How do teachers and civil servants reach over $1 million
retirement fund?
Teachers and civil servants with life-long salaries of under
$100,000 have always amazed me in their account accumulations. Whether they
invest via their pensions or IRAs, they seem to stick with a buy and hold
strategy to save over $1,000,000 for retirement. I got a hint about how they
did it from a study by Fidelity: customers
that did the best were the ones that forgot they had an account. Also, the
customers that were dead. The strategy is the one ascribed to Warren Buffett:
buy and hold. You don’t sell—no balancing or trading or market timing. Buffett bought and
holds stocks like Coke, AmEx, GEICO. He never sold them. The secret to
ending up with enough retirement money is to buy and hold stocks like these at
low cost. According to the rating firm DALBAR, a
stock market index returned 11% at year. So any person could accumulate a
million during their working years: investing $250
a month for 35 years may earn $1.1 million. And that is exactly what
Buffett and Bogle, Vanguard founder, recommend. Bogle was a fiduciary. The
Bible called it being a steward of assets: The Bible’s parable of talents.
Wall Street firms ignore SEC mandate to give investors the
facts
A new survey found that most firms just ignore the mandate. 1,300
firms failed to disclose the misdeeds of their advisors. Trump made
regulation irrelevant early in his administration by canceling Obama’s
Fiduciary Rule. Instead of brokers/advisors being under the rule to give us the
best
products, Trump made it clear they were free to fleece us again: regulators
would not prosecute bad advice. Result: Wall
Street is now free to sell risky “private placement” investments in our pension
accounts. Our 401k holds our serious money not our speculative money.
Instead of a stock market index with steady 11% growth over time, Wall Street
can offer us ‘take a flyer’ like MCI WorldCom or Enron. Insider
trading is NOT prosecuted unless the perp is followed in the press. We
investors are not protected in the TrumpWorld. We must protect ourselves.
Use a Fiduciary advisor: https://www.amazon.com/Fiduciary-Rule-BEST-dont-anymore/dp/1530980275
Investment behavior research and your biases
Why do we hold on to losers and sell winners? Why do we
engage in vigorous trading when studies show we lose money? New
studies about our way of thinking about money have provided some guard
rails that may keep us from big mistakes. Fact: we spend more time planning a
vacation than planning for our financial future. People with money have a
plan—investment and retirement plan. People who most NEED a plan don’t think
they need one. Set goals, find strategy, set up plan. List financial goal
priorities. Know your biases and
avoid them with help. For example, we buy a stock or fund that just went up. It
goes down but we don’t face it and lose more money. Or if the stock goes up we
feel we must sell to win. Instead of diversifying a portfolio for safety, we
buy more of the same. Many keep buying their own company stock. We know this
strategy is risky so we worry instead of investing in a plain index fund. Even
with new information, investors stick with their original purchase. We tend to
think we are super brilliant when our purchase does well. Most of us mistakenly
rely on past performance. Usually winners become losers during the next period.
Buffett’s
strategy beat best advisors.
Let Warren Buffett be your advisor: https://www.amazon.com/Warren-Buffett-Your-Investment-Advisor/dp/1518690963
Is a FREE financial plan right for you?
Schwab is now offering Schwab Plan, a free digital financial
planning capability that assists investors in establishing and staying on
track towards financial goals. You must have an account—any account. After
completing a 15 minute questionnaire, you can model how changes might impact your
lifetime financial picture. You can see the probability of reaching goals with Monte
Carlo simulations. Changes and updates to the financial plan are dynamic –
when you update your plan, you will automatically receive an updated
probability of reaching your goals. A similar service is available at other
fund complexes including Vanguard’s
Nest Egg Calculator. You can play with the factors that determine your
total accumulations: time, stock bond mix, age. The challenge is to know what
your data means. Unless you have $ millions or $1,000 one-time fee, you don’t
have a professional planner to customize your plan.
Try it yourself FREE: https://www.amazon.com/Your-Plan-Live-Age-100/dp/1548180793
Is using your bank’s online bill-pay safe?
Is electronic bill
pay safer than personal checks? If you are using a well-established bank with
FDIC insurance, you can be assured that your bank is aware of the risks. Given
the Trump
mandate to slow the mails, you are at greater risk using personal checks. Your
check may end
up in a pile of mail at a sorting center. Some sorting machines that are
used to speed those printed bill payment vouchers have been removed. If your
check is inside those thin voucher envelopes they can easily get stuck on other
mail or literally fall through the cracks in sorting tables. I have been using
bank bill pay for 10 years—hundreds of bills paid with no late fees. Most banks
will actually pay the late fee if they are responsible for the late payment.
Most banks use ACH (Automated Clearing House) which is a network that
coordinates electronic payments and automated money transfers. I usually enter
the bill amount and date to actually get to the vendor when I receive the bill.
Then I don’t have to worry about remembering to send it on time. Most banks use
electronic transfer—my payment, account number, etc—and send payments in a
batch with others to each vendor on date I enter. So my utility bills are
always paid on time. I don’t give my bank info to the vendor to let them take
the money from my account. I tried that once but they messed up and I had
trouble fixing it. The downside to this arrangement is that I have to keep a
balance in the account to make all transactions free. I feel it is worth it
since I don’t have buy stamps and I don’t have any more late fees.
What experienced investors do when uncertain?
When there is a crisis or the future looks uncertain, savvy
investors go back to basics: diversification and low cost. They confirm why
they are investing in the assets they own: stocks for the long term and cash
equivalents for the short term. Every investor that has weathered the storm of
2007-8 has learned that a balanced portfolio helps maintain their long-term
accumulation goal. They know that stocks
earn 11% over time and yet bonds and other assets can offset temporary downturns.
