Ever hear of Vanguard? Of course you have. It is a very well-known respected mutual fund company founded by Jack Bogle, now 81 years young! In his latest book, Mr. Bogle warns about the "perils of numeracy." Even though investors have earned about 9% a year in the stock market in the last century, much of that from dividend income and earnings growth, there's more to that story than meets the eye.
Trading costs, sales charges and investment fees as well as TAXES, eat a large portion of the return. In fact, Mr. Bogle says that the number is as much as 75%, before taxes!
Well known as a guru in the investment world, Mr. Bogle says, "Numbers don't necessarily repeat themselves, and the person who presents the number to you may have a vested interest," In his ninth book, "Don't Count on It! Reflections on Investment Illusions, Capitalism, Mutual Funds, Indexing, Entrepreneurship, Idealism and Heroes," which is a collection of his writings over the last decade.
An interview with Mark Jewell of the Associated Press asks Bogle, "What worries you most about the markets?" He responds, "I've never seen a more difficult time to invest, with the specter of these enormous deficits hanging over us, and with the global economy teetering a great deal more than people think it is. China poses special risks, with a huge construction boom that can't go on forever.
When asked "What's your current outlook on the stock market?" He answers, "The market is at a relatively fair value now but may be a bit overvalued for the long term. But I will no more predict what will happen in 2011 than fly to the moon. Anybody who goes into the market to make money specifically in 2011 should either be spanked or have their head examined. It's just too short of a period to predict, and it's a crapshoot."
"Jack" Bogle at least tell it like it is. I really respect the guy.
-Lady Fi.
Kathy
Thursday, March 31, 2011
Wednesday, March 30, 2011
Protecting Yourself in a Skittish Market
Turning the TV channel from Fox News to CNN to MSNBC, the images are familiar. Crowds of people demonstrate in the streets. Molotov cocktails fly through the air and explode in a grisly mix of fire and glass. Another dictator may fall, or protesters may be arrested. The slumber of a previously submissive population has been awakened by a younger generation fueled by social media.
Beyond Egypt and the Middle East, our own economy still struggles to gain footing. Many analysts believe that, as a result of a weak and unbalanced financial system, the bull market that we are seeing right now could experience significant volatility.
The VIX is an index of consumer perceptions of risk in the market place. The VIX index is published in any Financial Newspaper, i.e. Wall Street Journal. It is a bellwether measure of volatility in the marketplace today. In 2010, the VIX peaked in May and June, and has gradually leveled off since then. This index, however, can change quickly.
In 2010 the S&P 500 saw an increase 15.06%. All in all a pretty good return, particularly in light of previous years when the S&P was negative. In looking at 2010 in detail, however, some facts are important to realize:
In May of 2010, the market experienced the "Flash Crash;" an event started by a computer program that eventually led to a 600 point drop in the Dow Jones. In the aftermath the television program 60 Minutes ran a story about how computers are now handling trades on stocks sometimes at split-second interval. The question for today's investor concerned about retirement is what to do when world events impact the direction of markets. While this has been an age-old dilemma, increased volatility in the markets reflects what is happening in society.
While diversification is a good strategy, what happens is the entire market is negatively affected by world events. There is no real way to avoid systemic risk. Systemic risk is market risk. If the market goes down, people lose money, take it one step further if the market goes down so does your retirement account go down. At this stage in your life can you really afford this scenario.
What if there was a product for investors that protects them in this time of increased volatility? If a market has a decline over a period of time, investors will see 0% credited to their accounts as opposed to actually losing money. In compensation for this security against loss the upside is limited. Would you accept a more limited upside in return for a guarantee of protection on the downside?
A study was done that actually asked these questions and 80% of people surveyed stated that they would rather have a 4% return with a guarantee against not ever losing their investment, versus a product that offered 8% return with the possibility of loss. If asked, and you fall into the 80% category, give our office a call and we will gladly provide you with the information needed to make an intelligent decision otherwise enjoy the ride, it's your retirement.
Tom
Beyond Egypt and the Middle East, our own economy still struggles to gain footing. Many analysts believe that, as a result of a weak and unbalanced financial system, the bull market that we are seeing right now could experience significant volatility.
The VIX is an index of consumer perceptions of risk in the market place. The VIX index is published in any Financial Newspaper, i.e. Wall Street Journal. It is a bellwether measure of volatility in the marketplace today. In 2010, the VIX peaked in May and June, and has gradually leveled off since then. This index, however, can change quickly.
In 2010 the S&P 500 saw an increase 15.06%. All in all a pretty good return, particularly in light of previous years when the S&P was negative. In looking at 2010 in detail, however, some facts are important to realize:
- On 106 of 252 days that the market was open, the S&P 500 actually went down.
- If you had taken a daily average, the return on the S&P 500 would be 2.2%.
In May of 2010, the market experienced the "Flash Crash;" an event started by a computer program that eventually led to a 600 point drop in the Dow Jones. In the aftermath the television program 60 Minutes ran a story about how computers are now handling trades on stocks sometimes at split-second interval. The question for today's investor concerned about retirement is what to do when world events impact the direction of markets. While this has been an age-old dilemma, increased volatility in the markets reflects what is happening in society.
While diversification is a good strategy, what happens is the entire market is negatively affected by world events. There is no real way to avoid systemic risk. Systemic risk is market risk. If the market goes down, people lose money, take it one step further if the market goes down so does your retirement account go down. At this stage in your life can you really afford this scenario.
What if there was a product for investors that protects them in this time of increased volatility? If a market has a decline over a period of time, investors will see 0% credited to their accounts as opposed to actually losing money. In compensation for this security against loss the upside is limited. Would you accept a more limited upside in return for a guarantee of protection on the downside?
A study was done that actually asked these questions and 80% of people surveyed stated that they would rather have a 4% return with a guarantee against not ever losing their investment, versus a product that offered 8% return with the possibility of loss. If asked, and you fall into the 80% category, give our office a call and we will gladly provide you with the information needed to make an intelligent decision otherwise enjoy the ride, it's your retirement.
