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Investing trends for 2014

Created date

January 8th, 2014

The start of a new year is always a good time to evaluate your financial plan and (pun intended) take stock of your investments. Of course, there is no one-size-fits-all approach to managing money, and following fads is rarely advisable. But, being aware of how changes in the macro environment could impact your finances always makes sense. 

The next time you meet with your financial advisor, be sure to discuss how these emerging trends and tips could affect you in 2014.

Expand your horizons. If you haven’t done so already, New York wealth advisor Charlie Massimo recommends taking a look at international stocks in 2014. “So many people have this U.S. bias because they think U.S. stocks are biggest and safest, but it’s actually the opposite,” Massimo says. “So we coach clients on the value of owning a globally diversified portfolio.”

Manage income. As federal health care reform takes effect this year, so too does the additional Medicare tax on income over certain levels. “Investors need to be very careful about how they take portfolio income so it doesn’t push them into a different tax bracket and trigger that Medicare surcharge,” Massimo says.

Reconsider mutual funds. “Mutual funds are poised to go the way of the dinosaur,” Wisconsin investment advisor Prateek Mehrotra says. “Alternative funds will continue to gain as more investors worry about downside protection and not just about upside potential.” Instead of mutual funds, Mehrotra likes exchange-traded funds, which operate much like mutual funds, but with some advantages like lower fees and exposure to different asset classes. 

Expect interest rates to rise. Diane Garnick, CEO of a New York asset management firm, says 2014 will be the year that the Federal Reserve begins to raise interest rates. She says higher interest rates can be disastrous for retirees because many people shift assets into fixed-income vehicles when they stop working, hoping to achieve financial stability. “The facts here are that when rates go up, as they are expected to in 2014, the value of those fixed-income investments will decline,” Garnick says. “Ironically, that is precisely the type of volatility that investors were seeking to avoid.” Her advice: Move money into equity portfolios now before interest rates start to climb.

Delay social security. It’s no secret that waiting to begin collecting social security can mean a higher payout over the course of your lifetime. Now, it seems more Americans are jumping on the bandwagon and holding out. Angela Deppe, a CPA and founder of, says about a year ago 75% of people took social security before full retirement age. Today that number has dropped to 74%, which Deppe says is a small but significant step in the right direction. “This trend is personal to me as my own mother took her social security early and lost out on over $100,000,” she says. Deppe’s website has a benefit maximization calculator that can help you determine when is the best time to claim your benefits.