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CNBC
8 hours ago
- Business
- CNBC
Why investors shouldn't try to be a 'hero' in this economy, analyst says
Data suggests the U.S. economy may be in a precarious spot — and investors may be wise not to take outsized risks with their portfolios for fear of steep losses, experts said. "This is not the environment to be a hero in," Callie Cox, chief market strategist at Ritholtz Wealth Management, wrote this month in a newsletter. In other words: Stick to your long-term investment plan, including an appropriate asset allocation and time frame to reach your goals, experts said. Avoid the temptation to funnel a big chunk of money into high-flying shiny objects like individual technology stocks or cryptocurrency, they said. "You need to own a basket of quality assets and investments, hold your breath and let markets do their work," Cox said in an interview with CNBC. To be sure, this is sound perennial advice typically offered by financial planners. But some market-watchers caution that economic headwinds could serve up ample volatility in the coming months. "I think there are a lot of reasons to be optimistic, but also cautious at the same time," said Winnie Sun, co-founder of Sun Group Wealth Partners, based in Irvine, California, and a member of CNBC's Financial Advisor Council. The job market appears to have weakened considerably, for example. Employers in the public and private sectors added 35,000 jobs, on average, over the past three months, according to federal data. Job growth from May to July is happening at a "pace you normally see around or in recessions," Cox wrote. It's also down from average monthly growth of 123,000 jobs during the same three-month period of 2024, and from 111,000 in the first three months of 2025. Here's a look at other stories offering insight on ETFs for investors. The size of the U.S. labor force has declined for three consecutive months, which hasn't happened since 2011, Cox wrote. "The job market is in a precarious spot after months of slowing consumer spending," Cox wrote. "The American consumer drives the economy, and the economy ultimately drives the direction of markets," she added. Economists also worry about inflation reigniting as tariffs levied by the Trump administration work their way into higher prices for consumer goods and services. There have been some signs of that in recent months, and many economists expect that inflationary pressure to bite harder in coming months. Despite these headwinds, experts say the economy isn't in dire shape. The stock market has also continued to march to new highs, with the S&P 500 stock index up about 10% since the start of the year. Many of Sun's clients have shown urgent interest in artificial intelligence and crypto amid lofty returns, versus more bread-and-butter long-term planning, she said. Shares in tech giants like Meta, Microsoft and Nvidia are up about 34%, 24% and 36%, respectively, this year, for example. Bitcoin prices are also up over 25%. It's a "hurry-up-and-invest" mindset, Sun said. "A lot of people are feeling like they'll be left behind," she said. "But we don't feel like we have the full picture yet on where the U.S. is economically." Tariff policy has whipsawed in recent months, leaving markets and investors grasping for answers as new import duties are announced, delayed or rescinded in a rapid-fire fashion, according to market-watchers. "Right now, we feel it's best to stick with diversified and long-term plans," Sun said. "A lot of the decisions being made right now are not financially driven," she said. "I think it's much more emotions-driven." Sun advises investors to be well-diversified, and avoid the temptation to over-allocate their portfolio to growth-oriented sectors like technology. Having a well-diversified portfolio diversifies risks in the event lackluster economic data send markets tumbling, she said. Exchange-traded funds or mutual funds, which are baskets of several different securities like stocks and bonds overseen by professional asset managers, can help the average investor stay diversified, she said. ETFs often carry relatively low fees compared with mutual funds, and so can offer a cheap way to diversify. Rebalancing more frequently in this environment is "key," Cox said. That entails ensuring your asset allocation hasn't been thrown out of whack if certain segments of your portfolio outperform or underperform for a period of time. "You never want to hit a market selloff and be more exposed to it than you think," Cox said. Jacob Manoukian, U.S. head of investment strategy, at J.P. Morgan Private Bank, cautions that taking too much risk off the table could also have adverse outcomes for investors. Companies continue to have strong corporate earnings despite some relatively weak economic data — a dynamic that can persist for a while, he said. "It's hard to give advice to reduce risk substantially when corporate earnings are as strong as they are," Manoukian said. "When companies are surprising to the upside to that degree, we'd encourage investors and our clients to have the right amount of risk for their plan and not reduce risk unduly — that's a way to underperform," Manoukian said.