Tom
Tuesday, March 29, 2011
PEACE BE WITH YOU
This is a common phrase used in many religions today to wish someone well, to send them love and goodness.
It is also a mindset. With all the mania in the financial world today, I think what everyone really wants is very simple. Peace of mind.
There is so much information out there to disseminate. Surely, we do not have a lack of it, we have information overload. When a client tells me they want to do more research on my recommendations, I know I have failed. I have not effectively conveyed my message, which is " you can place your trust in me." I have attentively listened to you express your desires and needs for a happy retirement, and based on my professional experience and intuitive nature, I have delivered one or more solution that I sincerely feel will deliver the outcome you need. There are sometimes several scenarios one can put in place to solve a particular issue or concern. The bottom line, is which one of those will give you what you are really looking for - peace of mind. Do you really want to know or try to learn the intricacies of how an investment or insurance product works? Don't you really just want to know what it will do for you?
Certainly, full disclosure is important and mandatory, but honestly, most people glaze over after a few minutes of explaining the mechanics of most investments. What you want is trust. You want to be able to fully trust the person who is making the recommendations. Without trust, you will never have peace of mind. All the research in the world won't give you peace of mind. All the procrastinating in the world won't give you peace of mind. No, my friend, you must dig deep and see if there is trust.
I know this is so hard to do in our world now with all the scandalous behaviors of unethical and dishonest individuals who have abused someone's trust. It is, however, attainable. Trust is a two-way street. You have to let your guard down some and also be honest with the person from whom you are seeking advice. You don't go to the doctor and not reveal your symptoms. You could get a totally inaccurate diagnosis, and that would not make the pain go away and could cause you harm.
For peace to come into your mind you need to empty it of all the noise, all preconceived notions, all the negativity and hyperactivity. Keep an open mind, free of fear. Trust will come, or it won't. You will know. Trust yourself.
Kathy
It is also a mindset. With all the mania in the financial world today, I think what everyone really wants is very simple. Peace of mind.
There is so much information out there to disseminate. Surely, we do not have a lack of it, we have information overload. When a client tells me they want to do more research on my recommendations, I know I have failed. I have not effectively conveyed my message, which is " you can place your trust in me." I have attentively listened to you express your desires and needs for a happy retirement, and based on my professional experience and intuitive nature, I have delivered one or more solution that I sincerely feel will deliver the outcome you need. There are sometimes several scenarios one can put in place to solve a particular issue or concern. The bottom line, is which one of those will give you what you are really looking for - peace of mind. Do you really want to know or try to learn the intricacies of how an investment or insurance product works? Don't you really just want to know what it will do for you?
Certainly, full disclosure is important and mandatory, but honestly, most people glaze over after a few minutes of explaining the mechanics of most investments. What you want is trust. You want to be able to fully trust the person who is making the recommendations. Without trust, you will never have peace of mind. All the research in the world won't give you peace of mind. All the procrastinating in the world won't give you peace of mind. No, my friend, you must dig deep and see if there is trust.
I know this is so hard to do in our world now with all the scandalous behaviors of unethical and dishonest individuals who have abused someone's trust. It is, however, attainable. Trust is a two-way street. You have to let your guard down some and also be honest with the person from whom you are seeking advice. You don't go to the doctor and not reveal your symptoms. You could get a totally inaccurate diagnosis, and that would not make the pain go away and could cause you harm.
For peace to come into your mind you need to empty it of all the noise, all preconceived notions, all the negativity and hyperactivity. Keep an open mind, free of fear. Trust will come, or it won't. You will know. Trust yourself.
Kathy
Monday, March 28, 2011
Play Defense
Did you know the U.S. Government does not have an approved 2011 budget for its DEPARTMENT OF DEFENSE? We're nearly 6 months into the year and Congress has not authorized any money to fight wars-at least not the one with Libya. Still, the U.S. is shooting missiles, dropping bombs, and there's no budget. Weird.
Last year, Congress had the money to pass "Don't ask, don't tell" legislation. Oddly, Congress could not pass a law to pay our troops and fund operations. Very strange.
With all this craziness, gold and silver are looking even more attractive, as well as mineral developers. Oil and energy related shares also look like a defensive play.
The federal budget is way out of control. Spending is over the top, and our debt is escalating daily. No one knows how this will all turn out, but the U.S. dollar is destined for inflation. Lose your purchasing power, lose your way of life.
Gold may once again become the new standard.
Last year, Congress had the money to pass "Don't ask, don't tell" legislation. Oddly, Congress could not pass a law to pay our troops and fund operations. Very strange.
With all this craziness, gold and silver are looking even more attractive, as well as mineral developers. Oil and energy related shares also look like a defensive play.
The federal budget is way out of control. Spending is over the top, and our debt is escalating daily. No one knows how this will all turn out, but the U.S. dollar is destined for inflation. Lose your purchasing power, lose your way of life.
Gold may once again become the new standard.
Friday, March 25, 2011
Happy Birthday, Health Reform
Well one year ago this week, President Barack Obama signed the Patient Protection and Affordable Care Act into law.
And, in the last 12 months-despite promises to the contrary-we still haven't found out everything that's in it. Since the Secretary still has not filled in all the blanks- as if this legislation were some sort of Federal Mad Lib.
We've seen at least half a dozen lawsuits, with as many rulings as plaintiffs, and no clear resolution in sight. And, after all of that, I'm not sure we've seen that many patients "protected" and we've certainly not seen any more "affordable" care.
We've also seen Congressional Democrats endure a midterm beating the likes of which we haven't seen since Clinton decided to pass his own (Welfare) reform. What we have also seen is a public still split over the law; clearly opposed to the individual mandate clause, but without it, the entire thing falls apart, making even less sense than it already does.
Meanwhile, we have a President who believed so much in this legislation last year he insisted on shoving it through Congress, and now we've seen more waivers - and wavering - than an office fantasy football league.
