Where to Invest in 2021
David Muhlbaum: 2021, the year ahead, people have pinned a lot of hopes on it, but how will it play for stock investors? Kiplinger Executive Editor, Anne Kates Smith joins us to give her forecast. We’ll also get back to the outlook for raises next year and talk about cars and winter.
- Episode Length: 00:36:11
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David Muhlbaum:Welcome to Your Money’s Worth. I’m Kiplinger.com Senior Editor David Muhlbaum, joined by Senior Editor Sandy Block. Sandy, how are you?
Sandy Block: Doing great, David.
David Muhlbaum: Well, a few weeks ago here, we were talking about the 2021 cost of living increase. And we mentioned that we would get back to the prospect of raises next year and well, that’s what I want to do. So the cost of living, which is inflation basically, is a factor in those raises, but it’s not the only one. So the two are connected, but let’s go into raises.
Sandy Block: Right. If you’re looking at a raise number, the first 1.3% of that is just to get you back to where you were in 2020, that keeps your purchasing power the same. Anything above that is well, an actual raise as in, you’re going to get paid more than you were before.
David Muhlbaum: Assuming you’re an employee with a job.
Sandy Block: Right, right. And that’s an important pre-qualifier these days.
David Muhlbaum: Okay. And what should someone who meets those qualifications expect to get as a raise in 2021?
Sandy Block: Well, we’re only going to be able to deal in averages and forecasts here because the fates and fortunes of industries vary, as well as individual job performance.
David Muhlbaum: But not everyone can do as good a job as you, Sandy.
Sandy Block: Good job. This was your week to pay the compliment. And I think you’re underpaid too.
David Muhlbaum: You’re welcome. Yes, log-rolling in our time. So, the average raise forecast, the average-average-average, forecast-forecast-forecast. What’s the number?
Sandy Block: Well, The Kiplinger Letter is forecasting a 2.5% increase for 2021, up from 2% this year. It would likely have been more, but you know, there’s a pandemic, recession, high unemployment, all the fun factors of what you call Our Blessed Year of 2020, and both that number and the cutback are consistent with a study from the consultancy Willis Towers Watson. They ran this in September. So it’s COVID-aware. Their forecast is 2.6% for all employees, but executives. For the executives, the survey indicates a 2.5% raise.
David Muhlbaum: I don’t suppose we have to break out the world’s tiniest violin for the executives’ slightly lower raise since so much of their competition is non-salary, stock grants, and such.
Cars, yeah. Cars, all those good things. That’s true. I wouldn’t get hung up on the tenth-percent difference here between them, but when the number drops a few tenths of a percent and then another few tenths of a percent, then you have a trend. And what I’m talking about here is that between May and June, when Willis Towers Watson ran an earlier version of the survey, the average wage increase for 2021 was forecast to be 2.8%, and pre-pandemic, the number was
