5 Reasons Why Your Nest Egg Could be at Risk in 2016

5 Reasons Why Your Nest Egg Could be at Risk in 2016



This is an excellent article about why we should be cautious about stocks and bonds in 2016.  As for stocks, the bull market has shown a topping process for the past year although it could still continue to rise at a much slower pace.  Only the best stocks might have a double-digit return in the future.



Then, concerning bonds, the article gave a clear explanation for what will probably happen as the Federal Reserve raises interest rates.  For every one percent rise in interest, the principal of intermediate term bonds may drop 5% or more.  The increase in yield will not offset the capital loss.  So, there is no safe place to hide in today's stock market except possibly in cash or preferred stocks like PFF where the 5% dividend should cover any small drop in the stock price.