Last week I had the privilege of attending a Chamber of Commerce dinner where the guest speaker was the Vice President of a local hospital. In his speech he mentioned that he has yet to meet any Congressman who has read the 2,500 page report that outlines the details. It still amazes me that this is a fact. He also stated in his speech that he had no idea how this health care reform was going to work.
If you believed in this so much, at least stand by it, and I can respect your ideas and resolve. Otherwise, you're just another slick politician more beholden to polls than principals. And not unlike the host of federal regulations that hangs over our heads, we already have more than enough of those.
Tom
And, in the last 12 months-despite promises to the contrary-we still haven't found out everything that's in it. Since the Secretary still has not filled in all the blanks- as if this legislation were some sort of Federal Mad Lib.
We've seen at least half a dozen lawsuits, with as many rulings as plaintiffs, and no clear resolution in sight. And, after all of that, I'm not sure we've seen that many patients "protected" and we've certainly not seen any more "affordable" care.
We've also seen Congressional Democrats endure a midterm beating the likes of which we haven't seen since Clinton decided to pass his own (Welfare) reform. What we have also seen is a public still split over the law; clearly opposed to the individual mandate clause, but without it, the entire thing falls apart, making even less sense than it already does.
Meanwhile, we have a President who believed so much in this legislation last year he insisted on shoving it through Congress, and now we've seen more waivers - and wavering - than an office fantasy football league.
Last week I had the privilege of attending a Chamber of Commerce dinner where the guest speaker was the Vice President of a local hospital. In his speech he mentioned that he has yet to meet any Congressman who has read the 2,500 page report that outlines the details. It still amazes me that this is a fact. He also stated in his speech that he had no idea how this health care reform was going to work.
If you believed in this so much, at least stand by it, and I can respect your ideas and resolve. Otherwise, you're just another slick politician more beholden to polls than principals. And not unlike the host of federal regulations that hangs over our heads, we already have more than enough of those.
Tom
Thursday, March 24, 2011
How to Trim the Fat From Your Budget
We see some tough times on the horizon. With longer life expectancies, higher inflation and not enough income – the time is NOW to buckle down and watch your spending.
You don’t have to live like a hermit or make drastic changes to your lifestyle, but here are a few suggestions to help you think about how you spend.
- Don’t go shopping without a list. Stick to the items you need so you don’t impulse by.
- Cut down on eating out. It may be fun to take turns creating a new recipe. Or take turns hosting on Saturday nights with friends – you can play games or cards for an inexpensive form of entertainment.
- Use debit cards instead of credit cards. You’ll only spend what’s actually in your bank account and won’t run up your charge accounts with high interest charges.
- Consolidate your errands so you use less gas and less of your free time.
- Think about writing out your bills instead of automatic debits. It makes you more aware of what things cost.
- Go shopping in your own “store.” Your closet and drawers probably have clothes you forgot you have or have not worn in a while. Change it up with a scarf or vest or by layering. Guys too!
- Go out for appetizers instead of dinner! You’ll get a lot more variety and won’t overeat.
- Have one glass of wine or one drink when you go out, and the rest at home! You can probably purchase a bottle for what you pay for 2 drinks in a restaurant. And besides, you shouldn’t drink and drive anyway!
- Be kind to your environment – use aluminum water bottles and refill them. Also, less exposure to plastics, which can break down and may be harmful to your health.
- Use washable containers instead of baggies, aluminum foil and disposable containers.
Small changes in your spending habits can really add up over time and may give you that little bit of extra cash when you really need it.
Kind of like cutting calories during the week so you can indulge a little on the weekends!
-Kathy
Lady Fi
Wednesday, March 23, 2011
Taking Income in Retirement
As great as it feels to take income from an appreciating account, it feels terrible to take income from the same account when the value is declining. From a mathematical perspective, taking income from an account with a declining value might be harmful in terms of retirement planning. The reason is simple - whatever the percentage of investment loss, it takes a larger percentage of gain to make up the loss as the discussion below outlines.
Let's look at an example.
If I have an investment worth $1,000,000 and lose 20% in a given year, I have a year-end account balance of $800,000.
Now, let's assume the following year my investment makes a 20% gain. I now have an account balance of $960,000. A 20% loss followed by a 20% gain still results in an investment loss!!
It takes an investment gain of 25% to recoup the losses experienced from a 20% investment decline.
The relationship existing between losses and subsequent gains is absolute - meaning it always exists, regardless of the percentage. The greater the investment loss, the larger the subsequent gain needs to be in order to recoup all investment losses. It's this simple mathematical fact that makes not losing money in investments so important for so many retirees.
That's why it's important to invest at least a percentage of your assets conservatively, in a vehicle where account values are as stable as possible. A large investment loss makes it more difficult to receive a level, consistent income stream. And, for those individuals in retirement or nearing retirement, receiving consistent income is an essential component of living a traditional retirement.
Avoiding losses in retirement may be every bit as important as making gains, some would argue more important. One of Warren Buffett's best known quotes is "Rule number one: Never lose money. Rule #2: Never forget rule number one."
-Tom
Let's look at an example.
If I have an investment worth $1,000,000 and lose 20% in a given year, I have a year-end account balance of $800,000.
Now, let's assume the following year my investment makes a 20% gain. I now have an account balance of $960,000. A 20% loss followed by a 20% gain still results in an investment loss!!
It takes an investment gain of 25% to recoup the losses experienced from a 20% investment decline.
The relationship existing between losses and subsequent gains is absolute - meaning it always exists, regardless of the percentage. The greater the investment loss, the larger the subsequent gain needs to be in order to recoup all investment losses. It's this simple mathematical fact that makes not losing money in investments so important for so many retirees.
That's why it's important to invest at least a percentage of your assets conservatively, in a vehicle where account values are as stable as possible. A large investment loss makes it more difficult to receive a level, consistent income stream. And, for those individuals in retirement or nearing retirement, receiving consistent income is an essential component of living a traditional retirement.
