22 August 2018 FT — Articles to Read

22 August 2018


Question: According to MSN:Money Opinion: What are the 10 commandments of retirement?


All-time high puts US stocks on brink of history’s longest bull run – Pg. 1

–          US stocks hit an all-time high yesterday as the market moved a day away from setting the record for the longest-ever bull run, with investors cheered by strong company earnings and Donald Trump’s corporate tax cuts

–          …set the stage for making the post-financial crisis rally the longest stretch of rising prices without a 20% drop, the level typically associated with a bear market

–          It has been aided by unprecedented central bank stimulation of the economy and a burgeoning debt pile globally, raising fears that the equity boom is a bubble fueled by years of cheap money

–          The duration of the rally – which by the end of trading today will clock up 3,453 days to top the 1990-2000 bull run fueled by first tech boom – reflects the low base from which it started.  Markets plunged after the global financial system nearly collapsed in 2008, weighted down by bad bets on toxic mortgage debt and excess leverage

–          On an annualized basis, the gain would be about 16.5%, compared with a historical average of 22% for bull markets

–          The biggest-gaining rally on an annualized basis came in the wake of its most storied collapse: a 35.5% rise from 1932-1937, the years after the October 1929 drop that preceded the Great Depression

–          The Fed has raised US interest rates seven times since 2015, and another two increases are penciled in this years, with some hawks urging more increases, given the rise in economic growth and asset prices in recent months


Fed chief knows risks are acute as he heads for Jackson Hole – Pg. 3

–          The US consumer is resurgent, economic growth is running at an annualized pace of more than 4%, joblessness is hovering near 50-year lows, and fiscal policy is set to deliver a further boost in the second half of the year

–          Among the main questions are: where is the so-called neutral level of interest rates that neither suppresses nor propels growth; do rates need to be lifted into restrictive territory; how should the Fed factor in the threat of financial excesses; and when should the central bank stop shrinking its multi-trillion-dollar balance sheet

–          The flattening of the yield curve, which is regarded by some as a possible harbinger of slowing growth, could be providing warning signs…

–          The economy is on track to grow at 4.3% annual rate in the third quarter, …

–          The personal savings rate in the first quarter was revised upwards to 7.2% form a previously reported 3.3%, indicating households are less financially stretched than economist has thought.  With unemployment at just 3.9% and the Fed’s favoured measure of core inflation hovering at 1.9%, analysts have started to discuss how far inflation may overshoot the Fed’s 2% target


Answer: (1) If your preretirement lifestyle is set with a view to what you can sustain after you quit the workforce, you’re likely on track; (2) Remember that social security is designed to replace no more than 40% of preretirement income; (3) Have a financial and estate plan that provides for your spouse and any others who depend on you financially…; (4) Never forget the nonfinancial aspects of your retirement are important, too.; (5) Pay attention to communications from your employer, Social Security, Medicare, personal advisers and others; (6) Put retirement savings ahead of other goals, like college or a vacation home; (7) Save as much as possible as soon as possible; (8) Recognize that your taxes may not be lower in retirement; (9) Place health care high on your list of fixed expenses; (10) Invest in ways that will provide steady income stream in retirement