Investing in the stock market can be an exciting adventure but also can cause panic if your investments are not doing so well. Of course, the most memorable panic in history was the stock market crash of 1929. Experts are warning there will be another stock market crash; it's not about IF it is about WHEN.
There is a lot of speculation about what will cause the stock market to crash. The biggest reason is runaway corporate debt. Ever since 2008 when large companies were bailed out of debt, the economy has been snowballing into eventually seeing the stock market slamming into record numbers.
In recent years low-interest rates encouraged companies to go into debt to help finance corporate mergers and stock buybacks. In 2015 the tides began to change, and the Federal Reserve hiked the rates from almost zero to 2.25%, and they are expected to keep rising. These companies will eventually need to face their debt by paying them off or refinancing. Only now they will be refinancing at higher rates, which could lead to trouble.
U.S. companies have collectively accumulated $6.3 trillion in debt, a figure that is at an all-time high. Of the greatest concern is the number of "junk" bonds has increased substantially to the tune of $1.3 trillion in 2018. The S&P 500 states that corporations with junk bonds have $8 of debt for every $1 of cash. This can only mean disaster.
Now is the time to protect your money and make sure your hard-earned savings do not fall victim to the next stock market crash. At West Financial Group we will help you make the right market decisions to keep your money safe. Contact our office today for a consultation.