Avoiding losses in retirement may be every bit as important as making gains, some would argue more important. One of Warren Buffett's best known quotes is "Rule number one: Never lose money. Rule #2: Never forget rule number one."
-Tom
Tuesday, March 22, 2011
Get Ready for the Ride
We are still in a secular bear market! (Secular means a long period of time). The last secular bear market lasted 17 years – If we count back starting in 2001 – and history proves itself, that means we have about 7 more years of a bumpy ride. Don’t be fooled by the last 2 years. Most bear markets have periods of retracement. But as the recent volatility suggests, these periods eventually wash out. I see storm clouds ahead. The bounce in a secular bear market lasted about 26 months during past downward cycles and that puts us around mid May of 2011.
Funny how some people are just gluttons for punishment. If you get creamed in 2002 and/or 2008, why are you still in the ring? It doesn’t hurt to step out for a while. If I’m right, you still have your gains and have avoided another blood bath, If I’m wrong, well you still have your gains!
Steve Blumenthal, CEO of Capital Management Group, an Investment Advisory firm, sees a pullback of about 34%. I like the people he hangs out with – brilliant minds like John Mauldin and Dr. Christopher Geczy. I’m in their camp . Here it comes, buckle up. This is going to be another wild ride. If you choose to stay on – keep your eyes wide open! No surprises here.
Get the heck off and just watch. Somewhat of a thrill, but without the high blood pressure.
The Choice is Yours.
-Kathy
Monday, March 21, 2011
This is NOT the time to Buy and Hold - Spring Cleaning
Who’s the first Irishman you see in springtime?
Patio Furniture.
Yeah – corny, right?
Goodbye winter of 2011- hello Spring.
Spring is always a good time to take stock of what we need, and what we don’t.
We can hope for a traditional strong spring real estate market, but I don’t think we’ll see one. Still too much unemployment and only 50,000 “Gen X-ers” to buy 83 million Boomer houses, among other things...
Perhaps it is a good time for getting rid of those collectibles you’re just not into anymore. I hear E-bay is booming. There are also probably a lot of families going through some tough times who could use “like-new” clothing, shoes, boots and next year’s winter coats. Little league and soccer is revving up-got any equipment crowding your garage and closets?
Spring is also a great time to do a checkup on your financial situation. Organize your records, discard unnecessary paperwork and old statements.
Do you have the stomach for another rocky ride with your investments? I think we’ll see a pullback very soon. Don’t wait too long before you talk to your trusted advisor for their take on things.
Spring is a wonderful time to remember those we love and make sure they will be taken care of if you’re not here. Update those wills you had done 20 years ago. The language may be insufficient to carry out your wishes today! Perhaps you need more than a will-such as a trust. Speak to an experienced estate planning attorney about what’s best for your personal situation. Be sure to have Durable Powers of Attorney and Medical Directives in place-no one plans on getting sick or hurt. This simple act will make it so much easier for your loved ones to step in and act on your behalf. Do it now!
So spring shape-up time my friends. Time to get the “house” in order.
Carpe Diem!
Kathy
Friday, March 18, 2011
Worker's Retirement Confidence Falls To Record Low
Yesterday I was doing some informational research when I came across this article from Benefit Selling. It blew me away so I decided to share it with you:
Worker's Retirement Confidence Falls To Record Low by Amanda McGregory
Twenty-seven percent of employees say they are “not at all confident” about having enough money to live comfortably in retirement, according to the 2011 Retirement Confidence Survey, released by the Employee Benefit Research Institute and co-sponsored by the Principal Financial Group.
This figure is the highest in the survey’s 21 years.
Additionally, 13 percent of workers say they are “very confident,” which ties 2009 for the lowest rate measured by the survey.
“The survey finds that many systemic conditions are forcing Americans to redefine retirement, such as high unemployment rates, government fiscal crises, rising health care costs, lower investment returns, a surging older population putting pressure on Social Security and Medicare and longer life expectancies,” says Jack VanDerhei, EBRI research director and co-author of the report.
“Americans are beginning to recognize the level of savings needed for a comfortable retirement. Now it’s critically important to take steps to improve the chances they’ll have enough,” says Greg Burrows, senior vice president, retirement and investor services at The Principal. “Research shows even simple actions, like calculating how much is needed for retirement, increases savings. Creating a plan and working with a financial advisor can also help get savers on realistic paths to a secure retirement.”
Approximately one-third of workers and retirees report dipping into their savings in 2010 to pay for basic expenses; however, those with retirement savings accounts are much less likely to withdraw from their savings.
Forty-two percent of respondents say they guessed to determine their needed retirement savings while 70 percent say they are a little or greatly behind schedule in planning and saving for retirement.
More than half of workers report having less than $25,000 in total savings and investments, excluding their homes.
Twenty percent of respondents say they now intend to retire at an older age than originally planned, but 45 percent say they retired earlier than expected, primarily because of a health problem or disability.
What steps are you taking? Our analysis can put you on the right track and establish a working plan. Calling our office at 732-364-5462 would be a good first step.
Is greeting customers at Wal-Mart or Costco really an option you want to consider for your retirement?
-Tom
Thursday, March 17, 2011
The Life Cycle of Your Money
You spend many years trying to save for retirement. During your 20's and 30's you are just starting out. Perhaps you married, paid down some school loans, while saving for that illusive down payment on your first home. If kids come along, a lot of your earnings went to raising them. A lot! During these years, your money is in the accumulation phase.
Just when you can finally start to buckle down, after college tuitions, weddings, and helping the kids get started, you realize you don't have a lot of time left to save more for your "planned" retirement date. Now you are getting near the distribution phase.
This is the time you need to consider being more conservative with your investment choices. Please realize, conservative does not necessarily mean guaranteed. It can be totally devastating to the longevity of your money if you take a hit from the market during the first few years of distributions. When you are drawing down during these periods it can become very difficult and sometimes impossible to recoup losses.
