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What’s the Stock Market Outlook for 2019 and Beyond?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Investing money in the stock market is one way to build wealth — many view this form of investment as a critical piece of retirement. You may be ready to start your investment portfolio. However, placing your money into the market without a strong understanding of the current conditions can be nerve-wracking.

As with most things, knowledge can help to ease that uncomfortable feeling. The more you know, the more comfortable you will be in your market investments.

Below, we take a look at the past and share expert opinions about stock market predictions for 2019.

2018 market performance at a glance

Understanding the past year will help to better frame the stock market predictions for 2019.

When looking at the stock market forecast over time, we will refer to the Standard & Poor’s (S&P) 500. The S&P 500 is an index of the largest 500 publicly traded companies in the U.S. stock market. Although the investment portfolios of each individual investor will react differently to the changing market, the S&P 500 is a good benchmark to follow market changes.

In 2018, the stock market proved to be very volatile. Although the S&P 500 has shown a small year-to-date increase, the slight rise has been accompanied by a bumpy ride.

The S&P 500 started off the year with a bang when it reached an all-time high in January, but it subsequently dropped 10.16% in February. It continued to rise and fall in significant swings for most of the year. In fact, although the S&P 500 hit multiple record highs this year, October 2018 was the worst month for the past seven years.

Even with all this turbulence, the bull market — when the prices in the stock market are rising — became the longest-running in history on August 22. As we near the end of the year, more investors are convinced that we are heading into a bear market — when the prices in the market are falling.

“This type of volatility mirrors that of which the US economy has seen at the onset of previous bull market wind-downs,” said Paul Shelton Jr., a portfolio manager with Warwick Shore Advisors. In a volatile market, it can be difficult to invest with confidence. However, the outlook for the future is not entirely grim.

The stock market forecast for 2019 and beyond

Although experts have made stock market predictions for 2019, it’s impossible to know what will actually happen. No one can foresee the unexpected events and conditions that will create changes in the market. The only thing we can anticipate are changes of some kind.

Keep in mind that attempting to predict the future can be the downfall of many investors. It’s tempting to try timing the market, but that can often be a risky investment strategy. Instead, use the stock market forecasts below as a jumping off point as you conduct your own research and decide which investments are best for your portfolio.

Short-term forecast

It’s not surprising that different experts have different opinions about the market’s outlook. Even predictions about the next year vary greatly.

According to a CNN report, Morgan Stanley equity strategist Michael Wilson predicts that we are currently entering a bear market, indicating a downturn in the market. However, other investment giants like Goldman Sachs disagree. Their official outlook predicts that the S&P 500 will continue to grow slowly with more choppiness in 2019, as reported by CNBC. Similarly to Goldman Sachs, Shelton said, “Over the next year I foresee moderate appreciation — however, the ride will be bumpy.”

An Eaton Vance survey of more than 600 financial advisors showed similar division: 54% foresee stocks to continue increasing in value, but many are concerned with the market’s volatility. More than a quarter of surveyed advisors think geopolitical issues and U.S. politics are drivers in market volatility, with another 22% pointing to the Federal Reserve’s decision to raise interest rates as a contributing factor as well.

Other factors that could sway market predictions for 2019 include rising wage costs, slowing U.S. GDP growth and a falling growth rate of the S&P 500. It’s unclear how significantly these factors will affect the growth of the market in 2019, but many investors agree these developments will slow growth to some extent.

Long-term forecast

Making accurate stock market predictions for the next year is difficult, but creating a forecast for the long-term is even harder — so many factors can change between now and then.

With the average historical returns of the market around 10%, it’s tempting to assume returns will remain high. However, Kenneth Melotte III, founder of Melotte Financial Advisors, warned against that. “I caution anyone against assuming U.S. stocks will provide returns remotely close to the 10% long-term historical average return over the next ten years.”

The strong cautionary words were founded in Melotte’s belief that “the potential downside in the next bear market is quite large, as losses may exceed 50% or even 60% from the ultimate peak based on the current level of the most reliable valuation metrics.”

Yet Melotte was quick to note that market forecasts really are “a guess … no matter who is making the prediction.” Past performance has shown that long-term investments are typically less risky than short-term investments, but it’s important to carefully assess one’s risk tolerance before deciding to invest.

Final thoughts

Remember, predicting the future is impossible. The only sure thing is that the market will change — whether it rises or falls has yet to be seen.

One way to help protect yourself from the inherent volatility of the stock market is to diversify your investments and continue to invest on a regular basis. If you’re nervous about investing or aren’t sure where to start, consider consulting with a licensed financial professional to get specific advice for your money.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Sarah Sharkey |

Sarah Sharkey is a writer at MagnifyMoney. You can email Sarah here

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Investing

E*Trade vs. TD Ameritrade

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

E-Trade and TD Ameritrade are two of our picks for the best online brokers available in the market today. While these firms share broad similarities in the services they offer, there are some important differences that can hopefully help you make an informed choice between these two key industry players.

