According to the Washington Post, economic growth was slow in the United States during the first quarter of 2017, moving along at only 0.7 percent.
The number is a big drop off from the 2.1 percent growth experienced by the nation in the final quarter of 2016 and a long way from President Donald Trump’s promise of 3 percent economic growth during his time in office.
It hasn’t been all bad news on the economic front thus far in 2017. In the wake of what is turning out to be a volatile and unpredictable presidency, the stock market, which usually swings on every little tick of news – economic or not – has been quiet. In fact it continues the steady growth that it has shown for nearly a decade.
Financial adviser Stephen Ng (www.stephenngfg.com) says he doesn’t know how long this strong market performance will continue, but does know it can’t last forever.
“When the market is up, you have to be careful,” says Ng, author of the book 10 Financial Mistakes You Should Avoid. “You need to make sure you have strategies in place for when the market drops.”
The stock market is one thing Ng will have his eye on as we move into the second half of 2017, along with a couple of other financial related items:
• Inflation. Prices could be going up in the U.S. and the increase could be pretty high if we limit imports or place tariffs on them, as Trump has talked about doing. Ng says the cheapest watermelon costs about $25 in Japan. Compare that to the U.S. where we might pay $5. But if the country clamps down on imports, we might start seeing $25 watermelons ourselves.
• Taxes and IRAs. Trump’s proposal to lower corporate and personal income taxes could provide a historic opportunity for people to convert their traditional IRAs to Roth IRAs. When you retire, you pay taxes on the money you withdraw on a traditional IRA, but you don’t pay taxes on money you withdraw from a Roth. So if taxes are lowered, people should consider taking advantage and convert to Roths. You would pay taxes when you convert, but likely at a lower rate than you might have in the distant future when you retire.
• The stock market. The market has been on an upward swing for the most part of about nine years. What goes up comes down. When the market is up, people need to be careful, but most people become complacent. Do you have a strategy to protect your portfolio when the market has its inevitable drop?
“The most stable approach is generally to maintain a well-diversified portfolio using a strategy appropriate for your time frame, personal goals and risk tolerance,” Ng says.
Stephen Ng, founder and president of Stephen Ng Financial Group, is author of 10 Financial Mistakes You Should Avoid: Strategies Designed to Help Keep Your Money Safe and Growing (www.stephenngfg.com). Ng is a Chartered Life Underwriter, Chartered Financial Consultant and a Certified Estate Planner. He is also an Investment Advisor Representative with SagePoint Financial, Inc., member FINRA/SIPC. He regularly holds financial management, retirement investing and insurance planning seminars at businesses, churches and non-profit organizations.