A strategy that may help is to build a foundation based on a guaranteed supplemental income stream (after Social Security and your pension, if you're on of the lucky ones that still gets one!). Once you have an income plan in place, then you can diversify according to your own risk tolerance. A word to the wise: being too conservative can be almost as dangerous as being too risky. You could very well outlive your money, earning today's meager returns once you factor in inflation and future tax increases.
I suggest having an analysis done on your current and future income needs. Be sure to cover the "what if"s like needing extra money for health care, or losing your spouse/partner. Then go and live your life!
For an independent audit and income analysis, give us a call. We want you to live the best life possible.
-Kathy
Family Focus Financial Group (732)364-5462 kathy@ffrgonline.com
Just when you can finally start to buckle down, after college tuitions, weddings, and helping the kids get started, you realize you don't have a lot of time left to save more for your "planned" retirement date. Now you are getting near the distribution phase.
This is the time you need to consider being more conservative with your investment choices. Please realize, conservative does not necessarily mean guaranteed. It can be totally devastating to the longevity of your money if you take a hit from the market during the first few years of distributions. When you are drawing down during these periods it can become very difficult and sometimes impossible to recoup losses.
A strategy that may help is to build a foundation based on a guaranteed supplemental income stream (after Social Security and your pension, if you're on of the lucky ones that still gets one!). Once you have an income plan in place, then you can diversify according to your own risk tolerance. A word to the wise: being too conservative can be almost as dangerous as being too risky. You could very well outlive your money, earning today's meager returns once you factor in inflation and future tax increases.
I suggest having an analysis done on your current and future income needs. Be sure to cover the "what if"s like needing extra money for health care, or losing your spouse/partner. Then go and live your life!
For an independent audit and income analysis, give us a call. We want you to live the best life possible.
-Kathy
Family Focus Financial Group (732)364-5462 kathy@ffrgonline.com
Wednesday, March 16, 2011
There is a general sense of uneasiness, skepticism, and mistrust permeating the air..
Many still vividly remember the stock market collapse of 2008 and early 2009. The news stories of Bernie Madoff and other financial swindlers are still relatively fresh in our minds. Quantitative easing, i.e. the massive printing of money by the Federal Reserve has people worried about the future direction of the US economy and the possibility of massive inflation. While the "official" unemployment number is falling even those who are less engaged with current economic news know that as far as official Government reporting is concerned, the proverbial books are being cooked.
How many watch the financial talking heads on TV? Do you watch Cramer? Kudlow? Cavuto? The squawk box gang. How many of you have ever heard two seemingly bright people on these shows talk about the same financial topic and give advice that is the polar opposite advice that another seemingly intelligent person gives? The reason for this is that each of these pundits has a different opinion as to what might occur due to a specific set of economic circumstances. Then based on that opinion these experts have a suggested course of action in order to profit from or be safe from these possible outcomes.
A better course of action, I suggest, would be to identify personal financial goals and pinpoint possible obstacles to achieving these goals and from those two lists develop a plan to achieve those goals. There is a lot of confusion and uncertainty among the masses, people are scared financially speaking, unsure what their personal goals are and how to identify the possible obstacles that might get in the way since there are so many. Can we help? I think so.
What are you really looking for - could the answer be Security?
-Tom Boles
How many watch the financial talking heads on TV? Do you watch Cramer? Kudlow? Cavuto? The squawk box gang. How many of you have ever heard two seemingly bright people on these shows talk about the same financial topic and give advice that is the polar opposite advice that another seemingly intelligent person gives? The reason for this is that each of these pundits has a different opinion as to what might occur due to a specific set of economic circumstances. Then based on that opinion these experts have a suggested course of action in order to profit from or be safe from these possible outcomes.
A better course of action, I suggest, would be to identify personal financial goals and pinpoint possible obstacles to achieving these goals and from those two lists develop a plan to achieve those goals. There is a lot of confusion and uncertainty among the masses, people are scared financially speaking, unsure what their personal goals are and how to identify the possible obstacles that might get in the way since there are so many. Can we help? I think so.
What are you really looking for - could the answer be Security?
-Tom Boles
Tuesday, March 15, 2011
Choose the Right Pension Payout - It's Forever!
The day you've been looking forward to is almost here- retirement.
You've put your time in and now you've had enough!
Before you leave your employer, some very important decisions need to be made; how do you structure your income payout from your pension. What is the best option for you?
It will be different for everyone. Here are some questions to ask yourself:
You've put your time in and now you've had enough!
Before you leave your employer, some very important decisions need to be made; how do you structure your income payout from your pension. What is the best option for you?
It will be different for everyone. Here are some questions to ask yourself:
- How stable is your company or municipality. It is no secret that many public pensions could be in jeopardy due to overspending, mismanagement of funds, loss of revenue (foreclosures hurt-if you're not paying your mortgage, you're likely not paying your property taxes).
- Are you willing to permanently part with a portion of your pension to provide a spousal benefit? Boomers are expected to live 25-35 years into retirement. That's a lot of lost wages if you take the reduced payout option.
- On the flip-side 25-35 years is a long time to go with no pension if you choose a life only option and die too soon, leaving your spouse under-protected.
- Should you consider a pension maximization program which basically allows you to take a higher payout with no spousal benefit, then supplement with a life insurance policy on the pensioner if he or she dies first. This can give you many years of maximum income to spend, especially if you are both relatively healthy. However, the numbers may not make sense if you are rated or a smoker.
- Are you healthy? Consider each partner's health and the lifestyle you envision for your retirement?
- Are you planning to work part-time or perhaps start a business?
- What other income sources do you have? Could your investments sustain you if you experience a market loss, especially early on?
It is wise to meet with your trusted advisor who should be able to do an analysis and run all the numbers and scenarios. Only then can you make an educated decision on what feels best for you and your spouse.
If you need help, we're here to listen.
Kathy
Family Focus Financial Group (732) 364-5462
Monday, March 14, 2011
The Media Can Hurt You
We're all so thirsty for information, especially when it comes to what to do with our finances. There are plenty of opinions out there. What scares me the most is the media. It seems when you read it in print, some written by whom the public views as credible, or hear it on television, you want to believe. Many do believe. It was on TV, so it must be true; or "so and so," who is a celebrity, says you should do this...
