The Stock Market’s Trying to Help Your Retirement Plans

If you’re a regular reader of Savings Beagle, you’re likely familiar with my quarterly stock market recaps in which I discuss the market returns for the previous quarters.

I wrote, “Have You Checked Your 401(k) Lately?” to cover the fourth quarter of 2015, “The Stock Market Beat Goes On” looked at the first quarter of 2016, and “The Surprising Second Quarter Stock Market Results” discussed the obvious.

These pieces aren’t provided to show exactly how the stock markets are doing; rather, they’re an illustration of a big picture economic situation that makes saving money so vitally important.

Stock market returns should be of interest to everyone, even if you personally don’t own a single stock.

Often, people don’t connect that IRAs, 401(K)s and other retirement accounts are made up of stocks.

And almost never is it considered that public and private pension plans rely on solid investment returns, much of which come from stocks, to ensure they’re able to meet their future obligations.

I’ve written how pensions normally require 7-8% investment returns annually to guarantee the payments they’ve promised.

And if you’ve ever used a retirement calculator (which is what many financial advisors enlist to help guide their advice) those, too, rely on a 7-8% annual return for the long-term calculations they provide.

Which is great when the economy is doing well and stocks are benefiting.

But it’s not so great when the economy is languishing – as it has been since the Great Recession – and the stock markets have been moody as a result.

In my January piece, I showed how the three stock market indices; the Dow Jones Industrial Average (down 2.23%), the Nasdaq Composite (up 5.73%) and the S&P 500 (down 0.73%) had all missed the magic 7-8% mark for the final quarter of 2015 – some by a large margin.

And my April post showed the Dow Jones Industrial Average (up 1.79%), the Nasdaq Composite (down 2.75%) and the S&P 500 (up 0.77%) still falling well short of that magical 7-8% return goal.

Finally, my July article noted the Dow Jones Industrial Average (up 1.38%), the Nasdaq Composite (down 0.56%) and the S&P 500 (up 1.90%) all continued limping along as it relates to returns.

So, with the past three quarters showing muted growth, I thought I’d give an update on how the markets fared during the third quarter of 2016.

For the third quarter – July 1, 2016, to September 30, 2016 – the Dow Jones Industrial Average was up 378.16 points or 2.11%

The S&P 500 for that same period was up 69.42 points or 3.31%

And the Nasdaq was up a whopping 469.33 points or 9.69% – thank you tech sector

For the first nine months of 2016, the Dow has shown a percentage increase of 5.07%, the S&P 500 an increase of 6.08% and the Nasdaq an increase of 6.08%, as well.

Much better third quarter numbers for all the major stock indices than we’ve seen the previous two quarters of 2016.

And the cumulative, year-to-date returns are getting closer to that magical 7-8% range needed to meet the long-term targets pensions and other investment vehicles need to achieve their goals.

We just need that positive momentum to continue through the end of the year. Whether that will happen remains to be seen.

Now for my “stock” ending to these quarterly update posts.

We at Savings Beagle are not investment advisors. Our goal is not to guide your investment decisions or sell you investment products.

Rather, this, and previous articles, are presented only to get you thinking about your long-term financial situation.

The stock market very well may increase its returns for the remainder of 2016, helping IRAs, 401(K)s and pension plans move toward their projected goals. But, on the other hand, the market may not.

A sound financial lifestyle is an important component to ensuring long-term fiscal stability. And saving money, wherever you can, plays a large part.

Which is where Savings Beagle comes in.

We’re here to find deals and pass along tips that’ll save you money, and help keep you on a sound financial course.

If you haven’t already, bookmark our site, follow us on Facebook, join us on Twitter or subscribe to our posts to ensure you receive every savings opportunity we’re able to pass along.

Saving money and planning for the future’s hard – we’re here to help make it a little easier.

Stock charts courtesy of morningstar.com

image courtesy of stuart miles at freedigitalphotos.net