NBC News
07-06-2025
- Business
- NBC News
When it comes to saving, Gen Z asks: ‘What's the point?' That's dangerous, expert says
Gen Z seems to have a case of economic malaise. Nearly half (49%) of its adult members — the oldest of whom are in their late 20s — say planning for the future feels 'pointless,' according to a recent Credit Karma poll. A freewheeling attitude toward summer spending has taken root among young adults who feel financial 'despair' and 'hopelessness,' said Courtney Alev, a consumer financial advocate at Credit Karma. They think, 'What's the point when it comes to saving for the future?' Alev said. That 'YOLO mindset' among Generation Z — the cohort born from roughly 1997 through 2012 — can be dangerous: If unchecked, it might lead young adults to rack up high-interest debt they can't easily repay, perhaps leading to delayed milestones like moving out of their parents' home or saving for retirement, Alev said. But your late teens and early 20s is arguably the best time for young people to develop healthy financial habits: Starting to invest now, even a little bit, will yield ample benefits via decades of compound interest, experts said. 'There are a lot of financial implications in the long term if these young people aren't planning for their financial future and [are] spending willy-nilly however they want,' Alev said. Why Gen Z feels disillusioned That said, that many feel disillusioned is understandable in the current environment, experts said. The labor market has been tough lately for new entrants and those looking to switch jobs, experts said. The U.S. unemployment rate is relatively low, at 4.2%. However, it's much higher for Americans 22 to 27 years old: 5.8% for recent college grads and 6.9% for those without a bachelor's degree, according to Federal Reserve Bank of New York data as of March 2025. Young adults are also saddled with debt concerns, experts said. 'They feel they don't have any money and many of them are in debt,' said Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, based in Irvine, California. 'And they're wondering if the degree they have (or are working toward) will be of value if A.I. takes all their jobs anyway. So is it just pointless?' About 50% of bachelor's degree recipients in the 2022-23 class graduated with student debt, with an average debt of $29,300, according to College Board. The federal government restarted collections on student debt in default in May, after a five-year pause. The Biden administration's efforts to forgive large swaths of student debt, including plans to help reduce monthly payments for struggling borrowers, were largely stymied in court. 'Some hoped some or more of it would be forgiven, and that didn't turn out to be the case,' said Sun, a member of CNBC's Financial Advisor Council. Meanwhile, in a 2024 report, the New York Fed found credit card delinquency rates were rising faster for Gen Z than for other generations. About 15% had maxed out their cards, more than other cohorts, it said. It's also 'never been easier to buy things,' with the rise of buy now, pay later lending, for example, Alev said. BNPL has pushed the majority of Gen Z users — 77% — to say the service has encouraged them to spend more than they can afford, according to the Credit Karma survey. The firm polled 1,015 adults ages 18 and older, 182 of whom are from Gen Z. These financial challenges compound an environment of general political and financial uncertainty, amid on-again-off-again tariff policy and its potential impact on inflation and the U.S. economy, for example, experts said. 'You start stacking all these things on top of each other and it can create a lack of optimism for young people looking to get started in their financial lives,' Alev said. How to manage that financial malaise Young adults should try to rewire their financial mindset, experts said. 'Most importantly, you don't want to bet against yourself,' Sun said. 'See it as an opportunity,' she added. 'If you're young and your expenses are low, this is the time to invest as much as you can right now.' Time is working in their favor, due to the ability to compound investment growth over multiple decades, Alev said. While investing might 'feel impossible,' every little bit helps, even if it's just investing $10 a month right now into a tax-advantaged retirement account like a Roth IRA or 401(k). The latter is among the easiest ways to start, due to automatic payroll deduction and the possibility of earning a 'match' from your employer, which is 'probably the closest thing to free money any of us will get in our lifetime,' Alev said.
