Experts Forecast Stock and Bond Returns: 2023 Edition

Thanks to higher yields and lower equity valuations, return assumptions are the highest they’ve been in years. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_improvingfinances&utm_content=41848&elqTrackId=0b44a65304ad4ef3afcbd465804ea468&elq=06685b5a5ec1489f8a04d260128d7ae5&elqaid=41848&elqat=1&elqCampaignId=20055) [Improving Your Finances] Improving Your Finances with [Christine Benz]( [Christine Benz] If you’re in the market for good news—and who isn’t?—there was plenty to be found in [my latest roundup of capital markets assumptions]( investment providers’ outlooks for the future performance of stocks and bonds. Owing to higher bond yields and lower equity valuations, the latter of which improve stocks’ return prospects, nearly every firm in my survey was forecasting higher stock and bond returns for the next decade than they were calling for a year ago. Outlooks for non-U.S. stocks were the highest of all, consistent with previous years’ forecasts. (That forecast has yet to come to fruition, but foreign stocks are beating U.S. stocks so far this year.) Savvy investors might naturally be skeptical of the whole business of forecasting. And I’d agree that very short-term forecasts about what the market might do are about as reliable as a coin flip. (Did anyone see the pandemic and its related market effects coming—both the big losses early on and the subsequent rally later?) But you need to use some kind of return assumption for long-term planning purposes, whether you’re deciding how much you need to save or how much you can safely withdraw in retirement. A case in point: John Rekenthaler, Jeff Ptak, and I used Morningstar Investment Management’s capital markets assumptions in [our recent research on safe withdrawal rates for retirement](. Susan Dziubinski and I discussed some of the major findings, especially the conclusion that 2022’s bad market actually improves the [outlook for retirement spending, in this video](. Tax considerations are an unsung aspect of retirement planning, at least in the mainstream. That’s why it was such a treat [to delve into the topic with Jeff Levine]( one of the pre-eminent tax planning experts in the United States. One of the topics we discussed in depth, included in [this excerpt]( was how to manage taxes in retirement, including when to tap which accounts and whether to convert traditional IRAs to Roth. It’s a complicated business, but Jeff manages to make it as simple and entertaining as possible. Also, join me tomorrow for a live discussion via [#TwitterSpaces]( on how to navigate necessary family talks about estate planning. With warm regards, Christine Benz [Experts Forecast Stock and Bond Returns: 2023 Edition]( Thanks to higher yields and lower equity valuations, return assumptions are the highest they’ve been in years. [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] [Everything You Need to Know About Roth IRAs]( Roth IRA contribution and income limits, the ins and outs of the backdoor IRA maneuver, and more. [Watch Now]( [4 Strategies for an Organized Tax Season]( Has tax season become a frustrating paper chase? These tactics can buy you some relief. [Read More]( [A Year-End Portfolio Review in 7 Easy Steps]( Check up on your portfolio’s health—and that of your whole plan—ahead of tax season. [Read More]( [What's a Safe Withdrawal Rate Today?]( What declining stock and bond prices and higher inflation mean for retirement income. [Read More]( [Ann Garcia: How to Pay for College]( The financial planner and author discusses the college application process, strategies for making college more affordable, and how college choice affects success later in life. [Listen Today]( Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2023 Morningstar, Inc. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602