The majority of people not receiving financial advice have “inappropriate risk levels” in their workplace retirement plans, according to a study by Financial Engines and AON Hewitt. Their study analyzed fourteen 401(k)/403(b) plans representing over 723,000 individual participants with over $55 Billion in collective retirement assets over a seven- year period.
When I was 14 I started my first job: paperboy. I delivered the afternoon paper to my customers in one 7-story apartment complex so, once I rode my bike there in all kinds of weather, the actual delivery process was easy. Load a shopping cart up with papers, replace the ones in the rack, then go floor to floor kicking papers underneath doors. I actually made good money but would have made more if I hadn’t had such a collection problem. Back then, you subscribed to the paper and then your friendly delivery person would provide you with a bill. Would you believe some of these deadbeats would try and stiff a 14-year old boy and not pay?
A bank used to run a TV ad during the SEC Game of the Week where a man, talking about retirement, says he plans to do “absolutely nothing.” His wife then leans in and says, “He means it.” That’s not a plan for retirement, that’s a plan for a vacation. Be careful not to confuse the two. Planning for retirement isn’t just about the financial, it’s also about your post-career purpose.
The best-selling personal finance author, Suze Orman, recently said, “I wouldn’t buy a cup of coffee anywhere, ever, because I would not insult myself by wasting money that way. You need to think about it as: You are peeing $1 million down the drain.” She goes on to say that coffee is a want, not a need. The barely noticed personal finance blogger and Certified Financial Planner™, Steve Byars, responded, “Horse Feathers!”
I have a friend who has been asking me for almost 3 years if we think the stock market is ready to take a dive. My answer is always the same: “What portion of your portfolio is actually invested in the stock market?” Why do I ask such a question? Because the return of the stock market only impacts her stock mutual fund investments. Her overall portfolio return depends on how all her investment types – cash, long-term income funds, stock funds, real estate funds, etc. – are mixed and how they perform together. This is called asset allocation and is an important investment portfolio technique that balances risk among various types of investments. So, here is: 1) A review of 2019 so far; 2) The stock and bond market returns in context and; 3) Our recommendation to focus on asset allocation, not the short-term direction of the stock market:
When first learning to reading, my son would often read aloud restaurant signs through the car window that proclaimed, “World’s Best Fried Chicken!” or “Best Chocolate Ice Cream in Vermont!” When he was old enough for some level of critical thinking and those claims sunk in as audacious, he would ask, “Says who?” I was reminded of that recently when the Securities and Exchange Commission (the other SEC) issued new regulations that attempt to raise the level of conduct of Stock Brokers. The new rule allows brokers to claim they are acting in clients’ “best interests” – a level up from the current “advice that is suitable” standard. But, “Says who?” As it turns out, if the brokers say so.
Now, I’m guessing eyes started glazing when I mentioned the word regulation but, hang with me, here’s why you should care:
It’s still a year off but seeing all these graduation ceremonies and commencement speeches on Twitter started me thinking of what I’ll tell our daughter when she graduates college next spring. Plus, I know she just can’t wait to get more advice from me, so why not start early?
While in Kansas City to visit family recently one of my cousins posed a question to the Byars boys at lunch, “I don’t want to retire – so what do I call that?” So, for context, here’s the backstory: My cousin is extremely bright with an MBA from Northwestern and is the CFO for a company headquartered in Omaha not called Berkshire-Hathaway. He already knows that accumulating enough money to support him and his family throughout their lives isn’t really his pertinent question but, what am I going to do with my life to challenge myself and make my mark, is. Essentially, he explained that he likes to work, doesn’t have hobbies that consume him and wanted to know what should he plan for if not retirement? My answer? Glance back at the title of this post for a hint – Financial Independence!
I first met Bob Bova, founder of Moneywatch Advisors, in 1986 right after I had graduated from college and Bob was hosting my Dad, his client, for their regular quarterly meeting. For perspective, this was the year the Mets broke the hearts of the Red Sox by winning the World Series after Bill Buckner, who just died this week, let an easy ground ball roll through his legs. Economically, the U.S. was doing well after a recession in the early ‘80’s and the Federal Reserve was lowering short-term interest rates that offered the economy a bit of a tailwind. To me, the ease with which Bob explained his strategy for helping my parents as they were just starting to really focus on some long-term financial goals seemed like he had been born to do this – although he had just founded the firm 6 years prior.
We traveled in March to Argentina to see our daughter who is there studying this semester. While in Cordoba, a city of 1 million boasting the country’s largest university with an enrollment of 100,000, we rented an apartment and tried to experience as much Argentina life as one can over a two-week span. One day, my son remarked how the lifestyles we saw seemed much less affluent than we’re used to seeing: fewer people own their own cars and houses and apartments are smaller and more modest, for instance. So, with an opportunity to teach a life lesson, I dove into the conversation that “all wealth is relative.”
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