 65, the average life expectancy for those who reach 65 is 85, meaning you could have 20 years to enjoy your retirement.

5 Common Investing Mistakes Beginners Make

21 Jul, 2023

Engaging with the stock market often brings a combination of anxiety and excitement to new investors. There are several factors to consider when navigating the seemingly endless list of public companies with stocks for people to purchase for trading or investing, and it can quickly become overwhelming.