Carnegie Investment Counsel Blog


What Should I Do with My Portfolio in My 20s, 30s and Beyond?

Posted by Shams Afzal, AIF® on Oct 27, 2020 1:30:00 PM

While some investing wisdom is timeless and can be as simple as “save early and often,” behavioral finance shows us that the best advice is one that can be followed and adhered to long enough for it to deliver. 

Priorities in one's 20s are and should be different than those in one's 40s and beyond. 2020 has put a wrinkle in even the best laid plans and added other layers of uncertainties to be taken into account for both short- and long-term financial decisions. Here are some steps to consider in the different phases of financial life:


The Promise of the 20s

Outside of bulge bracket employment in Silicon Valley, Wall Street and other rare launching pads, young savers are likely to find themselves in lower tax brackets just starting out. After-tax investing in Roth IRAs should be prioritized during these years due to the potential of five decades worth of tax-free growth. With maximizing your Roth contribution up to the limit of $6,000 per year, it can become a substantial capital resource at retirement. Pre-tax investing in 401(k)s or other retirement plans should go hand in hand with at least 5% salary deferral rate. 

Given the unique circumstances of 2020 which is accelerating adoption of everything digital, for people in their 20s, further care should be taken to ensure that investments prioritize growth-oriented companies over those that pay out most of their annual profits in dividends. High dividend payers generally indicate industry maturity and low potential for growth.


Stability and Professional Growth in the 30s

The 30s are generally marked by stability of career, expertise-building and growing families. Competition for discretionary dollars can be intense, from a mortgage, children and other responsibilities. This is the decade, for most people, when seeking out mentors can be key to personal and professional development. In some ways, most adults set forth their career trajectories during this decade of their lives. With a few promotions and salary increases in the bag, 30-somethings should be targeting setting aside at least 10% of their salary monthly into their retirement plans along with sustained funding of Roth IRA accounts. Investing for growth rather than safety of principal should remain the primary focus.


Accelerating Net Worth in the 40s and 50s

The 40s and 50s share similarities in terms of their ability to provide clarity of path, and perhaps, purpose in one's personal and professional life. It is likely that this period, endearingly called “middle age,” manifests its mark at the upper level of Maslow's hierarchy, where an individual graduates away from needs and wants paradigm to some form of self actualization. In practical terms, the combination of monetary rewards of professional expertise and maturity while approaching empty nester status, make these years elemental for future financial stability and retirement readiness.

Maxing out retirement plans along with sustained funding of after-tax accounts during these years is a must for those looking to supercharge their retirement goals. Special care must be taken to ensure that new found discretionary income meets personal budget discipline.

The 40s and beyond are years where lack of professional financial advice can be extremely costly. Studies from large custodians like Fidelity, routinely show that there is a propensity on the part of many investors to buy high and sell low. As an example, selling investments in March or April of 2020 at near market bottoms is already proving to be a regrettable move and could spell trouble for retirement readiness. Bear market losses, as a result of erratic trading without a plan, can take years to recover from.

Emotions-based trading aside, how one is invested has come under the spotlight as a result of the pandemic. The market performance delta between the information tech economic sector and the energy economic sector stands at greater than 60 percent so far into 2020. Investment portfolios, not taking growth versus value-oriented asset classes into consideration, may be doing so at the risk of multi-year underperformance.

A comprehensive financial plan during these years can mitigate market volatility jitters and pave the way for a disciplined path towards retirement goals.


Preparing for the Next Phase in the 60s and Beyond

Those in their 60s are faced with the prospect of another zero interest rate regime commenced by the Federal Reserve in response to Covid-19. Not only are government securities yielding negative rates after adjusting for inflation (as of this writing), a $10,000 emergency savings account is likely generating a whopping $1 in interest per month, exclusive to highly valued customers, of course!

Further exacerbating income generating potential for folks facing imminent retirement, are shocks in the energy sector and commercial real estate, areas traditionally relied upon for retirement income.

Special consideration should be given this year to Roth conversions on investments held in IRAs that have suffered steep declines as a result of the dislocation seen in some segments of the US economy. If these investments are expected to rebound and thrive in a post pandemic world, what better way to position those assets than in a Roth account where future recovery of prices will be tax free. For investments that have seen better days, tax loss harvesting can be a great tool this year. Always consult with a tax advisor before taking any steps with large tax implications.

In the months ahead, the US economy is positioned to enjoy a resurgence of consumer and business activity as confidence rebounds to early 2020 levels. The optimism is showing up in discretionary spend data tracked by sites like, new home sales and other service sector metrics. 

Millennials, who have been long behind the curve with regard to homeownership, are finally getting in on the action, driving new home sales to 2007 levels. While bankruptcies in retail have captured headlines, the economy has been innovating for a post pandemic world. Let's remind ourselves that companies like Airbnb, CarGurus, Wix, Dropbox and more came into existence as the housing bubble was coming to an end and new solutions were warranted during the last economic crisis.

2020 is one for the history books. It will be remembered for many things including large scale societal, corporate and individual changes. It is highly likely that the investments landscape will emerge altered from the pandemic as well. Diligence and prudence are needed more than ever to ensure harmony with a changed world.

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Topics: Investment Management

What Is the Windfall Elimination Provision and How Does it Impact Me?

