Another new year, another day closer to retirement.
And for those investors concentrating on retirement investments, the New Year offers a great chance to re-balance and refocus their portfolios. But 2017, may not be such a slam dunk for retirement investors. There’s plenty of uncertainty out there.
A new incoming president, slowing global growth in key regions like Europe and China, rising interest rates, mixed economic data here at home as well as plenty of global strife have the potential to rear their ugly heads over the new year. Investing for retirement over the next twelve months could be a challenging game indeed. Don’t expect a repeat of 2016. Not everything asset class or stock will win or rise, if we see some bumps in the New Year.
But that doesn’t mean retirement investors need to run to cash or jump out of the markets. All it takes is a little tweaking to save yourself from some of the potential heartache this year.
With that in mind, here are some of the best retirement investments to get you through the next twelve months.
New Year’s Retirement Investments: Berkshire Hathaway Inc (NYSE:BRK.B)
When it comes to finding the best retirement investments, America’s favorite value investor has the answer for the New Year.
Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B, NYSE:BRK.A) really needs no introduction. The conglomerate of various whole business, stock holdings and other assets should be a staple of every retirement investor’s portfolio. BRK still generates plenty of cash from its hefty under-writing premiums and the various stock dividends it receives from owning shares in such firms as Phillips 66 (NYSE:PSX) and The Coca-Cola Co (NYSE:KO). Buffett and his team then uses that cash to go out and buy more stocks/whole firms. And given the uncertainty, BRK may do a fair bit of buying if/when prices tank.
In the end, BRK is about long-term growth.
But it’s also about ballast. Buffett and his team have continued to run Berkshire in a very conservative manner. It’s as much about capital protection as it is capital appreciation.
Given how it’s run, BRK tends to bounce around less than many other stocks. This makes Berkshire Hathaway perfect for retirement portfolios over the next 12 months.
New Year’s Retirement Investments: iShares S&P 100 ETF (OEF)
The new year is potentially a crossroads. On one hand, we could continue to see rising stock values over the next year. On the other, we could see rising volatility as uncertainty continues to grow. So what’s an investor supposed to do with their retirement investments?
The answer is to think big. As in really big.
The mega-caps could be the best way to fight the uncertainty over the new year. The biggest U.S. stocks provide plenty of stable revenue streams and much stronger balance sheets. The bluest of the blue chips are simply better equipped to handle any possible downturns in the market, thanks to larger dividends, ability to acquire floundering smaller competitors and lower overall volatility. Better yet, they will still participate in any market upside.
And the best way to play these mega-caps is through the iShares S&P 100 Index (ETF) (NYSEARCA: OEF).
As its name implies, OEF owns the S&P 100, which is basically the top 100 stocks in the venerable S&P 500 index. You’re getting the Johnson & Johnson’s (NYSE:JNJ), the Apple Inc.’s (NASDAQ:AAPL) — the biggest U.S. multinationals. In short, OEF and its holdings should be the best way for retirement investors to navigate the difficult waters of 2017. And they have the returns to prove it. Over the last three years, OEF has return an annual average of nearly 7%.
Expenses for OEF run at just 0.2%, or $20 annually for every $10,000 invested.
New Year’s Retirement Investments: The DoubleLine Core Fixed Income (DLFNX)
With interest rates rising here in the U.S. and negative rates a real thing overseas, investing in the bond market takes a light and skillful touch. Jeffrey Gundlach at DoubleLine has proven that he has that touch and skills necessary to make money in almost any sort of environment. His calls on everything from stock market swoons to even Trump winning the election have been pretty much correct.
So investors should plow their money into his flagship DoubleLine Total Return Bond Fund (MUTF:DLTNX), right? Not exactly. Right manager, wrong fund.
A better bet would be his smaller DoubleLine Core Fixed Income (MUTF:DLFNX) mutual fund. DLFNX has a wider mandate than DLTNX, which mostly focuses on mortgage bonds. This gives Gundlach the ability to comb the entire world of IOU’s — emerging market corporate debt to U.S. government bonds — with his smaller fund. The wider mandate has allowed DLFNX to outperform the flagship fund by a decent margin this year — you know, when rates started to rise and things got wonky across the world.
For those retirement investors looking for a fixed income investment for the New Year, DLFNX should be at the top of their lists. In the end, the new bond king should be able to use his ability to predict trends and react to those trends by selecting the right bonds. The New Year is exactly the kind of market you want a skilled captain at the helm for.
Expenses for DLTNX run at 0.75% and the minimum investment is $2,000.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.