Avoid a market
downturn panic
We are now in the
longest positive market period. But there will be pain in the future. We just
can’t know when. Our best defense is a Target-Date or ‘balanced’ fund. Because
we don’t know when the market will fall, we can’t time the market to get out at
the right time. People who try this strategy usually lose. In fact, over time,
they usually earn just 3.79%
versus 11% for the buy-hold folks. Inflation of nearly 3% reduces their
buying power even further. Why does this happen? Most of us take the short view;
not the long view with our savings/investing dollar. If our statement account
could show a loss, we opt out of the long-term 11% return. We can prepare for
market falls by using a balanced fund like the low-cost Wellesley
Income Fund. Its allocation of 60% bonds/40% stocks has provided nearly 10%
a year since 1970. So even when stocks fell 37%
in 2008, this
fund had less of a ‘statement’ loss to overcome. Also, some folks seem to
think that when the market falls 37% they actually lose 37% of their money. If
you don’t sell, your fund holds the same number of shares so when the shares
rose 27% and 32% as in 2009 and 2013, your account value still rose about 10% a
year over time. No panic investing.
Are you planning to retire
early?
If this is your
dream, here are the lessons that will make it happen. Any goal requires
changing your habits and not necessarily making hard sacrifices. When I wanted
that Chevelle
SS 396 at age 18, I had no problem giving up stuff I usually wasted money
on. If you are going to retire from the daily grind, you need a plan and you
need to stick with it. The goal is financial security and independence: freedom
and flexibility. First, start early. “Saving becomes ingrained in everything”
you do. It makes you feel better—in control. Second, reaching the goal takes
time but investing 29% of your income (vs 6% for others) makes you proud of
your annual statement. Third, spending smart does not mean you must become a
hermit. It means getting your money’s worth—especially when it comes to investment
products. Why waste 1-3% of your ballooning account by sharing it with a
salesperson. Today, a low-cost ETF or fund in the most
aggressive sectors is all you need. According to Warren
Buffett, the smart money just keeps buying
the best stock market sectors. Trading and timing just defeat your best friends—compounding
and tax- FREE accounts. About
53% of savings overachievers have Roth IRA accounts, versus 29% of other
savers. Taxed money goes in and tax-FREE money is what you live on later,
when you have escaped the GRIND. Change habits: used car vs new car—just
$350 a month in a simple index can compound to $1 million in 30 years.
Build your wealth not theirs: https://www.amazon.com/Your-Wealth-Reserve-Save-year/dp/107028288X
Which IRA withdrawal
plan is best for you?
At 70.5 years we
must start taking out our life-long accumulations. If you have already taken
money out and paid your tax and/or penalty, you need to re-examine how much you
will take out going forward. Taking out too much can cause serious problems
down the line. This is the number one fear of retirees—not having enough to
last your whole life. Since we don’t know how many years we will need this income,
it is good to review. Your advisor may have mentioned the classic 4% rule: take
4% your first year and increase it by the cost of inflation each year. But the
rule was made when the average retiree was earning 8-10%. Your money was still
growing each year to beat inflation. Back then, the average retirement last to
age 75 or so. Things have changed: we will need income for longer and our money
may not be earning as much. You must design a plan for your special situation.
Since the IRS
has a required percentage based on our age each year, we can start with
their table. Since the IRS design assumes we will live to age 115, it’s ratio
is less than 4%. Our benefits are recalculated each year so that if our account
increases, we spend more and if it decreases we spend less. This makes sense
for most of us and has the benefit of complying with the regs each year.
DIY financial
services and save every year
When you buy any
electronics, appliances or even a vehicle, don’t you shop around for the best
quality at lowest price? How much can you save by buying direct from low-cost providers?
Example: this saver was using a brokerage IRA. However, the company had chosen
to use an expensive
record keeper and investment option. Their costs were hidden in the plan
document given when the saver Tom began. Tom is conservative and put his
contributions in the fixed accumulation option. Tom was paying 1.5% a year but
earning only 5% so his net was 3.5%. By the time he retires, Tom will have $159,000
instead of $208,000. The brokerage will have the other $67,000 for little work.
Tom does not change options or call his broker often. Tom could have chosen Vanguard,
Schwab or other low-cost company. Save $67,000 or more!
**********
How Govt wastes our money: Congress spends another Trillion we don’t have!
Ignore climate
changes: Alaska hits
90; Arctic melts; Miami floods; we pay
Court
affirms Trump making money directly from his political position.
SCAMS/SPINS:
$1.99 charges
forever: Nickel
& Dime hackers use system to steal.
$15 wage would help 1.3
million people leave poverty; 27.3 million workers buy more.
Boeing caught
paying $9/hour for 737 Max software that killed
hundreds. CEO bonus?
John G Schmidt OH caught
fraud Ponzi-like scheme elderly disabled—5 years prison
Steven Pagartanis, Cadaret
caught
misrepresenting, omission, etc $2.7 million. No jail.
Kyung Soo Kim caught
trading crypto outside Merrill: fine no jail
Freedom Debt Relief caught
charging fees, misleading clients of rights: fine, no jail
Anthem Health caught
overcharging 401k participants: $18 million fees/loss
Ford knew Focus
and Fiesta bad transmissions deadly but sold cars anyway
Google
Assistant taping your statements, incl names, addresses, details, all. Fed
crime?
Sugar
soda/juice tied to cancer: stick with diet or water without arsenic,
lead,
plastic,
etc.
Alkaline
water is junk science: no effect on tightly regulated pH levels in bloodstream.
Marriott caught
misleading overcharging deception fraud for years: warnings ignored
CNN to emulate
FoxNews on selected stories: which news do you want? Pick
your bias.
Trump is making
up Ronald Reagan good comments on himself years later: Dementia?
Jobs:
Where to retire:
Make a list of what you like and don’t like and try it out for a month.
Farm
lending falls as banks tire of aggie troubles: bankruptcy, retire, sell
off.
Who owns your account now?
Miracle:
Woman needed food
but got caught shoplifting: Cops pay for food--no
arrest.
For
couples who need a new adventure: Real bonding!
IAN
41 Watchung Plaza,
B242
973.746.2014
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