CNBC
07-06-2025
- Business
- CNBC
When it comes to saving, Gen Z asks: 'What's the point?' That's dangerous, expert says
Gen Z seems to have a case of economic malaise. Nearly half (49%) of its adult members — the oldest of whom are in their late 20s — say planning for the future feels "pointless," according to a recent Credit Karma poll. A freewheeling attitude toward summer spending has taken root among young adults who feel financial "despair" and "hopelessness," said Courtney Alev, a consumer financial advocate at Credit Karma. They think, "What's the point when it comes to saving for the future?" Alev said. That "YOLO mindset" among Generation Z — the cohort born from roughly 1997 through 2012 — can be dangerous: If unchecked, it might lead young adults to rack up high-interest debt they can't easily repay, perhaps leading to delayed milestones like moving out of their parents' home or saving for retirement, Alev said. But your late teens and early 20s is arguably the best time for young people to develop healthy financial habits: Starting to invest now, even a little bit, will yield ample benefits via decades of compound interest, experts said. "There are a lot of financial implications in the long term if these young people aren't planning for their financial future and [are] spending willy-nilly however they want," Alev said. That said, that many feel disillusioned is understandable in the current environment, experts said. The labor market has been tough lately for new entrants and those looking to switch jobs, experts said. The U.S. unemployment rate is relatively low, at 4.2%. However, it's much higher for Americans 22 to 27 years old: 5.8% for recent college grads and 6.9% for those without a bachelor's degree, according to Federal Reserve Bank of New York data as of March 2025. Here's a look at other stories affecting the financial advisor business. Young adults are also saddled with debt concerns, experts said. "They feel they don't have any money and many of them are in debt," said Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, based in Irvine, California. "And they're wondering if the degree they have (or are working toward) will be of value if A.I. takes all their jobs anyway. So is it just pointless?" About 50% of bachelor's degree recipients in the 2022-23 class graduated with student debt, with an average debt of $29,300, according to College Board. The federal government restarted collections on student debt in default in May, after a five-year pause. The Biden administration's efforts to forgive large swaths of student debt, including plans to help reduce monthly payments for struggling borrowers, were largely stymied in court. "Some hoped some or more of it would be forgiven, and that didn't turn out to be the case," said Sun, a member of CNBC's Financial Advisor Council. Meanwhile, in a 2024 report, the New York Fed found credit card delinquency rates were rising faster for Gen Z than for other generations. About 15% had maxed out their cards, more than other cohorts, it said. It's also "never been easier to buy things," with the rise of buy now, pay later lending, for example, Alev said. BNPL has pushed the majority of Gen Z users — 77% — to say the service has encouraged them to spend more than they can afford, according to the Credit Karma survey. The firm polled 1,015 adults ages 18 and older, 182 of whom are from Gen Z. These financial challenges compound an environment of general political and financial uncertainty, amid on-again-off-again tariff policy and its potential impact on inflation and the U.S. economy, for example, experts said. "You start stacking all these things on top of each other and it can create a lack of optimism for young people looking to get started in their financial lives," Alev said. Young adults should try to rewire their financial mindset, experts said. "Most importantly, you don't want to bet against yourself," Sun said. "See it as an opportunity," she added. "If you're young and your expenses are low, this is the time to invest as much as you can right now." Time is working in their favor, due to the ability to compound investment growth over multiple decades, Alev said. While investing might "feel impossible," every little bit helps, even if it's just investing $10 a month right now into a tax-advantaged retirement account like a Roth IRA or 401(k). The latter is among the easiest ways to start, due to automatic payroll deduction and the possibility of earning a "match" from your employer, which is "probably the closest thing to free money any of us will get in our lifetime," Alev said. "This is actually the most exciting time to invest, because you're young," Sun said. Instituting mindful spending habits, such as putting a waiting period of at least 24 hours in place before buying a non-essential item, can help prevent unnecessary spending, she added. Sun advocates for paying down high-interest debt before focusing on investing, so interest payments don't quickly spiral out of control. Or, as an alternative, they can try to fund a 401(k) to get their full company match while also working to pay off high-interest debt, she said. "Instead of getting into the 'woe is me' mode, change that into taking action," Sun said. "Make a plan, take baby steps and get excited about opportunities to invest."
