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A Forecast for Low Returns, and Advice for Investors

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Jean Brunel, chief investment officer at GenSpring, says expect returns of 2-2.5% on bonds and 5% on stocks and not much higher in the next 5 years. He points out that with low rates the whole investment environment has changed. The consensus among investment managers is that it is a good idea to lower expectations and not chase risky returns in the next couple of years.

What senior executives of financial firms are doing with their own investments and what their firms are telling the public

08/23/2011

For senior executives interviewed in this survey investing is all about capital preservation. One executive has moved all his funds to U.S. government bonds and cash, another executive has given up the 60% stock 40% bond allocation recommended by financial firm advisors and moved his savings to cash and high investment grade bonds. These executives witnessed the 2008 crash and are not taking any chances. Financial advisors of these firms continue to tell the public to stay in it for the long term. Who bears the greater risk if things go wrong? The middle aged investor risks losing the bulk of his 401 (K) as he nears retirement. Investor portfolios of the middle class in America risk further losses after losses in the 2008 crisis.

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