Look Abroad For Higher Returns

Previously, we examined three main factors conspiring against investors seeking higher expected returns. These factors can combine to generate a “perfect storm,” at least from an investment perspective, facing today’s investors. We then turned to the four most effective ways that investors can fight these head winds, which, oddly enough, have nothing to do with investing. We’ll now cover some additional investing-related steps you can take to help ensure you don’t run out of money in retirement.

Increase Your Equity Allocation

While today’s higher valuations do forecast lower future returns, this doesn’t necessarily mean stocks are overvalued, just more highly valued than historically has been the case. I’ve explained previously why higher valuations aren’t signaling overvaluation, as many gurus have been stating. And while higher valuations do forecast lower returns going forward, there’s still a relatively large equity risk premium.

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