Category Archives: Finance

Grow Your Retirement Savings to Keep Up With Inflation- Ticker Tape

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Source: TD Ameritrade’s The Ticker Tape

— Read on tickertape.tdameritrade.com/retirement/your-retirement-savings-plan-inflation-15452

Key Takeaways

  • Understand if your assets are keeping pace with inflation and cost of living increases
  • Consider how even an “average” rate of inflation can cut into your retirement savings
  • Take a look at some saving and investing suggestions that might help you combat inflation
  • Most of us probably strived for better-than-average grades at school and better-than-average salaries at work. That being the case, it’s kind of surprising that so many investors seem to be comfortable having “average” retirement savings for their age.

Unfortunately, if your savings are just “average,” they probably aren’t going to account for inflation and cost of living increases both before and during retirement. The hard truth is that even after you retire, your assets will need to grow quicker just to keep up with higher prices.

How to make your retirement savings last forever — Market News

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New research, which began circulating in academic circles earlier this month, was conducted by Javier Estrada, a professor of finance at IESE Business School in Barcelona. His new study is entitled: “Managing to Target (II): Dynamic Adjustments for Retirement Strategies.”

In it, Estrada measured the success rates of various strategies that adjusted withdrawal rates depending on whether your portfolio in any given year is ahead or behind of what your retirement financial plan had assumed it should be. It will be ahead, needless to say, if your investments perform better than had been assumed by your financial plan–and behind if your investments have performed more poorly.

Estrada refers to strategies that adjusted withdrawal rates as “dynamic,” in contrast to the “static” strategy implicitly assumed by many financial planners.

To illustrate: Let’s say you retire with a $1 million portfolio, want to fund a 30-year retirement, and your investments grow at an annualized rate of 5% above inflation. Assuming you do not intend to leave a bequest, and assuming your portfolio’s investment return is 5% in each year along the way, you can withdraw the equivalent of $61,954 in today’s dollars in each and every one of those 30 years.

In fact, of course, that italicized assumption is unrealistic. Given the inevitable variability of yearly returns along the way–some good and some bad, it’s not unlikely that, at some point along the way, your portfolio’s performance would be insufficient to support that rate of steady withdrawals. You’d run out of money, in other words.

— Source and Read on research.tdameritrade.com/grid/public/markets/news/story.asp

Retirement Concern: How to Alleviate Four Common Fears for Retirees

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Source: TD Ameritrade’s The Ticker Tape 

https://tickertape.tdameritrade.com/retirement/reduce-common-retirement-concerns-fears-17461

1. Investment Loss

One of the biggest financial fears retirees may have is investment loss. Because the markets move cyclically, there’s a good chance you’ll experience a market downturn during retirement. This can be doubly painful if you’re a retiree, because you have little choice but to sell at a loss for the capital you need. For retirees this is called “sequence of return risk,” because withdrawing investments in a down or declining market may cause you to liquidate too many shares, which then leaves fewer shares to grow when the market bounces back.

2. Running Out of Money

When you’re younger, a market decline can be weathered in multiple ways: perhaps by saving more, working longer, getting a second job, or just waiting it out because you won’t need to use your savings for years. But once you’re close to or in retirement, running out of money becomes a serious concern. Few people would want to go back to work at age 95 because they ran out of money. Fortunately, the flooring strategy helps here too. Lifetime income means just that: an income stream that’ll last no matter how long you live. By deploying annuities and other lifetime income strategically—just to meet your essential expenses—you can cover basic needs and avoid becoming a burden to your kids or others.

3. Major Health Event

As we get older, it’s common to see an increased need for health care. It’s natural, as a retiree, to worry about a major health event that can set you back financially. But it’s possible to prepare to some degree for such events.

4. Inflationary Effects

Inflation is sometimes considered the “quiet killer” of retirement. Over time, prices rise, making your money less valuable. A dollar today is worth more than a dollar tomorrow. Keeping up with inflation is an important part of retirement planning.

Planning Matters

One of the best things you can do for yourself is to plan ahead. Meet with a retirement specialist to create a plan that might help you avoid unpleasant surprises in the future. The earlier you start, the more likely you are to avoid the common fears faced by retirees. Having a plan in place and making consistent contributions to a retirement portfolio can go a long way.

