Talk about the Fiduciary Rule continues. The issue is simple. When you seek investment advice make sure you work with someone that is held to this higher standard like Richard C. Young & Co., Ltd. You can read more about the fiduciary rule in some of my previous posts: Is Your Wealth Manager Held to this Higher Standard? Who’s Looking Out for You? Wall Street’s Dirty Secret … [Read more...]
Annuity Salesmen Rise from the Dead
I’ve been slammed over the last few weeks talking with prospective clients. We are open for business is an understatement. One area that I continue to hear about from prospective clients is how they wish they didn’t buy that annuity. I’ve written to you before about these toxic products (for example here, here, here, here and here). The issue is that annuities are sold with a full-court press on those that don’t invest for a living. They’re promised rates of return that sound good on paper but will be wiped out if the insurer goes bankrupt and the government doesn’t bail it out. With … [Read more...]
State of Rhode Island Terminates Hedge Fund Investments
Back in 2013 I warned about Rhode Island's pension fund investments in high-fee hedge funds, writing here: It has allocated 25% of its plan to alternative investments, or hedge funds and private equity. Enormous fees are paid to these guys for an investment that a) is illiquid and b) has a subjective price. There are a lot of retired teachers out there who have no idea how poorly their money is being invested. Again earlier this year I reiterated this warning: The state of Rhode Island has been a big-time investor, through its pensions, in hedge funds. Retired teachers who depend on this … [Read more...]
Fidelity and Vanguard above the Fray
It seems like every week there’s another big bank paying another billion dollar fine. One thing that’s for sure is that the fines will continue and the customer will end up paying for them. Two names that seem to be above the fray are Fidelity and Vanguard. I have accounts at both and suggest the same for you. Here are links to both: Fidelity Investments Vanguard … [Read more...]
Retirement: Imagine Your Someday
Here are the top five reasons why people retire according to a survey at Fidelity.com: Leisure, Stress at Work, Grandchildren, Hobbies and Travel. But what about the when? The “when” people retire is a different matter. That has more to do with money. As if we needed a survey for that! "Spend less, save more," you know the song. Here’s some advice you can use. Get out of debt. Pay off your mortgage. It’s simple, yet effective. Stress is a killer. Trust me, I speak to retirees for a living. Getting out of debt creates a lot of peace of mind. The less you have to worry … [Read more...]
Do You Remember Howard Johnson’s?
Investors are taking their eye off the ball. With all the hand wringing over what the Fed is—or isn't—going to do with rates, there's a much bigger problem lurking in most investors' statements. It's called survivorship bias. Most of the big movers never existed when I was a kid. Great ideas or concepts don't last forever. I was reminded of that reading this story about Howard Johnson's. Brian MacQuarrie writes: The last Howard Johnson’s restaurant in New England is scheduled to close Tuesday — leaving only one more in the country — and an uptick in customers is arriving for one final … [Read more...]
On the Road Again
I like what Sue and Dave Teich are doing. If you're looking for a place to retire, why not take your time to find the perfect spot? This is hardly roughing it. Here the Teich's daughter, Jessica interview them about their travels. For my parents, home is where they park it. Last summer, they sold the 3,500 square-foot house that both my mother and I grew up in. With downsizing and exploration in mind, they cruised right past their Baby Boomer peers and moved into a decked out Class A motor home — with two cats and a Lab mutt in tow. What started as an unconventional way to house hunt has … [Read more...]
Bond and Pension Struggle in Puerto Rico
You get an idea how the struggle between bondholders and pensions quickly turns into a political nightmare, as reported in the WSJ: San Juan, Puerto Rico—One of the thorniest tasks awaiting a seven-member board charged by Washington with cleaning up Puerto Rico’s debt crisis is deciding how to balance a $70 billion debt load with nearly $43 billion in unfunded pension liabilities. The issue is coming to a head now because the White House is set to name as soon as next week the members of that oversight board, drawn from lists of candidates submitted by congressional leaders in both … [Read more...]
Pension Survival Increases Risks
"The public dispute over accounting standards is a signal to taxpayers, retirees and political reformers that fundamental flaws remain in how pensions measure their finances,” writes Steve Malanga in the WSJ. At issue, as he correctly points out, is the delusion that government pensions “on average estimate they will earn 7.6% a year on their portfolios.” Using a more realistic riskless rate (as if that exists!) increases the unfunded liability from about $1 trillion to $3 trillion. It’s all funny money. I’ve looked at the numbers in Newport, RI and it’s ugly. The stock market will not come to … [Read more...]
Low Interest Rates Threaten Insurers and Baby Boomers
Here you get a glimpse at the problems facing insurers and baby boomers thanks to the Fed’s zero percent interest rate policy as reported earlier this month in the WSJ. Insurers reported a messy second quarter plagued by low interest rates and catastrophe claims, highlighted by a $2 billion charge at MetLife Inc. tied to a savings product popular with baby boomers. Life insurers MetLife, Prudential Financial Inc. and Lincoln Financial Group booked lower premiums and fees, while property-and-casualty insurer Allstate Corp. faced elevated levels of claims for severe weather, including a … [Read more...]
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