Don't get me wrong. I am happy that you are being made aware. It causes you to think. However, more often than not, the reporter or the writer only gives part of the facts, takes things out of context, or simply does not have the financial training and experience to be discussing the subject matter. Important information gets left out. The facts are sometimes incorrect, and often you, the public, are misguided.
This can do more harm than good. So before you take things as gospel, realize who is delivering the message. If it's a reporter or writer, even one from a widely read publication, chances are the information may not be totally accurate. Without years of education and experience on the subject matter, what credentials do they have to be giving out such crucial advice?
Think about this. Who would you feel had more credibility? A doctor who had years of medical education, training and experience in his or her field of expertise, or something you heard on the news?
It's ok to question. In fact, it's wise. One of two outcomes will occur: you will realize the "story" has flaws and trust your instincts, or believe anything you hear and read because it's popular opinion. Bad news sells! For some reason the public is addicted to it, maybe because that's all we're fed on a daily basis. Perhaps you've been brainwashed by the hype; or have you just given up on your ability to filter through the madness.
All I can say is trust your own instincts and develop a relationship with a knowledgeable and credible advisor who has taken the time to listen and get to know you.
After all, don't you deserve better than "cookie cutter" advice?
-Kathy
Don't get me wrong. I am happy that you are being made aware. It causes you to think. However, more often than not, the reporter or the writer only gives part of the facts, takes things out of context, or simply does not have the financial training and experience to be discussing the subject matter. Important information gets left out. The facts are sometimes incorrect, and often you, the public, are misguided.
This can do more harm than good. So before you take things as gospel, realize who is delivering the message. If it's a reporter or writer, even one from a widely read publication, chances are the information may not be totally accurate. Without years of education and experience on the subject matter, what credentials do they have to be giving out such crucial advice?
Think about this. Who would you feel had more credibility? A doctor who had years of medical education, training and experience in his or her field of expertise, or something you heard on the news?
It's ok to question. In fact, it's wise. One of two outcomes will occur: you will realize the "story" has flaws and trust your instincts, or believe anything you hear and read because it's popular opinion. Bad news sells! For some reason the public is addicted to it, maybe because that's all we're fed on a daily basis. Perhaps you've been brainwashed by the hype; or have you just given up on your ability to filter through the madness.
All I can say is trust your own instincts and develop a relationship with a knowledgeable and credible advisor who has taken the time to listen and get to know you.
After all, don't you deserve better than "cookie cutter" advice?
-Kathy
Friday, March 11, 2011
WOW ! Wall Street is starting to get it……ALMOST!
We’ve been touting this for years. Boomers are going to need income. It is the number one concern of all boomers, and if it isn’t, it should be. A reasonably healthy 65 year old couple has more than a 50% chance that at least one partner will live beyond age 90. A single male has about a 35% chance, and a single woman, a 45% chance. That’s at least 25 years or more after retirement that income will be needed. And, oh, by the way, we haven’t even mentioned the significant impact inflation, tax increases, or health care will have on that monthly nut you will need to crack to cover your basic needs, like food, clothing, shelter and yes, medications. If you’re going to live that long, there is a good possibility that you’ll not be in 100% perfect tip-top shape.
I was so shocked to read a recent article in the Wall Street Journal, March 8, 2011 titled “Making the Case to Buy an Annuity.” Wall Street has been bashing annuities for years - remember, most stock brokers do not have the necessary licenses , training, or credentials to offer them to you. If there is nothing in it for them, why would they recommend them. Also, since an annuity is meant to be left alone to do its job, create present or future guaranteed income, and tax advantages, it not a financial instrument that is meant to be sold, cashed in or traded. Do you get what I’m saying?
Well I am so happy to see Wall Street finally recognizing the importance and the value of having annuities as a “foundation” of a good retirement plan. But once again, they did not tell the whole story. They spoke of only two kinds of annuities; an immediate annuity, which works like a pension- trade a sum of money for a period of guaranteed payments, and of course they would tout a variable annuity, which invests in, what else, mutual funds! They never mentioned one of the most popular annuities today: a fixed indexed annuity with guaranteed income riders. One might say that this type is the best of both worlds. Your principle is guaranteed (unlike
a variable), and only your interest is variable as it can be allocated to either a guaranteed fixed rate, usually better than a CD, or it can be linked to various indexes like the Dow or commonly the S & P. So, you can have the potential for growth, with none of the downside risk. In addition, you don’t have all the hidden fees associated with variable annuities.
In closing, each individual should work with an advisor who is competent and knowledgeable and not limited to one company’s products. Remember, it’s about what is best for you, not them, and each of you has your own unique situation, risk tolerance, and income needs.
WE LISTEN. We’re here to help if you need us.
-Lady Fi
Kathy
I was so shocked to read a recent article in the Wall Street Journal, March 8, 2011 titled “Making the Case to Buy an Annuity.” Wall Street has been bashing annuities for years - remember, most stock brokers do not have the necessary licenses , training, or credentials to offer them to you. If there is nothing in it for them, why would they recommend them. Also, since an annuity is meant to be left alone to do its job, create present or future guaranteed income, and tax advantages, it not a financial instrument that is meant to be sold, cashed in or traded. Do you get what I’m saying?
Well I am so happy to see Wall Street finally recognizing the importance and the value of having annuities as a “foundation” of a good retirement plan. But once again, they did not tell the whole story. They spoke of only two kinds of annuities; an immediate annuity, which works like a pension- trade a sum of money for a period of guaranteed payments, and of course they would tout a variable annuity, which invests in, what else, mutual funds! They never mentioned one of the most popular annuities today: a fixed indexed annuity with guaranteed income riders. One might say that this type is the best of both worlds. Your principle is guaranteed (unlike
a variable), and only your interest is variable as it can be allocated to either a guaranteed fixed rate, usually better than a CD, or it can be linked to various indexes like the Dow or commonly the S & P. So, you can have the potential for growth, with none of the downside risk. In addition, you don’t have all the hidden fees associated with variable annuities.
