Some Of The Riskiest Investments May Surprise You

July 30, 2015

One of the biggest fears people have when it comes to investing is a year like 2008, when the US stock market fell almost 40%. But as long as you didn’t bail out of stocks, you would have recovered your losses in about 5 years and then gone on to make more money. The same is true of every other market downturn since the Great Depression. If you’re worried about the real risk of permanent loss, some of the riskiest investments actually seem much safer. Here are ones that may surprise you: Continue reading “Some Of The Riskiest Investments May Surprise You”

3 Hidden Pitfalls Coming to a 401(k) Statement Near You

December 18, 2014

When you see your 401(k) balance or even a projection of your future balance when you retire, do you really know what that number means for your retirement? If you’re like most people, you probably don’t. A $200k balance may look like the most amount of money you’ve ever had so you can easily think it will be more than sufficient even if it turns out to be nowhere near enough to generate the income you’ll need to retire comfortably. Continue reading “3 Hidden Pitfalls Coming to a 401(k) Statement Near You”

Should You Take a Pension or a Lump Sum?

December 05, 2014

Within the past few weeks, I have had more than a few people ask about a prior employer offering a lump sum payout vs. leaving it in the plan and taking a monthly payout at a later date.I’m not sure if companies are making this “the lump sum season” intentionally or not, but there has been a major influx of conversations about this topic. I’m figuring for every person that is asking, there are probably many more sitting there silently and trying to make the decision on their own.  That sounds like a great reason to write a blog post.  Here is the process that I walk through with a person to help them evaluate their options when they have a lump sum opportunity. Continue reading “Should You Take a Pension or a Lump Sum?”

Why Your Social Security Projection is Probably Wrong

June 27, 2014

When doing retirement planning sessions with people, we often talk about their retirement resources in order to help them plan for the future.  We look at any pension incomes that will come their way.  We look at their savings and investment accounts, their contribution levels and the potential growth of those accounts.  Continue reading “Why Your Social Security Projection is Probably Wrong”

Those Were the Days

June 17, 2014

1979 – Happy Days was a popular TV show, disco clothes were in, and a top tune was Y.M.C.A. by the Village People. My husband recently relived all these memories at his 35th high school reunion for the Class of ’79.  I got dragged along, but at least the classic rock and disco tunes were fun to listen to.  Continue reading “Those Were the Days”

Should You Go For The Gold?

February 27, 2014

With the 2014 Winter Olympics in Sochi now over, the United States ended up winning 9 gold medals, 6 silver and 11 bronze medals. It’s truly amazing to watch the athletes ski, slide, glide and flip their way to Olympic history. There was a previous post about how athletes are taxed on the prize money awarded with their medals and as I watched the games, I thought about how gold and other precious metals can help an investor reach their financial goals.

Two extremes

There are two extremes on the precious metals spectrum. There are some who believe that investing in gold is a money losing proposition because it doesn’t pay dividends and it costs money to store. In fact, Warren Buffet said, “Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

On the other end are those who believe that the US dollar is quickly losing purchasing power and gold is the true currency. There’s a growing concern that rampant inflation and debt will make the dollar worthless. While I know people who believe that inflation will soon jump to double digits and we’ll burn dollars for fuel, I question their reason for gathering gold or silver. If we suffer such devastating economic collapse, I don’t believe the main currency will be gold or silver but gasoline, food, clean water, and antibiotics.

The place for gold in our portfolios

The place for gold in our financial portfolios is somewhere in the middle of the spectrum. Gold is part of a larger asset class called commodities. Its price tends to be uncorrelated to the stock market, so having some gold can lower the overall risk of a portfolio. A recent study by economists reported that from 1836 to 2011, gold earned an average annual inflation-adjusted return of 1.1 percent. By contrast, they estimated long-term returns to be 1.0 percent for Treasury bills, 2.9 percent for long-term bonds and 7.4 percent for stocks.

So how much gold should you have in your portfolio? It depends on your risk tolerance and overall goals but many economists suggest that gold or silver comprise no more than 2% of your overall investment portfolio. Of course, the recent Olympic medalists aren’t thinking about what the economists are saying. Their medals ARE the dividends of all their hard work and dedication. Congratulations to all the athletes!

