Is your portfolio ready for the New Normal? It had better be…read on

There is much discussion today about the New Normal brought on by the economic turmoil of the last year and a half.  “The world is traveling on a bumpy road to a new destination – or what PIMCO has labeled the new normal. The notion of a new normal is increasingly resonating in policy circles and among market practitioners.”  As stated by Dr. El-Erian CEO and co-CIO of PIMCO

The New Normal will most likely include higher inflation (although at this point we are still more concerned about de-inflation). However, the shear amount of liquidity and cash infusion from the Federal government has the potential for leaving us with a “hang over” from this recovery party called inflation.

Higher taxes:  Regardless of your political views there have been policies in place for years that will force the hand of whoever is in the White House.  Between high deficits, lower tax revenue, and increased spending on social safety nets it is hard to see how we can grow the economy fast enough to generate higher tax revenues that will pay down the deficit and pay for the government obligations without increasing the taxation levels.

Higher unemployment lagging for a long period of time is a good possibility.  Today’s employers are getting a tremendous high rate of output per employee.  Technology is moving so fast many jobs will just not be necessary.  So as companies start to bring back workers some just won’t be needed.  Especially for those workers who have not kept up with their industry and its technological changes.

 Our country’s current higher savings rate is a double edged sword.  Yes, it makes for more responsible citizen who will be less likely to over spend but it also affects unemployment.  Dollars sitting in savings accounts are not buying goods and services therefore not driving down unemployment known as the paradox of thrift.

The shifts that have created a New Normal are not necessarily destructive to your portfolio.  Rather it is a time to thoughtfully look at your portfolio, make adjustments to position yourself and take advantage of the many tools available to be in the right place for the New Normal.

If you would like guidance on this journey please contact us. Custom Financial Design is located at 4647 North 32^nd Street, Suite B210, Phoenix AZ 85018 602- 952-5588 or www.cfdaz.com

Rebecca Kennell, CERTIFED FINANICAL PLANNER™ is a Registered Representative and Investment Adviser Representative  with/and offers Securities and Advisory Services through Commonwealth Financial Network ®,Member FINRA, SIPC, a Registered Investment Adviser.

This communication is strictly intended for individuals residing in the states of AL,AZ,CA,DE,IL,NC,OK,PA,TX,VA.  No offers may be made or accepted from any resident outside these states due to various state regulations and registration requirements regarding investment products and services.

Contributed by Mario Romero, CRS, CDPE, CLHMS
602-252-4191 office, 602-254-9810 fax
The Romero Team - Melcher Agency
www.TheRomeroTeam.com
www.ShortSaleTeamAz.com
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