Based on our comparison, E-Trade is less expensive for high volume traders who do more than 30 trades per quarter. TD Ameritrade seems to offer a wider range of trading options, including foreign exchange and cryptocurrency, plus more portfolio management options for larger balance accounts.

E-Trade vs. TD Ameritrade: Feature comparison

E-TradeTD Ameritrade
Current promotions

For customers who deposit at least $10,000, E-Trade offers up to 500 commission-free trades for each stock or options trade executed within 60 days of funds becoming available.
For new accounts with a deposit of at least $25,000, you'll also receive a cash bonus, which can range from $200 to $2,500 depending on the amount deposited.

Deposit $3,000 or more and get 60 days of commission-free online equity, ETF and option trades.
Stock trading fees
  • $6.95 per trade (less than 30 trades per quarter)
  • $4.95 per trade (more than 30 trades per quarter)
  • $6.95per trade
Amount minimum to open account
  • $500
  • $0
Tradable securities
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
  • Futures/Commodities
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
  • Futures/Commodities
  • Forex
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $75 full account transfer fee
  • $25 partial account transfer fee
  • $0 yearly inactivity fee
  • $0 annual fee
  • $75 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Commission-free ETFs offered
Mutual funds (no transaction fee) offered
Offers automated portfolio/robo-advisor
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Coverdell Education Savings Account(ESA)
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • Custodial IRA
  • SEP IRA
  • Solo 401(k) (for small businesses)
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
  • Guardianship or Conservatorship
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • 529 Plan
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Coverdell Education Savings Account(ESA)
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • Custodial IRA
  • SEP IRA
  • Solo 401(k) (for small businesses)
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
  • Guardianship or Conservatorship
Ease of use
 
 
Mobile appiOS, AndroidiOS, Android, Windows phone
Customer supportPhone, 24/7 live support, Chat, Email, 30 branch locationsPhone, 24/7 live support, Chat, Email, 364 branch locations
Research resources
  • SEC filings
  • Mutual fund reports
  • Earnings press releases
  • SEC filings
  • Mutual fund reports
  • Earnings press releases
  • Earnings call transcripts
  • Earnings call recordings

E-Trade vs. TD Ameritrade: Fees & account minimums

Some brokers charge an annual or monthly fee to maintain your account. Neither E-Trade nor TD Ameritrade impose such a fee, nor do they charge a fee if your account is inactive during the year. However, E-Trade does impose a $500 minimum to open an account at the firm. TD Ameritrade requires no minimum account balance.

E-Trade and TD Ameritrade charge investors a flat fee for each stock trade. At E-Trade, the charge is $6.95 a trade for the first 30 transactions in a quarter. When you make more than 30 transactions per quarter, E-Trade drops its commission to $4.95 per trade. TD Ameritrade charges a flat $6.95 commission per trade. This makes E-Trade less expensive for high volume traders. Both firms offer a range of commission-free exchange traded funds (ETFs) and the ability to purchase mutual funds without a transaction fee.

Both brokers charge fees for professional account management services. At E-Trade, fees range from 0.30% to 0.90% of assets under management, depending on the services chosen by the investor. At TD Ameritrade fees are similar, ranging from 0.30% to 0.90% of assets the firm manages.

E-Trade charges a $75 fee for a full account transfer and a $25 fee for a partial transfer. TD Ameritrade charges the same $75 fee for a full account transfer. However, at TD Ameritrade, partial account transfers are free, offering investors additional flexibility.

Many online brokers offer special incentives to attract investors. E-Trade and TD Ameritrade both currently offer commission-free stock and options trading. At E-Trade you get $600 (and up to 500 free trades) for a $10,000 deposit. At TD Ameritrade you must deposit at least $3,000 to get 60 days of free trades. In addition, you get $100 if you deposit $25,000, $300 if you deposit $100,000 and $600 if you deposit $250,000. Offers vary over time.

E-Trade vs. TD Ameritrade: Tradable securities

In addition to trading stocks and bonds, E-Trade and TD Ameritrade offer their customers a wide range of investable asset classes to choose from:

