A basic rule of thumb in retirement investing is that you should save at least 25X your desired retirement income. Using the rule of 25, an investor who needs $100,000 in income from her portfolio must save $2.5 million to retire without the threat of running out of money. Younger investors will need to account for inflation in this calculation. Assuming a 3% inflation rate, an investor planning to retire in 30 years will need $243,000 to buy what $100,000 buys today. That means instead of saving $2.5 million to retire, this younger investor must save $6.1 million. Calculating how … [Read more...]
I’ve Never Been Busier
“I've never been busier”, is a phrase I often hear from retirees. We all think we’ll have tons of free time in retirement. And we do. But the hours still get filled-up with things to do. That’s why it’s crucial to plan ahead and understand some of the pitfalls out there. I’ve advised that you should rent your second home, at least to start off with, so you can get your bearings. I like this article in the The WSJ by Tom Lauricella on “The Five Myths About Retirement”: 1. You'll probably retire earlier than expected. Sounds like a good thing, but it's not. Among the most critical variables … [Read more...]
Dumb and Dumber
“Don't just do something, stand there!” is easier said than done. All investors have a breaking-point. And most believe it to be higher than it really is. That’s why it’s important to learn from the past and establish the right portfolio for your emotional make-up. I like the work The WSJ’s Jason Zweig references here in his piece “Just How Dumb Are Investors?”: A new study finds that the average investor in all U.S. stock funds earned 3.7% annually over the past 30 years—a period in which the S&P 500 stock index returned 11.1% annually. That means stock-fund investors underperformed the … [Read more...]
A Retirement High-Life
“Your life is made of two dates and a dash. Make the most of the dash.” Twice a year a client of mine leaves the comforts of home to patrol 26,000 sq. miles in Southeastern Utah for the Department of Interior. He spends two weeks in the Spring and two months in the Fall, September and October. I spoke with him the other day, the first day back from his Spring trip. I asked him what he does out there. He said he is either out on his own for 3-5 days patrolling, or working from the base station going out on day jobs to fix things, do field study, or work on his research at the base … [Read more...]
Save Money. Live Better
Wal-Mart’s slogan is “Save Money. Live Better.” Just don’t do your banking there. Check-out this WSJ analysis: On a rainy morning in April, Anna Proctor entered a Wal-Mart Supercenter near some of this city's poorest areas to get $300 for urgent car repairs—money she didn't have. Inside, she joined a line at a Woodforest National Bank branch and intentionally overdrew her account. When her paycheck was deposited 12 days later, she said, the bank would take the borrowed sum plus a $30 fee. "It's cheaper than a payday loan," said Ms. Proctor, a 35-year-old customer-service worker. If her … [Read more...]
Wall Street Research or Paid Advertising?
Most seasoned investors have long suspected that Wall Street research is compromised. Wall Street is not in the research business. Wall Street’s big banks are in the business of distributing securities. The “research” departments at banks are best viewed as branches of their marketing departments. Sell recommendations are rare from the big brokerage houses because they are bad for business. Corporations don’t hire banks to issue stock or bonds if the bank has a sell rating on the company’s shares. If you are still relying on Wall Street’s buy and sell recommendations to manage your … [Read more...]
$1 Million Ain’t What it Used to Be
USA Today on what a million dollars means today: You've been saving like a miser to get ready for retirement. You've pinched pennies, kept that last car for what seems like an eternity. And now you've banked a cool $1 million for your retirement years. Think you're set? Well, you very well might be. Then again, you still might be short. "The good news is there are more millionaires," says Richard G. Dragotta, at LPL Financial in Paramus, N.J. "Over 9 million people in the U.S. have $1 million or more." But, Dragotta says, $1 million might not mean you're wealthy: The new $1 million … [Read more...]
How $50K is Worth Millions in Retirement Income
Don’t hate the messenger, but one of the best ways to guarantee income in this low yield environment is to continue working. Your salary may never be more valuable than it is at this moment in history. I want you to consider your job as a bond investment. When you retire you must have bonds in your portfolio, plain and simple. Bonds can help protect your assets when markets crash. In 2008, treasury bonds made money. Today, the 10-year treasury yields 2.6%. Imagine how much money you’d need to have in 10-year treasuries to replace a salary of $50,000. The answer is $1,923,079. So before … [Read more...]
Who’s Watching Your Money?
There are a lot of charlatans out there that have been trusted with the management of other people's money. It's shocking how many get away with it. According to this WSJ analysis there are many red flags that go unnoticed by clients: In less than two years, stockbroker Marcos D. Leiva racked up a personal bankruptcy, a tax lien, a court judgment for unpaid debt and a criminal guilty plea relating to a false report to law enforcement. Each should have been promptly disclosed to investors. None was. Mr. Leiva is one of more than 1,600 stockbrokers whose records failed to disclose … [Read more...]
Your Greatest Investment
Paul Ewing Lucky you. I get to speak with successful businessmen on a regular basis. Their greatest investment tends to be in their business not the stock market. It’s never too late to invest in yourself. I speak regularly with Paul Ewing. He could easily be retired and then some, but instead he and friend David Halley, M.D., have created a business around their X10 Therapy knee rehabilitation machine. Last week, Crain’s Detroit Business published an article on it. If you or someone you care about wants to learn the keys to a successful knee replacement then read this article. … [Read more...]
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