In closing, each individual should work with an advisor who is competent and knowledgeable and not limited to one company’s products. Remember, it’s about what is best for you, not them, and each of you has your own unique situation, risk tolerance, and income needs.
WE LISTEN. We’re here to help if you need us.
-Lady Fi
Kathy
Thursday, March 10, 2011
Senate to Vote on rival GOP, Democratic Budgets
In a demonstration of official Washington's often curious logic, the Senate is expected to vote down both a slashing GOP budget bill and a less painful Democratic plan to demonstrate progress instead of gridlock.
The idea is to show both sides that they need to move toward each other to break a bitter stalemate over how much to cut spending as Congress wraps up last year's unfinished budget work. The combatants are facing a March 18 deadline that already has Republicans in the House drafting another stopgap spending measure to make sure the government doesn't shut down if a broader agreement isn't reached by them.
Let me put this into average American household terms:
Say that a married couple, both working, has a home with a mortgage of $1000. That payment includes the taxes on the property and the property insurance. The couple also pays an electric bill, a natural gas bill and a cable bill each month.
Now one of the two loses their job. Down to just one income, the couple has some decisions to make about what to cut out of their household budget and what to keep in the budget. They have to cut about $1000 per month in expenses in order to make their household budge balance.
Instead of making the hard choices, they decide for starters to eliminate the cable and see how it goes. You don't need a degree in economics to figure out that it won't take long and the couple will be broke, unable to meet their household budget.
That's exactly what is happening at the Federal level currently. Given the magnitude of the US deficit and debt, it seems that there would be meaningful discussions about getting spending under control, but instead the two parties are arguing about the cable bill.
-Tom
The idea is to show both sides that they need to move toward each other to break a bitter stalemate over how much to cut spending as Congress wraps up last year's unfinished budget work. The combatants are facing a March 18 deadline that already has Republicans in the House drafting another stopgap spending measure to make sure the government doesn't shut down if a broader agreement isn't reached by them.
Let me put this into average American household terms:
Say that a married couple, both working, has a home with a mortgage of $1000. That payment includes the taxes on the property and the property insurance. The couple also pays an electric bill, a natural gas bill and a cable bill each month.
Now one of the two loses their job. Down to just one income, the couple has some decisions to make about what to cut out of their household budget and what to keep in the budget. They have to cut about $1000 per month in expenses in order to make their household budge balance.
Instead of making the hard choices, they decide for starters to eliminate the cable and see how it goes. You don't need a degree in economics to figure out that it won't take long and the couple will be broke, unable to meet their household budget.
That's exactly what is happening at the Federal level currently. Given the magnitude of the US deficit and debt, it seems that there would be meaningful discussions about getting spending under control, but instead the two parties are arguing about the cable bill.
-Tom
Wednesday, March 9, 2011
Women - Don't Settle!
Do you know statistics show that women currently control over 50% of the investment wealth in this country? (Federal Reserve Board data) And, that by 2020 that number is expected to be closer to 75%!
So, I ask you. Are you satisfied with your current financial advisor. Is he or she listening to your concerns, letting you know that your feelings are valid, that your fears are justified?
It is no secret that men and women think differently when it comes to money. Different things are important to us. Men are more focused on how something works. Women are more concerned about what it does.
Men tend to make financial decisions quickly while women need to get to know their advisor as a person to feel comfortable.
In general, women want to work with someone who listens carefully, who respects their ideas and has the patience to walk you through the process so we can feel confident in the solutions.
Lady Fi says, it's time to take TIME! Women often put themselves last. You are so used to doing for others first. It is our nature to nurture.
Well it's time to take care of business girl, this is serious!
It is said that by the age of 57, almost 50% of women will be either divorced, widowed or separated. In addition it is expected that "boomer women will outlive their husbands by 15 years or more!
What does this mean to you? It means it's time to wake up - smell the coffee - you need to be responsible for your finances.
If you are married it means you need to know what is going on. What assets do you have? How are they titled? Are beneficiaries updated? Do you have your own logins and passwords? This is not a matter of a lack of trust. This is just smart. It's good planning to protect yourself for the day when you are without your partner. No time to procrastinate or cry lack of interest or understanding - "Lady Fi" is here to help educate you, not break up your marriage.
If you're single you have NO EXCUSE! There is no knight in shining armor going to shower you with buckets or cash in your 80's. Yes, I know it's overwhelming to have to do it all yourself. But you're NOT ALONE! Lady Fi is here to guide you and help you do the best you can. In the end that's all any of us can do. But plan now, TODAY, you'll meet each challenge as it comes along - just as you always have!
Ask Lady Fi
Enter your concerns and questions here for our forum to discuss. I'm listening. And besides, I guarantee there are at least a dozen other women with the same concerns! Sharing helps us all.
Warm Wishes
"Lady Fi"
Kathy
A 2008 LIMRA report found that 72% of affluent women are NOT happy with their current advisor.
So, I ask you. Are you satisfied with your current financial advisor. Is he or she listening to your concerns, letting you know that your feelings are valid, that your fears are justified?
It is no secret that men and women think differently when it comes to money. Different things are important to us. Men are more focused on how something works. Women are more concerned about what it does.
Men tend to make financial decisions quickly while women need to get to know their advisor as a person to feel comfortable.
In general, women want to work with someone who listens carefully, who respects their ideas and has the patience to walk you through the process so we can feel confident in the solutions.
Lady Fi says, it's time to take TIME! Women often put themselves last. You are so used to doing for others first. It is our nature to nurture.
Well it's time to take care of business girl, this is serious!
It is said that by the age of 57, almost 50% of women will be either divorced, widowed or separated. In addition it is expected that "boomer women will outlive their husbands by 15 years or more!