  • Mutual funds: For investors interested in the professional management that mutual funds offer, at E-Trade you can invest in more than 4,400 mutual funds with no transaction fee. Meanwhile, TD Ameritrade offers more than 13,000 mutual funds.
  • Options: An option allows an investor to sell a security at a predetermined price for a certain period of time. At E-Trade investors can trade options at regular commission rates plus an additional fee of $0.75, which drops to $0.50 with 30 or more trades per quarter. TD Ameritrade permits investors to trade options for $6.95 plus $0.75 per contract.
  • ETFs: Including ETFs in your portfolio is a great way to add an element of diversity. E-Trade gives investors access to more than 250 ETFs free of commission. At TD Ameritrade, investors have access to more than 550 ETFs that are commission-free.
  • Foreign exchange trading. At TD Ameritrade, investors can access the currencies of more than 20 countries. E-Trade does not offer foreign exchange trading.
  • Futures. If you decide to trade in futures you are essentially agreeing to sell a security or other asset at a set price at a predetermined time in the future. E-Trade offers futures trading for $1.50 per transaction. TD Ameritrade gives investors access to more than 70 futures products.
  • Cryptocurrency. TD Ameritrade recently began offering cryptocurrency investing through ErisX, a regulated exchange for cryptocurrency trades. E-Trade does not offer the ability to invest in cryptocurrency.

E-Trade vs. TD Ameritrade: Special features

E-Trade offers two levels of managed account services. Core Portfolios is the company’s robo-advisor product, which offers you an automated portfolio of ETFs customized to your investment goals. Just complete a five-minute online questionnaire to get started, which includes information about your goals, timelines and attitudes about risk. The minimum investment is just $500 and the annual fee is 0.30% with no commissions.

Blended Portfolios is E-Trade’s second level of managed accounts. Investors work with a financial consultant to tailor a portfolio that meets their needs, however you need a $25,000 minimum balance to gain access to Blended Portfolios. Annual management fees range between 0.65% and 0.90%, depending on the total amount of money invested under the service.

TD Ameritrade offers investors three levels of managed portfolios. Essential Portfolios is the firm’s robo-advisor option, offering five goal-oriented ETF portfolios. The minimum investment is $5,000 and the annual management fee is 0.30%.

Selective Portfolios offers more personalized service, and invests in both ETFs and mutual funds. A financial consultant helps you set investing goals, and a support team that regularly updates you on how the account is tracking towards those goals. The minimum investment is $25,000, while annual fees range from 0.55% to 0.90% depending on account balance.

Personalized Portfolios provides TD Ameritrade’s highest level of service, with tailored advice and portfolio construction. It gives you a one-on-one relationship with a financial consultant, plus extra guidance and support from a team of investment professionals. The minimum investment is $250,000, and annual fees range from 0.60% to 0.90%, depending on portfolio type and the total amount invested.

E-Trade advantages

  • If you are a high-volume stock trader, after you do 30 trades in a quarter, the cost per trade drops to $4.95 from $6.95. TD Ameritrade offers only a flat fee of $6.95 per trade.
  • E-Trade offers its clients access to solid research tools including market news, recordings and transcripts of earnings calls as well as the ability to analyze companies with fundamental stock research, technical research and bond, mutual fund and ETF research tools.
  • E-Trade has a “better” bonus for new clients. For a deposit of only $10,000 you get $600 and up to 500 free trades. While TD Ameritrade offers 60 days of free trades for only a $3,000 deposit, you need to deposit $250,000 to get a $600 cash bonus.

TD Ameritrade advantages

  • TD Ameritrade does not impose a minimum balance to open an account. At E-Trade, the minimum initial investment to open an account is $500.
  • Some transfer fees at TD Ameritrade are lower. For example, there is no charge for a partial account transfer while E-Trade imposes a $25 fee.
  • TD Ameritrade has 364 branches located around the country to provide customer support. E-Trade has only 30 branches.
  • TD Ameritrade offers investors access to more mutual funds and ETFs that are free of transaction fees. For example, TD Ameritrade offers more than 13,000 mutual funds, nearly three times the number of mutual funds at E-Trade(4,400).

E-Trade vs. TD Ameritrade: Which is best for you?

When the time comes to choose between E-Trade and TD Ameritrade, E-Trade is likely to appeal to high volume traders, since the cost per trade drops to $4.95 after 30 trades in a quarter. Similar price cuts are available for options as well. TD Ameritrade will appeal to investors who are looking to trade foreign exchange and cryptocurrency. And for investors who are looking for stronger portfolio consulting options, TD Ameritrade offers a wider choice of customized investing advice for larger account balances.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Peter Fleming
Peter Fleming |

Peter Fleming is a writer at MagnifyMoney. You can email Peter here

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Investing

Where Investing in Housing Outperforms the Stock Market

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

The housing market has come a long way since the Great Recession. The demand for homes has reached such a fever pitch that in certain U.S. metro areas, the equity you have in a home outperforms investments in index funds tracking the S&P 500 — long considered one of the most reliable vehicles for investors and a strong indicator of how the stock market is performing as a whole.

