With U.S. and global interest rates still hovering close to historic low levels, stocks will likely offer the best opportunities for growth during the 2020s, Hyzy believes. While many investors have been reluctant to embrace stocks since the 2009 financial crisis, “over the next 10 years, we could see the rise of a new ‘equity culture’ of Millennials and younger investors seeking returns,” Hyzy says.
As robotics, automation and artificial intelligence play an ever-larger role in business and daily life, “we expect the technology sector to produce above-average returns during the 2020s,” Hyzy says. With people 65 or older set to outnumber people under the age of five globally for the first time in history, health care presents another area of potential growth. Other growth areas include industrial stocks and financial services, he adds. With climate change taking center stage, renewable energy stocks also hold promise.
Although stocks on the whole may represent the best opportunities for return in the 2020s, bonds should remain an important part of portfolios. Bonds can add protection against market volatility, Hyzy notes, as well as a source of income. High-quality corporate bonds, short-term Treasury and municipal bonds are among the most promising fixed-income choices, he adds.
Amid an uncertain outlook for the U.S. and global economies—as well as an upcoming U.S. presidential election that could influence tax and regulatory policies for years to come—investors should be prepared for market volatility throughout the coming decade, Hyzy advises. “We’ve had so much episodic volatility in recent years that markets are getting used to it,” he says.
For individual investors, “having a portfolio that’s well diversified across multiple asset classes and sectors is an effective way to prepare for the unexpected.” Another key is to continually rebalance your portfolio, as events and markets change, to be sure that your investments stay aligned with your long-term goals.
Speak with your financial advisor about your financial goals, and how you might adjust your portfolio for the decade ahead.