 

A Rich Life – HumbleDollar

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A Rich Life – HumbleDollar
— Read on humbledollar.com/2019/09/a-rich-life/

Frugality is about avoiding spending on things that have little value.

Affluence is about having things that truly matter.

It’s possible to strike a balance, so you’re frugal and affluent at the same time.

Track your expenses, ruthlessly reducing or eliminating spending that has little meaningful value. This will help you spend more on things you find truly rewarding. It doesn’t take a supersized income, financial windfalls, unsustainable self-deprivation, extraordinary luck or investment genius to become affluent.

Even if you have none of these, but you have frugality, financial success is all but inevitable.

Should You Try Timing to Avoid Bad Markets? – Retirement Researcher

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Everyone likes the markets when stocks are going up. We’re all getting the returns that we are “supposed” to be receiving for putting our money at risk. Naturally, we aren’t big fans of the market when stocks start falling. Unfortunately, stocks are “supposed” to go up and down – a lot.

The financial markets are based on the relationship between risk and return. We wouldn’t be able to harvest the long-term returns we expect without the risk. And, well, this is what risk looks like.
— Read on retirementresearcher.com/occams-should-you-try-timing-to-avoid-bad-markets/

Should You Own Bonds in a Rising Rate Environment? – Retirement Researcher

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One of the first things that finance students learn is that bond prices (and therefore bond returns) are inversely related to interest rates. Considering that all else is equal, when interest rates are going down, bond prices will go up, and when interest rates are going up, bond prices will go down.

This is fundamental to how finance works, and this raises the obvious question of why you would want to hold bonds when rates are rising – why would we choose to lose money?
— Read on retirementresearcher.com/should-you-own-bonds-in-a-rising-rate-environment/

Bond Market: Why Is Everything Upside Down? | Charles Schwab

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Bond yields in major developed countries declined sharply in mid-August, bringing the total amount of negative-yielding bonds around the globe to more than $16 trillion. The entire German yield curve is below zero. In the U.S., the 30-year Treasury yield fell below 2% for the first time in history, causing the yield spread between two-year/10-year Treasuries to invert briefly, for the first time since 2007. The three-month/10-year spread has been inverted on and off since March.
— Read on www.schwab.com/resource-center/insights/content/bond-market-why-is-everything-upside-down

13 High-Yield Dividend Stocks to Watch

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High-yield dividend stocks have gained even more allure lately in the face of shrinking bond yields. However, while a handful are ready buys right now, several more sport alluring yields – at least 5%, and up into the double digits – but need a little more time to simmer before it’s time to dip in.

Patience is a virtue in life. That’s particularly true in the investing world. It’s even true across investing disciplines. Sober value investors wait for their price before buying, but disciplined market technicians also know to wait for the proper setup before trading.

Sometimes, you need to wait for a fundamental catalyst to make your trade worth making. Other times, it’s simply a matter of waiting for the right price. But the key is having the self-control to wait for your moment. Lack of patience can be a portfolio killer.

“We tell our clients during the onboarding process that we won’t be investing their entire portfolio on day one,” explains Chase Robertson, Managing Partner of Houston-based RIA Robertson Wealth Management. “We tend to average into our portfolios over time as market conditions warrant, and we’re not opposed to having large cash positions. Our clients thank us in the end.”

Today, we’re going to look at 13 high-yield dividend stocks to keep on your watch list. All are stocks yielding over 5% that you probably could buy today, but all have their own unique quirks that might make it more prudent to watch them a little longer rather than jump in with both feet.

Click on the link below for more information.

apple.news/A552TdyXQQf23Eq13U7uxnA

3 Secrets to Retiring Rich

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Your ideal retirement may involve a lot of travel, the purchase of a few big-ticket items, and decades of worry-free, work-free days. But it’ll take a large nest egg to get there.

If you want to to retire wealthy enough to achieve your goals, you have to begin planning immediately. Start with these three steps.

Click on link below to read entire article.

apple.news/ArS5WUvycTlGxqinL5ZOQAQ