Key takeaways

  • We examined the performance of home prices in 20 U.S. metro areas from 2012 to 2018. Of these 20 areas, housing appreciation in the Los Angeles, San Francisco, San Diego, Miami and Seattle markets outpaced the S&P 500 over this period.
  • San Francisco outperformed the S&P 500 by the greatest margin, growing approximately 127 percentage points from 2012 to 2018, compared with the S&P 500’s gain of nearly 98 percentage points.
  • Among the five metro areas that outperformed the S&P 500, only Los Angeles has a majority of homes occupied by renters rather than by owners. Renters obviously don’t reap any benefits from the explosive growth in home values — in fact, they often see their rents rise as landlords see the growing value of their real estate.
  • From 2012 to 2018, the housing markets in all 20 cities we looked at increased in value. The slowest-growing market, Cleveland, still rose by almost 22 percentage points.

How we know housing markets have outperformed the stock market

Among the most reliable and most widely cited indices used to measure housing markets are the Case-Shiller indices, calculated each month by Standard & Poor’s and CoreLogic. There are several Case-Shiller indices, but we chose the Composite 20 index, which tracks housing values in the following 20 metropolitan areas:

  • Atlanta
  • Boston
  • Charlotte
  • Chicago
  • Cleveland
  • Dallas
  • Denver
  • Detroit
  • San Francisco
  • Seattle
  • Las Vegas
  • Los Angeles
  • Miami
  • Minneapolis
  • New York
  • Phoenix
  • Portland (OR)
  • San Diego
  • Tampa
  • Washington D.C.

The index examines the change in home prices for each of these cities by looking at residential home sales and running that data through an algorithm. To learn more about the Case-Shiller index, there’s plenty of information from Standard & Poor’s here.

In the 2012-2018 time period of our study, the Case-Shiller Composite 20 index showed a growth in average home values in all 20 metropolitan areas. You can then compare the Case-Shiller index to the growth in the S&P 500, an index of roughly 500 stocks that often serves as a bellwether for the U.S. stock market as a whole.

The chart above indicates that according to the Case-Shiller Composite 20 index, the housing markets of five metro areas grew quicker than the S&P 500 in the 2012-2018 period, which saw a rise of 97.97 percentage points:

  • San Francisco (+127.26 percentage points)
  • Los Angeles (+111.57 percentage points)
  • Seattle (+110.95 percentage points)
  • Miami (+109.10 percentage points)
  • San Diego (+98.67 percentage points)

That means in theory, the equity you have in a home in one of these markets may have appreciated by a greater amount than if you had invested it in an index fund that tracks the S&P 500 — a common stand-in for the entire stock market.

Good news for homeowners, bad news for renters

While homeowners may be celebrating, our study gives the renters living in these five metro areas little reason for joy. As the value of a home goes up, landlords increase rents to reflect the broader housing market (as much as they are able under the constraint of local housing laws and regulations). The chart below estimates the performance of rents in the five metro areas that outperformed the stock market from 2012 to 2018:

In San Francisco, for example, the average rent rose nearly 46% during the time period in question from $2,359 to $3,433 a month. While the City by the Bay offers the most dramatic example of rent increases, tenants in the other four metro areas also had to pay more for the privilege of renting in a hot housing market.

Another concerning consequence of rising home values in these cities is that homeowners in these markets tend to already be wealthier than their non-owning neighbors, which means real estate appreciation widens the wealth gap. For example in Los Angeles, only approximately 31% of renters have an income of $75,000 or more a year, compared with 63% of homeowners. Homeownership also has a racial disparity in these metro areas: Almost 71% of African American households in Seattle rent, compared with just 36% of white households.

Why stocks are still a better bet than housing

Despite the value of housing outpacing the growth of the stock market in certain metro areas, homeowners should think twice before funneling funds earmarked for their investment accounts into hearth and home.

The most obvious difference is the relative liquidity of investment securities and a house (especially one that’s your primary residence). Selling a house comes with a litany of costs that eat up both your time and your money, while cashing out on your investments can usually happen in a matter of days (not that selling an investment in an index fund or stock is without potential tax costs and other potential losses).

There’s also the matter of putting all of your eggs in one basket. The ability to diversify your investments is one of the greatest advantages of investing in markets. By placing your money in a diverse array of securities, from stocks, to bonds, to money market accounts, it can help shield you from volatility in any one particular market. But if you put all of your money in your home as an investment and the housing market crashes (like it did most recently in 2008), then your nest egg is scrambled.

Finally, owning a home comes with property taxes you need to pay every year. In the city and county of San Francisco, the property tax rate for the financial year of 2018-2019 was 1.1630%. With investments, you typically only pay a capital gains tax one time: when you sell it.

Methodology

Data on change in S&P 500 value over time comes from the Stern School of Business at New York University. Data on home value for each of the metro changes comes from the Case-Shiller Index of home values and is pulled from the Federal Reserve Economic Data. Data was analyzed over the 2012-2018 time period.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

James Ellis
James Ellis |

James Ellis is a writer at MagnifyMoney. You can email James here