By weighting these assets, experienced investors stayed fully invested during
the 2007-8 time of crisis. They benefited from the bull market: doubling
their money since 2011. They recognized that earning less than 2% on ‘safe’
investments
costing 1-2% was really a losing proposition.
Women want more control of their money
59%
believe they lacked sufficient financial and investment literacy, and 13%
believe that they are not very or not at all knowledgeable about finance and
investing. Most women don’t have time to learn about finance. Women don’t feel
well-served by advisors. Perhaps it is because there are few women advisors to
hire. Women who feel they control the money they earn are not considered in
charge of finances by their spouse. Women who work have retirement as their
primary goal. Their spouses don’t agree with their goals and thus there are
disagreements. Thus divorce after age 50 is on the rise. The burden of divorce
after age 50 falls heavily on women especially since many say they are not
prepared to control their money and assets. Pension
benefits and retirement accounts must be divided equitably—women are
entitled to part of the payouts. Several calculations are necessary to
determine the correct division of assets—current and future.
Women will have more money in the future but lack the
knowledge to manage it.
“An unprecedented amount of assets will shift into the hands of women over the next three to five years, representing a $30 trillion change of ownership. Few women have trustworthy advisors so many fortunes will be guided by salaried groups at large fund families. The trend to passive low-cost investment will accelerate. The age of the single investment ‘gun-slinger’ is over. Most women will seek security not market beating advice from ego-centered men. Wall Street gurus have lost their allure.
“An unprecedented amount of assets will shift into the hands of women over the next three to five years, representing a $30 trillion change of ownership. Few women have trustworthy advisors so many fortunes will be guided by salaried groups at large fund families. The trend to passive low-cost investment will accelerate. The age of the single investment ‘gun-slinger’ is over. Most women will seek security not market beating advice from ego-centered men. Wall Street gurus have lost their allure.
It’s about control: https://www.amazon.com/Leahs-Money-Book-control-money/dp/1448654408
Middle-class retirement in jeopardy of losing living
standard
New study: “40%
of households in the top third of the income distribution are at
risk of not being able to maintain their standard of living [in
retirement].” So taxes do make a difference. The retirement spending strategies
in the study did not yield much difference in tax rates. Further, this study
did not include state taxes, which could raise tax burdens by 25%. In short, a
$1 million nest egg does not go as far as it used to given that 85% of Social
Security benefits and 100% of the required minimum distributions from our
pensions and IRAs are taxed. The wealthy
have always found ways to avoid paying the IRS statutory tax rates. Even billionaires like Warren
Buffett have disclosed that they pay less tax than their employees. Unfortunately,
most of us do not use strategies that allow a tax-free retirement.
Use legal tax havens: https://www.amazon.com/Tax-FREE-Retirement-code-lifetime-income/dp/1475206976
**********ACCOUNTABILITY**************
Like 1776, this period
is a test
of democracy—do we really want ‘low-IQ’
Mobster?
Philly DA: we have an “authoritarian
dictator."
GOP platform: I
could shoot someone on 5th Ave and pardon myself
Dictator: Police
state and vigilantes assure re-election
How Govt wastes our money: Congress
gives 3.7 Trillion to the wealthy!
Trump EPA endorses new regs for more
coal pollution in our lives: OK to pollute!
GOP pushes budget
deficit to a record $3.3 trillion with wealthy
tax breaks/PPPloans
SCAMS/SPINS:
Vigilante
mobs with automatic weapons are NOT militias: militias
are trained to help army fight.
Trump’s
doc tells him herd immunity wins: Herd immunity if
people are immune; more
will die
Trump
promised to pay for virus patients recovery: he failed and patients get
bills
Trump’s
SEC allows insider trading: computer shows it as it happens: no regulation
Trump’s
eviction moratorium not working:
no legal authority over landlords
Dennis
Jali Smart Partners caught
Ponzi $27 million on church: offered 6-42% returns trading FX
Virtual
apartment rental scam: check landlord; visit and listen in neighborhood
Avoid
senior scams: home, ID, fake check, fake trouble, romance, invest, tech
support
Debt collector scam:
don’t
avoid; fight back
PayPal account hold
scam: email
asks me to click email to ‘confirm’ my info to scammer
Oportun debt
collector caught
intimidation lawsuits over high interest loans
Trans-Fast
Remittance caught
deceiving; violating problem resolution rules: fine no jail
Accelerate Mortgage caught
making false, misleading, and inaccurate statements no jail
Service 1st
Mortgage caught
misleading deceiving offer statement mailers; fine no jail
Facebook
info infiltrated with thousands of Russian accounts: election battleground
CA unemployment
scam: someone
else receives your benefits Hackers steal your data
WellsFargo advisors
cost retirees $ millions: fees
and charges moving to costly items
PlanGap Annuity uses
fear
of SS benefit drop in 2035 to sell expensive products
Steven Sexton CA caught
participating in Ponzi of Woodbridge illegal sales
Corporations
co-opting ‘religion’: marketing
brand with fake ‘religious’ rituals: worship idols?
Is it a scam? Check AARP scamline 877.908.3360. Check
IRS: https://www.irs.gov/newsroom/dirty-dozen-part-1-taxpayers-should-be-on-the-lookout-for-these-scams
Jobs
Giving
up citizenship for a job? Tons of paperwork
Best
states to work in: virus and health protections for employed and
unemployed: WA
Who owns your account now?
Student loan blues: starting college at community college cuts
lifetime debt in half
Miracle:
Our
new Toyota flies: you can afford a used one: 2030
CA
will produce generic drugs to save citizens money: GOP supports private
profits.
CO has been on all-mail
voting system since 2013: “it’s a system that works …” no fraud
IAN
41 Watchung Plaza,
B242
Montclair, NJ
07042
973.746.2014
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