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How Real Estate Investors Can Take Advantage Of Any Economic Scenario

February 20, 2014

Over the last few weeks, I’ve been writing about investing in rental real estate. I’m going to conclude this series with a final argument in favor of real estate investing and that’s how it’s likely to be affected by four different economic environments relative to other investments and the opportunities each situation presents to real estate investors. Here are the four different scenarios: Continue reading “How Real Estate Investors Can Take Advantage Of Any Economic Scenario”

The 3 Most Important Words in Financial Planning

September 05, 2013

According to this article, the three most important words when it comes to investing are the “margin of safety.” The article discusses how inaccurate people tend to be at making predictions about things like the economy, industry trends, and business growth. Since this unpredictability can wreak havoc on investment plans, many of the top investment experts recommend investing with a margin of safety, which is “simply the distance between your predictions coming true and needing those predictions to come true. You can still try to predict the future, but a margin of safety gives you room for error to be wrong.” In other words, rather than pick the investment that needs to grow at 10% per year to payoff, pick the one that could grow at 10% but would still be a good investment if it only grew at 5% with anything else being gravy on top. Continue reading “The 3 Most Important Words in Financial Planning”

When’s the Last Time You Got Good News from the IRS?

October 23, 2012

The IRS has perfectly timed the annoucement of the 2013 pension limitations during National Save 4 Retirement Week, which ends this Saturday.  Notice IR-2012-77   declares the COLA adjustments that will impact the dollar limitations for pension plans and other retirement accounts for tax year 2013 for both employer and employee contributions.  It is important to let your employees know how these increases can help them save more for retirement, so make sure to share this information with your workforce in the messaging format that best fits your workplace culture.  Continue reading “When’s the Last Time You Got Good News from the IRS?”

Protecting Your Retirement From Inflation

October 18, 2012

Are you worried about rising inflation and how it could impact your retirement planning? With the Federal Reserve announcing QE3 (printing more money) and our rising federal debt and entitlement obligations (may need to print more money in the future), you’re not alone. Many economists are warning about the dangers of inflation in our future. Continue reading “Protecting Your Retirement From Inflation”

What Another Obama Term Could Mean For Your Wallet

September 13, 2012

With the party conventions now over and the presidential election cycle in full swing, you may be wondering what the candidates’ plans might mean for you personally. Last week, we looked at how a Mitt Romney presidency could affect your wallet and this week we’ll do the same for a second Barack Obama term. Let’s start with the good news: Continue reading “What Another Obama Term Could Mean For Your Wallet”

Are You Ready for “The Future of Retirement?”

August 23, 2012

In her blog post last week, Linda Robertson wrote about her experience at this year’s ISCEBS Employee Benefits Symposium and in particular, a presentation by former U.S. Comptroller General David Walker about “The Future of Retirement.” Walker spoke about the growing national debt and the impending insolvency of the Social Security, Medicare, and Medicaid programs. He then argued that it will take a combination of both tax increases and benefit cuts to dig our way out of the hole. To the degree that we don’t take these steps, we could see higher inflation by either the government trying to print money to cover the debt and/or investors dumping the U.S. dollar in anticipation of or reaction to a devaluation of the US dollar. So what does this all mean for us? Continue reading “Are You Ready for “The Future of Retirement?””

Is it the Right Time to Buy a Home?

June 21, 2012

With both home prices and mortgage rates still near historic lows, is now the right to buy a home? That’s a question many would-be first time home buyers are asking themselves, myself included. For most of the first few years of my career, I was working on a full-commission basis and my unstable income and need to maintain a large savings account balance made me reluctant to commit to the upfront costs and monthly mortgage payments associated with home ownership. By the time my income was more stable, I was living in NYC, where buying just didn’t make sense to me, and then I was in law school with barely any income at all. As a result, I missed both the rise and the collapse of the real estate bubble. Continue reading “Is it the Right Time to Buy a Home?”

What’s Scarier Than Monsters??? Numbers…!

May 18, 2012

When I was growing up, I was surrounded by numbers and I actually liked that.  (Yes, I’m admitting that I’m a geek from way back.)  My friends and I could tell you the batting average of almost any member of baseball’s Hall Of Fame and the stats of major NFL players, compute a pitcher’s ERA in our heads or talk about the winning percentage of various great teams throughout history.  Numbers were fun!  Numbers were cool!  (To us, at least…)  Numbers were all that was right with the world back then…Last week, I read an article about the cost of healthcare during retirement and those numbers scared me! Continue reading “What’s Scarier Than Monsters??? Numbers…!”