Posted by Bryan Blackburn, CFP® on Oct 20, 2020 12:01:00 PM

Many of us are not particularly fond of surprises, especially later in life and certainly not when we are looking to understand what our Social Security benefit will be upon retirement. But if you are eligible for a pension based on work you did for a government entity or nonprofit organization and did not pay the Social Security tax on your wages, you may be in for a surprise.

Known as the Windfall Elimination Provision (WEP), this potential reduction in Social Security benefits is a federal law that impacts those who have worked in a job where pay was subject to Social Security tax withholding, and also have worked in another job where Social Security tax is not withheld. Employees in the public sector like teachers or in the civil service are the prime examples, but if your employer was outside the U.S. you may also be affected.

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Topics: Investment Management

Buyer Beware: A Review of Annuities and Why You May Want to Avoid Them

Posted by Richard Alt on Oct 14, 2020 1:30:00 PM

As life expectancy increases and stock market volatility seems to grow, annuities are gaining in popularity as people seek safety for their money. Last year, fixed annuities saw $139.8 billion in sales, which is an all-time high, according to InvestmentNews.

It is essential to share some truths about annuities and explain the risks of these seemingly safe products which are sold as “can’t miss” solutions. 

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Topics: Investment Management

Considering a Female Financial Advisor? Here Are 3 Ways to Find the Perfect Fit for You

Posted by Heidi Rose on Feb 11, 2020 12:00:00 PM

How to choose the best financial advisor for you


Looking for a female financial advisor? At Carnegie Investment Counsel, we asked three of our female financial advisors for tips about how to find the best investment advisor for you. They emphasized that team members at Carnegie, male or female, focus on providing a customized and hands-on approach to services from financial planning to portfolio management. The point is to assess any advisor for the best fit when choosing a long-term financial partner.

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Topics: Financial Planning, Investment Management

The Signal

Posted by Raz Pounardjian on Jan 30, 2020 9:51:00 AM


As 2019 was ending, I was reading a few articles and blog posts recapping the last decade of stock market returns.

Throughout this period, there were many instances where you could have been scared out of the market or sought signals that would indicate a “top” in the market.

For example, remember in 2013 when actress Mila Kunis said she was going from cash into stocks? The S&P 500 is up about 140 percent since she made that announcement.

Or how about in 2016 when the cover of Barron’s (a popular financial magazine) boasted “Get Ready for Dow 20,000?” The Dow Jones Industrial Average is in shouting distance of 30,000 or about 57 percent higher from the date of publication.

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Topics: Investment Management

What Is the SECURE ACT? Top 4 Ways It May Impact Your Retirement Planning, plus 2 Pitfalls to Avoid

Posted by Bryan Blackburn, CFP® on Jan 28, 2020 11:15:00 AM


How the new SECURE ACT rules may change how you save for retirement


In mid-December 2019, the “Setting Every Community Up for Retirement Enhancement” (SECURE) Act was included as part of a massive spending bill approved by Congress.

Notably, this may be one of the most significant pieces of retirement legislation in years.  

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Topics: Financial Planning, Investment Management

Market Insights: Understanding The Big S-Curve

Posted by Brent Luce on Jan 7, 2020 11:15:00 AM


The Big S-Curve

The most common things that typical market observers are currently worried about (partially fueled by the media) revolve around politics, the trade war, interest rates and the timing/depth of the next recession.

It is much less common to hear someone talking about the potential positives. Fears like this are nothing new, and in fact, I cannot remember a time in my career when there wasn't a slew of fears to worry about.

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Topics: Market News, Investment Management

Has Something Changed? Understanding Market Trends at the End of 2019

Posted by Brent Luce on Dec 3, 2019 11:30:00 AM

Anyone who follows the equity markets on a stock by stock (or company by company) basis (like me) has likely noticed that the market has experienced a clear shift in behavior since early September.

Some examples of this include:

  • Significant strength in the Financial sector with many financial stocks hitting all-time highs
  • Significant strength in Industrials, with many at new highs
  • A clear shift toward value stocks and away from smaller/newer growth stocks
  • A shift away from the previous winners and into the previous losers
  • Many of the “S-Curve” plays – see blog from 11/4/19 – have declined
  • Weakness in REITS, utilities and consumer staples stocks 
  • All-time highs in the major market indices
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Topics: Market News, Investment Management

What Elder Financial Exploitation Looks Like: 5 Signs to Keep in Mind

Posted by Gary Wagner on Oct 22, 2019 10:15:00 AM

As money scams proliferate, senior citizens are one of the most vulnerable populations. The U.S. Consumer Financial Protection Bureau notes a four-fold increase in financial fraud reports in recent years. Suspicious financial activity that involves older Americans totaled $1.7 billion in 2017 alone, the bureau says.

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Topics: Investment Management

Retirement Planning Guide for Couples: How to Have a Productive (and Enjoyable) Conversation About Retirement and Finances

Posted by Gary Wagner on Aug 22, 2019 9:08:00 AM

Are you and your spouse preparing for retirement? Have you had a candid conversation about what that retirement will really look like? Here are some steps as a retirement planning guide to help you have a productive discussion as a couple. 

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Topics: Investment Management

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