Broker Check

February 2021 401k Allocation Recommendations

February 01, 2021

Overall, we maintain a pro-growth stance with a positive outlook on the global economy in 2021. The new stimulus package signed into law in late December reinforces our view that the U.S. economy will grow solidly above trend this year. And while we expect oil prices and base effects to lead to a jump in headline inflation in the second quarter of 2021, core inflation is likely to remain contained and monetary policy accommodative. Globally, the surge in virus counts in Europe will limit activity in the first quarter but, equally, vaccine roll outs are accelerating. By mid-year we see scope for a surge in pent-up demand – especially in travel, leisure, retail and tourism – which means that for the year as a whole, growth should be above trend.

While we are positive on market growth, we also know there is a need to have a good extra-spare tire fund available to take advantage of opportunities in the market. It is important to remember that there have been 38 downturns of 10% or more in the market over the last 70 years. Downturns are normal, upturns follow the downturns and the upturns last significantly longer.



CONSERVATIVE: A Conservative investor values protecting principal over seeking appreciation. This investor is comfortable accepting lower returns for a higher degree of liquidity and/or stability. Typically, a Conservative investor primarily seeks to minimize risk and loss of principal.

MODERATE: A Moderate investor values reducing risks and enhancing returns equally. This investor is willing to accept modest risks to seek higher long-term returns. A Moderate investor may endure a short-term loss of principal and lower degree of liquidity in exchange for long-term appreciation.

Moderate Growth: A Moderate Growth investor values higher long-term returns and is willing to accept considerable risk. This investor is comfortable with short-term fluctuations in exchange for seeking long-term appreciation. The Moderate Growth investor is willing to endure larger short-term losses of principal in exchange for the potential of higher long-term returns. Liquidity is a secondary concern to a Moderate Growth investor.

Growth: Growth investors typically invest in equity investments. With a focus on growth stocks—that is, young or small companies whose earnings are expected to increase at an above-average rate compared to their industry sector or the overall market.

The information provided here is for general information only and should not be considered an individualized recommendation or personalized investment advice. The strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All investing involves risk including loss of principal. No strategy assures success or protects against loss. Past performance is no guarantee of future results. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.