Video Series: Reacting to Markets

By | August 13th, 2019|DFA, Dimensional Fund Advisors, Markets|

This 1 minute video says it all! Nobel laureate Eugene Fama provides perspective for long-term investors on why they shouldn’t pay a lot of attention to short-term results.

“If you have a bad period in the risky part of your portfolio and you get out as a consequence…What that says is you NEVER should have been there!”

The most free way of thinking about investing is understanding what the possibilities are…good or bad.

Retirement Insights Tip #7: Effects of withdrawal rates and portfolio allocation

By | August 8th, 2019|Markets|

ONE SIZE DOES NOT FIT ALL

Higher initial withdrawal rates or overly conservative portfolios can put your retirement at risk. But setting it too low can lead to sacrifices in retirement. You may want to consider a dynamic approach to spending.

Setting an initial withdrawal rate and an appropriate portfolio allocation is necessary to sustain 30+ years of spending in retirement. The chart on the left illustrates the effects of different initial withdrawal rates assuming a 40% equity / 60% bond allocation. The 4% initial withdrawal rate—a general rule of thumb introduced in 1994, which adjusts the initial withdrawal amount for inflation over time to preserve purchasing power—is valid as is 5% but the 6% initial withdrawal rate proves not as successful and may put retirement at risk. The right chart illustrates the 4% withdrawal rate, but assuming various portfolio allocations. The more conservative the investor, the more difficult it may be to sustain the 4% rule over long periods of time. Consider a more dynamic approach to ensure that you efficiently use your savings to support your lifestyle while ensuring that you don’t run out of assets too quickly.

Want to talk about a distribution strategy? Give us a call!

Video series: What’s the upside of risk?

By | August 7th, 2019|DFA, Dimensional Fund Advisors, Markets, Video|

In this short video, Nobel laureate Eugene Fama discusses how financial markets work, what fuels innovation, and the upside and downside of risk.

July Performance Dashboard

By | August 2nd, 2019|Markets|

After a record June, U.S. equities continued to post gains, thanks to strong earnings and economic growth. Dovish sentiment from the Fed was short-circuited on the final trading day of the month. Despite a well-telegraphed 25 bps reduction in the target federal funds rate, the trajectory for future rate cuts remains uncertain. Large, mid and small-caps gained, with the S&P 500®, S&P MidCap 400® and S&P SmallCap 600® all up 1%.

  • Enhanced Value was the top performing factor, and has outperformed the S&P 500 in 6 out of the past 12 months. Across sectors, Communication Services was the top performer, while Energy was the laggard.
  • International markets posted losses, with the S&P Developed Ex-U.S. and the S&P Emerging BMI both down 1%, with headwinds including U.S. dollar strength.
dashboard-us-2019-07

Retirement Insights Tip #6 – Changes in Spending

By | July 29th, 2019|Markets, retirement|

Spending habits change over time. Typically, spending peaks at the age of 45 and starts a slow decline. This is an important piece of the retirement planning puzzle. We often talk about distribution strategies at retirement age. A solid estimate of spending is necessary to strategize for your future.

This chart illustrates what college-educated households spend on major expenditures at specific ages. Most Americans’ peak spending years are between ages 45 and 54, and thereafter spending tends to lower at older ages. Note that the largest expenditure category at all ages is housing, while the category that older people spend significantly more on than younger people is health care.

Video series: Why Should I Invest?

By | July 25th, 2019|Markets|

In this first short video, Nobel laureate Eugene Fama explains two key steps to investing: knowing why you want to invest and understanding your tolerance for risk. Everyone has different reasons for investing and different risk aversions. Stay tuned for  our 3 part series on risk, rewards and markets.

 

Retirement Insights Tip #4 – Retirement Savings Checkpoints!

By | July 15th, 2019|Markets|

2019 Guide to Retirement
Achieving a financially successful retirement requires consistent savings, disciplined investing and a plan, yet too few Americans have calculated what it will take to be able to retire at their current lifestyle.  This chart from JP Morgan Asset Management ( for household incomes of $100,000 or more) helps investors to quickly gauge whether they are “on track” to afford their current lifestyle for 30 years in retirement based on their current age and annual household income.  This analysis uses an appropriate income replacement rate (detailed on slide 15), an estimate of how much Social Security is likely to cover and the rate of return and inflation rate assumptions detailed on the right to determine the amount of investable wealth needed today, assuming a 10% gross annual savings rate until retirement.  It is important to note that this analysis assumes a household with a primary earner who plans to retire at age 65 when the spouse is assumed to be 62.  If an investor’s current retirement savings falls short of the amount for their age and income, developing a written retirement plan tailored to their unique situation with the help of an experienced financial advisor is a recommended next step.

Call our office for a complimentary Retirement Savings and Distribution review.

QUARTERLY MARKET REVIEW – Q2 2019

By | July 5th, 2019|Markets|

Click on the link below for a detailed analysis of quarterly performance of the global equity and fixed income markets.

CLICK HERE TO READ THE 2ND QUARTER 2019- QUARTERLY MARKET REVIEW

 

Retirement Insights Tip #2: Longevity Risk – How can we Prepare?

By | June 24th, 2019|Markets|

Life expectancies in the United States continue to increase as more people are living to older ages than ever before.

Investors need to plan on the probability of living much longer – even 30+ years in retirement. It’s important to invest a portion of your portfolio for growth to maintain purchasing power over longer periods of time.

Discuss a Distribution Strategy with your financial advisor. Outliving your money is a real concern for many investors. If you are in good health, or have a family history of longevity, you much plan for living beyond average!

This chart shows the probability that 65-year-old men and women today will reach various ages. For a 65-year-old couple, there is nearly an even chance that one of them will live to age 90 or beyond.

Retirement Insights Series

By | June 19th, 2019|Markets, retirement|

THE RETIREMENT EQUATION

A sound retirement plan is to make the most of the things that you can control but be sure to evaluate factors that are somewhat or completely out of your control within your comprehensive retirement plan.

Investment efforts are best directed toward areas where we can make a difference and away from things we can’t control. We can’t control movements in the market. We can’t control news or financial headlines. No one can reliably forecast the market’s direction or predict which stock or investment manager will outperform.

But each of us can control how much risk we take. We can diversify! We do have a say in the fees we pay. We are in charge of our savings rate and spending, and we can exercise discipline when our emotional impulses threaten to blow us off-course.

This can be difficult for most people, because we are pushed toward fads that the financial marketing industry decides are sellable, which require us to constantly tinker with our portfolios.

That’s why we’ve created a Retirement Insights Series help you focus to the controllable things. Breaking down the road to retirement one step at a time! Stay tuned for a new topic each week in the series!

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