The Stock Market Beat Goes On

Earlier this year I wrote a piece titled, “Have You Checked Your 401(K) Lately?” in which I discussed the importance of stock market returns, 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 wrote 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 2015 – some by a large margin.

So, with the first quarter having closed on March 31, 2016, I thought I’d take a look at how the markets are fairing so far this year.

If you’re a casual observer of the stock market, you’ve probably got a smile on your face as a result of the recent market increases. But, looking a little closer, I wouldn’t say it’s Champagne time just yet.

For the first quarter – January 4, 2016 to March 31, 2016 – the Dow Jones Industrial Average was up 312 points or 1.79%.

During that same period, the S&P 500 was up 16 points or 0.77%.

And the Nasdaq was down 137 points or 2.75%.

As you can see, first quarter returns have not been as great as one might believe when hearing of increases on the nightly news reports.

Even the best first quarter return – an increase of 1.79% for the Dow – can hardly be called anything but middling. But, at least it’s not a loss like the Nasdaq has thus far sustained.

Of course, astute investors and money managers can beat those numbers. And hopefully many have for the sake of Americans’ retirement and pension plans.

I will conclude this post as I did the one from January. 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 the previous article, is 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.

investment charts courtesy of morningstar.com

image courtesy of cooldesign at freedigitalphotos.net