What does this mean to you? It means it's time to wake up - smell the coffee - you need to be responsible for your finances.
If you are married it means you need to know what is going on. What assets do you have? How are they titled? Are beneficiaries updated? Do you have your own logins and passwords? This is not a matter of a lack of trust. This is just smart. It's good planning to protect yourself for the day when you are without your partner. No time to procrastinate or cry lack of interest or understanding - "Lady Fi" is here to help educate you, not break up your marriage.
If you're single you have NO EXCUSE! There is no knight in shining armor going to shower you with buckets or cash in your 80's. Yes, I know it's overwhelming to have to do it all yourself. But you're NOT ALONE! Lady Fi is here to guide you and help you do the best you can. In the end that's all any of us can do. But plan now, TODAY, you'll meet each challenge as it comes along - just as you always have!
Ask Lady Fi
Enter your concerns and questions here for our forum to discuss. I'm listening. And besides, I guarantee there are at least a dozen other women with the same concerns! Sharing helps us all.
Warm Wishes
"Lady Fi"
Kathy
Monday, March 7, 2011
Debt Has Its' Consequences
$600 Billion, that's 75 billion dollars per month, of our own money to be bought back by the U.S. to stimulate our economy?
Huh? Yeah, I know it sounds like double talk. It is. Created a buzz for a while, kinda like a few glasses of cheap wine. But don't expect the euphoria to continue. The market is already starting to show signs of increased volatility.
Take heed...the bond bubble is about to burst.
As I wrote in the summer issue of The County Woman, here comes the implosion of the US TREASURY bubble. The last time this occurred in 1976, the five years following were among the most extraordinary in economic history. They're about to be repeated again, but this the the trend will be bigger, it will move faster, and the fallout will be far greater. We weren't 1.65 trillion dollars in debt. We did not have underfunded Social Security and Medicare disasters looming, and we did not have 76 million baby boomers retiring at the rate of 10,000 a day for the next 15-20 years! And above all, we were not recovering from the worst credit crisis in our history!
Now, in order to save the day, we need the rest of the world to keep buying our debt, 'cause we're pretty tapped out, wouldn't you say? Russia and China have already begun buying oil in their own currency, not the US dollar. We are looking at worldwide currency devaluation if the US Dollar gets replaced as the world currency.
The day of financial reckoning is near when other countries and even our own citizens lose confidence and nobody shows up to buy our bonds. When that day comes, we'll crank up the printing presses and print more money. In effect, we will be silently defaulting on our own debt, bonds will crash, the Dow and the dollar will nosedive, and inflation will quickly start to spin out of control.
And what of the overall market? The next downleg is coming. Could be as early as April, but I think no later than July. Believe me, I'd rather be wrong about this than right, but I mingle with and follow some really smart people that have no personal vested interest in their predictions. If your nest egg can't withstand another major hit, it doesn't hurt to sit on the sidelines for while. Me, I'd rather be safe than sorry. Again.
Usually the contrarian opinion ends up being the right one in the end. I don't smell roses. Smells like crap (or should I say poop!).
-Kathy
Huh? Yeah, I know it sounds like double talk. It is. Created a buzz for a while, kinda like a few glasses of cheap wine. But don't expect the euphoria to continue. The market is already starting to show signs of increased volatility.
Take heed...the bond bubble is about to burst.
As I wrote in the summer issue of The County Woman, here comes the implosion of the US TREASURY bubble. The last time this occurred in 1976, the five years following were among the most extraordinary in economic history. They're about to be repeated again, but this the the trend will be bigger, it will move faster, and the fallout will be far greater. We weren't 1.65 trillion dollars in debt. We did not have underfunded Social Security and Medicare disasters looming, and we did not have 76 million baby boomers retiring at the rate of 10,000 a day for the next 15-20 years! And above all, we were not recovering from the worst credit crisis in our history!
Now, in order to save the day, we need the rest of the world to keep buying our debt, 'cause we're pretty tapped out, wouldn't you say? Russia and China have already begun buying oil in their own currency, not the US dollar. We are looking at worldwide currency devaluation if the US Dollar gets replaced as the world currency.
The day of financial reckoning is near when other countries and even our own citizens lose confidence and nobody shows up to buy our bonds. When that day comes, we'll crank up the printing presses and print more money. In effect, we will be silently defaulting on our own debt, bonds will crash, the Dow and the dollar will nosedive, and inflation will quickly start to spin out of control.
And what of the overall market? The next downleg is coming. Could be as early as April, but I think no later than July. Believe me, I'd rather be wrong about this than right, but I mingle with and follow some really smart people that have no personal vested interest in their predictions. If your nest egg can't withstand another major hit, it doesn't hurt to sit on the sidelines for while. Me, I'd rather be safe than sorry. Again.
Usually the contrarian opinion ends up being the right one in the end. I don't smell roses. Smells like crap (or should I say poop!).
-Kathy
Friday, March 4, 2011
The Fleecing of America
Anyone get gas today?
If not you're in for a surprise! This is just a plain fleecing. We don't even purchase oil from Libya. If you are as outraged as I am, Call Your Congressman and Senator.
Realize this - we elected them to take care of us - to look out for our interests. They don't pay for gas, they have expense accounts. So, in reality we are paying for their gas.
This is outrageous. Call them to voice your displeasure and threaten to withhold your vote and tell them that you'll remember this at election time - this will get them to do something, even if it is just to listen to our venting.
This price hike is not about supply and demand - it's about fleecing the American public.
- Tom
If not you're in for a surprise! This is just a plain fleecing. We don't even purchase oil from Libya. If you are as outraged as I am, Call Your Congressman and Senator.
Realize this - we elected them to take care of us - to look out for our interests. They don't pay for gas, they have expense accounts. So, in reality we are paying for their gas.
This is outrageous. Call them to voice your displeasure and threaten to withhold your vote and tell them that you'll remember this at election time - this will get them to do something, even if it is just to listen to our venting.
This price hike is not about supply and demand - it's about fleecing the American public.
- Tom
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