If you’re an investor, you probably had a pretty good year in 2014. But what’s in store for 2015?
It’s essentially impossible to make precise predictions about the performance of the financial markets, but it is possible to identify those economic conditions and market forces that may help shape outcomes in the investment world for 2015.
Here are a few of these moves:
With stock prices having climbed higher and higher, you might be wondering if it’s time to scale back on your ownership of equities. Some factors point to continued strength for stocks over the long term. First, we are seeing signs of improving economic growth; employment gains and low oil prices are giving consumers more confidence, leading to a boost in spending. Second, corporate earnings, a key driver of stock prices appear poised to show more good results in 2015. Third, stocks at least large-company stocks are still reasonably valued.
For several years, interest rates have been at, or near, historical lows. Given the strengthening economy, and the decreased need for stimulus, the Federal Reserve may well raise short-term interest rates in 2015. But long-term rates may start rising even before then, so you may want to take a close look at your bonds and other fixed-rate investments. As you probably know, when interest rates rise, the value of existing bonds typically falls because investors won’t pay full price for your bonds when they can get newly issued ones that pay higher rates. One way to combat the effects of rising rates is to build a “ladder” consisting of short-term, intermediate, and long-term bonds.
Although economic growth has been slow in parts of the world, many countries have now initiated policies to spur economic growth. These actions can create opportunities for international equity investments. Keep in mind, though, that international investing involves particular risks, such as currency fluctuations and political and economic instability. So if you are considering foreign investments, you may want to consult with a financial professional.
There are no guarantees, but by following the above suggestions, you may be able to take advantage of what looks to be a fairly favorable investment environment for 2015. While you should make most of your investment decisions based on long-term considerations, it’s always a good idea to be attuned to what’s happening in the world around you — and to respond appropriately.
Information provided by Matt Kneifl, financial advisor, Edward Jones, 1100 73rd, Windsor Heights, 279-2219.