In Pontiac, Michigan, pensions for public employees have been underfunded for years, and the city is going to raise taxes to help fund pension payments. This same predicament is playing out across America, with pensions in many states and cities woefully underfunded, and with pension boards who overestimate returns to paper over the problem. Like many pensions, those in Pontiac are restricted on the proportion of assets that may be invested in equities compared to fixed income and other securities. The current limit is 40% of assets may be invested in equities. These limits are in place … [Read more...]
Wealth Management Pitfall: ESG
Don't fall into the ESG trap. Read what I wrote here on December 11, 2018. Your wealth manager should act as your fiduciary, plain and simple. Sounds easy. But in reality it’s not. Today, I want to help you overcome one of the more absurd obstacles you may face. It’s called environmental, social and governance investing, or ESG. Thousands of investment managers have pledged to follow ESG—a pledge to abide by a U.N.-sponsored statement of ESG principles. Investing in fossil fuel stocks, for example, would likely be on the “no go” list of companies available for investment. You can forget … [Read more...]
The Double Whammy Hitting Today’s Retirees
Retirees today are overcoming a mountain of bad timing. Read why in this post I wrote on December 3, 2018. Retirees today are the victims of an unfortunate double whammy. In the prime home-buying days of their youth, they were forced to pay the exorbitant mortgage rates of the late 70s and early 80s. Then, during the Financial Crisis, which should have been the peak of their earning and saving years, many lost jobs and watched their stock holdings evaporate. In the following years when many would have typically moved more of their portfolio into fixed income, they were left with the crumbs … [Read more...]
Can You Afford a 50% Loss?
Can You Afford a 50% Loss? That’s the question I asked readers in March 2014. I wrote: Can You Afford a 50% Loss? It’s impossible to have it all ways. In order to craft an investment portfolio that can act as an all-weather armadillo, you must be willing to forgo potentially substantial upside rewards to balance against the horror of a downside wipeout. If you are retired or saving for retirement in the not-too-distant future, you can easily get a knot in your stomach when you look at the basic math of downside portfolio protection. By example, when you lose 50% on an investment, you must … [Read more...]
“E.J., Has Your Phone Been Ringing off the Hook?”
With market volatility creeping upward, this is once again a question I'm getting, but I urge you to reread what I wrote back on February 28, 2018. Well this was a fun month for the stock market with wild swings from high to low of around 2,000 points in the Dow Jones Industrial Average. One question I’m asked on a consistent basis is “E.J., is your phone ringing off the hook?” and my answer is “no,” and I know why. Most of you have been educated by Dick Young that investment success is achieved over a lifetime, not a month or two. Investment success is about hitting singles and … [Read more...]
Top 10 “Retirement Killers”
There are a number of ways to mess up your retirement plan, but some are more dangerous than others. At MarketWatch, Brett Arends lists the top 10 "retirement killers." His list comes from an NBER research paper called "Saving Regret," written by Axel H. Börsch-Supan, Tabea Bucher-Koenen, Michael D. Hurd, and Susann Rohwedder. Arends explains the survey, writing: A survey of “Saving Regret” targeted 1,600 Americans aged 60 to 79 to ask them about whether they had saved enough money — and if not, why not. The survey was conducted by researchers from the RAND Corporation and the Max Planck … [Read more...]
Stock Markets Scaring Gun-shy Retirees
The common theme I espouse to you here at Your Survival Guy is the elimination of risk and a focus on your margin of safety. Whether the risk be to your personal safety or to your financial portfolio, I want you to focus on preventing negative events from affecting you and your family. After 2008, some retirees and those who were planning to retire understood the dangers of market risk, and began insulating their portfolios against future shocks. They spread out their investments among different asset classes, buying counterbalancers to smooth any market swings. They also began focusing … [Read more...]
Retirement Benefits: They’re not all in Dollars, Part II
You know, not all retirement benefits are in dollars. I received this email last week: “Season ending ‘last and fast’ Pantera run over Togwotee Pass (9700 ft.) with a few of my car guy buddies. Here’s some more pics of the 1972 DeTomaso Pantera recently featured in Hot Rod. Hot Rod's Richard Prince wrote: Some of Marty Quadland’s earliest memories involve sitting in the family’s 1935 Ford cabriolet with both hands tightly gripping the steering wheel as he belched out a four-year-old’s version of a V8 exhaust note. Later on, as a way of dealing with his motion sickness in the … [Read more...]
Thinking of Moving for Retirement? Check This Out
As elections come up, where we live and the political/governance climate there comes into sharper view. This piece I wrote on August 10, 2017 examines the tax climates of the states, and how retirees should make that a factor in their plans. Guess who needs the most of your dollars to survive? You guessed it, Washington D.C. If you're a retiree who has been living and working in Washington D.C. for your entire career, you would without a doubt stretch your dollars further if you moved to a less expensive locale. Washington D.C. is the most expensive place to live in the continental … [Read more...]
Calper’s OPM
Turns out, members of California’s public pension don’t like it when the C-suite are activists with other people’s money. The workers expressed their dissatisfaction with pension-fund-activism by firing CEO Priya Mathur and replacing her with Jason Perez. New CEO Perez's main point of criticism against Mathur's approach was her focus on "environmental, social and governance investing," which is a euphemism for using the pension fund's money to play politics. Perez ran on a platform of refocusing the pension fund on "the agency’s fiduciary duty to maximize investor returns." Sound … [Read more...]
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