Did 2020 take you to the cleaners? Don't go it alone recovering in 2021. For a highlight reel of 2020 and to help you get your savings train back on the tracks in 2021, local Registered Principal and Registered Investment Advisor Representative Linda Zivney, with Raymond James Financial Services, Inc., has some insights to offer.
Operating with a team of three women, Zivney personally manages investment accounts for families, retirees and those close to retirement. The comprehensive planning she oversees incorporates attorney and estate planning as well as accounting and taxes. Zivney also leads quarterly "women and investing" meetings.
Overall 2020 market recap
At the risk of stating the obvious, the 2020 market was volatile—with a correction, or lowest drop of the year, on March 23. The S&P 500 finished up at 16% in the black, with the biggest returns in large technology stocks. However, diversified individuals with lower risk investments may not have seen that full return in tech.
"From my standpoint, my job is always risk management," notes Zivney, who manages accumulative assets north of $200 million.
"Last year I was in constant communication with clients discussing individual levels of risk and how markets were reacting... If my clients weren't sleeping at night, we reduced their level of risk. Overall, we stayed with a fairly conservative bias for retirees and pre retirees—which is the phase of life for the majority of my clients."
Getting back on track
Zivney's top tip for newbies to investing or those working to recover is, "Figure out a way to auto-save from every paycheck, no matter how small. Have automatic forced savings. This is the best starting point for newcomers or anyone. From a retirement account standpoint, maximize your company's retirement plan offerings, especially if there is a contribution match option. Or, open your own Roth IRA, or traditional IRA," advises Zivney. April 15, 2021 is the tax filing deadline for 2020. People can contribute to a retirement fund up until this date.
As for personal investing apps like Robinhood, Zivney isn't a fan. "At the moment, active investment management is more critical than ever," explains Zivney. For apps that help households with savings and spending, Zivney gives a thumbs up.
2021 Financial Forecast
According to Zivney, this is the time of year when predictions are flying. She's been on conference calls with investment managers, strategists and economists to gain consensus knowledge. Her findings so far: "The general theme is equities will do better than fixed income; stocks better than bonds. The Fed will keep interest rates low, so there will be little to no returns there. Volatility should be a little less than last year. We shouldn't revisit a low like we saw on March 23, 2020. Stock markets are looking to recover in the second half of the year. Earnings will improve as the economy reopens, all predicated on the continued rollout of the vaccine. There's a pent-up demand for supply in leisure and other industries, which will fuel acceleration of economic growth into the second quarter. Inflation should stay low for the next year or two. Because there's a variance in returns, you need an investment manager weeding out investments which may underperform."
Environmental Social & Governance
In 2020, ESG, or environmental, social and governance, portfolios out-performed traditional counterparts. "A lot of money is filtering into socially based investing. Consensus is that it will continue to perform well into 2021. I'm having more and more conversations with clients about ESG. In the past you may have given up returns if you wanted to invest with your heart. Not anymore. There is already a call for this sort of investing in Bend, given our community's common love for the outdoors and a propensity for generosity."
Initial Public Offerings
Did you know there were 460 IPOs that came to market in 2020, the largest year recorded in United States history? Although Airbnb is up over 100% (destination vacations, in alignment with Bend industry), Casper Sleep and McAfee security software are down. "Some IPOs do very well, others do not. And remember, most retail investors don't have access to the IPO market, therefore the average investor does not have initial access. By the time the shares come on the open market the cost to get in could be much higher."