For more than a decade since the financial crisis of 2008 wiped out the retirement accounts of millions of retirees across the country, the stock market seems to have gone on a (mostly) never-ending rally that has shattered records and exceeded even the most optimistic of expectations.
However, Wall Street’s recent rocky activity due to the rhetoric behind the US/China trade war over tariffs should be disconcerting to retirees who invest in the stock market.
Remember, smart investing means using all the available information – both positive and negative, to make sure you’re doing the best thing for the nest egg you’ve built throughout your working life.
The following are real-world scenarios that Crash Proof Retirement® have identified as threats to our American prosperity in the short-term.
Asia and Germany
The International Monetary Fund is predicting the lowest global growth rate (3.1%) since the financial crisis.
For the U.S. economy to thrive, our trading partners must have robust economies as well.
Two of our major trading partners, China and Japan, are operating in “Market-Crash Mode.” China’s SSE Composite Index has dropped 50% since its high in June of 2007 and Japan’s Nikkei 225 crashed out in 1989 and never really recovered, losing 45% since then. Plus, China’s economy has its own troubles. It’s facing a housing crisis because China overbuilt housing in what are now known as “ghost cities” – housing which stands empty, due to over anticipation of people in rural areas moving to the city as part of China’s urbanization movement.
Add to that our fifth largest trading partner’s Deutsche Bank (1st in Germany and 15th globally) saw its stock drop 94% after exiting the US housing market, due to unethical foreclosure behavior and a resulting $11 billion in settlements.
In the coming weeks, the US Federal Reserve Bank will conduct a stress test to evaluate whether Deutsche has enough funds to cover its obligations. If not, 9,000 people the bank employs in the US may be in jeopardy. Recent merger talks with Commerzbank failed – adding more pressure to determine solvency.
China Trade War
Citing trade deficits with some of our biggest foreign partners, the Trump administration has levied $250 billion in US tariffs on certain goods and said it would increase tariffs by 10 percent on $300 billion worth of Chinese goods including shoes, clothing, and electronic goods such as laptops and game consoles. In response, major trading partners like China and the E.U. have enacted retaliatory tariffs of their own, leaving investors concerned that protracted trade wars on multiple fronts could leave the U.S. economy on shaky ground.
According to CNBC, publicly traded and US-based Walmart announced it will raise its prices, as a direct result of increased tariffs. Someone must pay for tariffs eating into company profits and unfortunately, as in this case, the consumer is the target audience to pick up the slack.
And the South China Morning News identified a list of more than 100 US companies affected by the tariff who might follow Walmart’s lead including – Kohl’s, Michael’s, Target, Macy’s, AutoZone and Best Buy, regularly shopped by consumers seeking clothes, household goods, auto parts and electronics.
The Fed’s Lack of Recession-Fighting Weapons
Traditionally, the Federal Reserve has sought to bolster the economy during recessions by lowering its benchmark interest rate. While this strategy has been used in the past to encourage borrowing and spending by giving consumers easier access to credit, it may not work this time. That’s because interest rates have been kept at historic lows throughout the current economic expansion. And, the Fed even cancelled a slate of planned rate increases that were to take effect throughout 2019.
With the Fed effectively disarmed, it’s uncertain whether they will have the tools they need to fight the next recession.
Crash Proof Your Retirement™
No matter what happens across the globe, the proprietary Crash Proof Retirement® System is built to thrive in any market condition. A Crash Proof Retirement®® System is a well-thought out, proprietary arrangement of flexible financial vehicles offering guaranteed principal protection, tax-friendly crediting strategies, double-digit returns, penalty-free withdrawals and long-term care solutions.
No matter how much a market index may drop, there’s a stopgap measure for the Crash Proof Retirement® System to disallow bankruptcy and loss of principal. Meaning, your credited interest returns will never go below zero even if the market index drops below that amount.
How does it work? If an insurance carrier should go out of business, the company is not legally able to file bankruptcy – it goes into what’s called receivership. With receivership, an official trustee is in charge of the company’s assets and is tasked with returning the company to profitability using other solvent insurance companies. Those solvent companies come together to float the receiving companies’ liabilities, leaving policyholders protected and giving them peace-of-mind. It is a much better option than bankruptcy, which liquidates assets and pays the most important shareholders first, leaving retail investors as the last to get paid – usually pennies on the dollar. The consumer advocates at Crash Proof Retirement®, LLC will help you protect your next egg, so you can enjoy your golden years to the maximum extent possible.
View our upcoming Crash Proof Retirement® events to find out more about the Crash Proof Retirement® System and to find an upcoming Crash Proof Retirement® Educational Event near you!