The late summer doldrums picked up straight away after our last post and drive to be more diligent here. Who knows what the driving factor has been, but it has been a busy time. Still, that’s no excuse for leaving you in the lurch with respect to finding great guidance for your retirement planning.
Late Summer Doldrums: Will it ever end?
Perhaps the day the doomsayers predict is getting closer, perhaps not. The bull run has been epic, certainly in our lifetimes. That has to end, right? So, what is different this time? The global, ongoing central bank campaign to flood markets with cheap money is one thing. More than just low rates, there was the extended Fed intervention in markets driving up the Fed balance sheet. Plus, many individual investors have migrated to index funds … putting incessant upward pressure on indices. As the Fed contemplates raising rates (tightening money) and selling assets (adding supply) and consumer migration tapers, the end of the run could be precipitous. David Stockman warns the market’s “Chuck Prince moment” has arrived…”only more dangerous” The Rise of Robots & the Risk to Passive
Late Summer Doldrums: Why worry?
You may be thinking “why worry? The markets have been great to me.” That may be, even in comparison to where you were in 2007. Then again, can you afford a correction like you saw in 2008/2009? Remember the notion of sequencing risk, retiring into a downturn is the worst-case scenario. Plus, the older you get, the less time you have to recover your ‘paper losses.’ Diversification remains your best friend at this point, with countercyclical components there to help when markets do turn. Just remember, your retirement will be long (longer than you think, hopefully) and come with surprises. 5 Retirement Expenses You’re Probably Not Ready For $500,000 Surprise: Health Care Sticker Shock Awaits You in Retirement
Late Summer Doldrums: What can/should you do?
For starters, don’t fret about any of those things. Control the controllable items and be aware of the rest. Start by ensuring your portfolio is properly diversified. The good news is that seemingly all asset classes have benefited from the long rally (oil & gas being the glaring exception). Still, you may need to do some rebalancing to get your portfolio back in shape. Here is an interesting take on total returns that is worth considering. Need More Income: Seek Total Return Here’s How to Determine Your Ideal Asset Allocation Strategy (caveat: no mention of alternative asset classes or even commodities that may provide a hedge)
Seems we have been stuck in something like the Summer Doldrums the past several weeks. Whether that is suboptimal weather, the ongoing mayhem in DC, or the occasional heat wave, I cannot say for certain. Nonetheless, life moves on and so does the need for diligence in your retirement planning regimen. So, we return to the primary topic at hand today with a vengeance: your retirement.
Summer Doldrums: The eye-opener section
Having taken a hiatus of nearly a month, it seems appropriate to start by jerking everyone back to reality. Yes, markets have managed to stay buoyant, but still ….
You should probably consider things that may conspire to trip up your retirement. The first – we’ve called sequence risk here before – is one you must take to heart. 27 Ugly Truths About Retirement
Then there is the matter of the never-ending bull market. Are you still ‘all in?’ Have you taken defensive measures to lock in some of your gains? This lengthy tome may help you put things into perspective. There They Go Again … Again from Howard Marks at Oaktree Capital Management
Summer Doldrums: How about some actionable ideas to consider for your retirement?
We often emphasize risk adjusted total returns when thinking about investing for retirement. That frequently turns into dividend aristocrats as an option. They drive current income and, hopefully, capital appreciation. Combined they are often a winning element of your strategy. Undervalued Aristocrats: Exclusive Dividend Aristocrat Buy and Sell Recommendations From Sure Dividend Ignore the Price, Remember the Dividends: Why Dividends are the Key to Building Wealth
At the same time, it often pays to capitalize on macroeconomic trends. In this case the convergence of a demographic trend and a political reality. A Private Pay Healthcare REIT That Yields 10%
Summer Doldrums: How can you bring about behavioral change?
Since we just missed a month of posting, how do you change behavior? A Stanford University Psychologist’s elegant three-step method for creating new habits
Strange times call for strange measures. With Congressional hearings becoming commonplace, the White House under constant siege, and financial markets hard to predict, perhaps it is time to think differently. We are really quite consistent here in our guidance on retirement. Save as much as you can, starting as early as you can. Watch fees in everything you do, and maintain a balanced portfolio to protect against downturns. When you near and enter the distribution phase, start thinking about income products: annuities with lifetime guarantees and dividend champions. In keeping with current events, though, feels like a good time to pick up a whole slew of unusual ideas. Depending upon how sophisticated you want to be some of these may be worthy adventures for you. If nothing else, you may pick up some new lingo for your next meeting with your advisor.
Strange Times: Some alternative approaches to containing risk.
Whether you believe it, or not, this incredible bull run since the bottom in 2009 will eventually correct. Some of the greatest investing minds of the last 50 years seem to think it is sooner than later. Jim Rogers: The worst crash of our lifetime is coming and Here’s Why Bill Gross is Worried About Markets So, you can/should use some of the approaches we have already covered, or consider some of these ideas.
Stay Invested and Hedge
Options: They’re Not as Complicated as You Think
27 ETFs to Consider for Hedging Your Portfolio Risk
Whether you are heading into (or in) the distribution phase, or not, read this. Retired or Retiring in the Next 15 Years? Better Get Defensive.
Strange Times: Since we are stepping outside the box …
Having led several life insurance companies, I came to appreciate the hidden attributes of many oft derided products. Here’s a great article on one of these. Don’t scoff until you read it, please. What’s Your Safe Money Plan for Retirement?
Strange Times: A little dose of reality …
Separating Retirement Fact from Retirement Fiction
Global retirement ‘timebomb’: Why you’ll have to work past 70
Today we will focus our energy on Retirement Security. Fact is I often harp on fees and generating income, but keeping a sharp eye on your retirement security is equally important.
Retirement Security: Protecting what you already have.
I really like this one because it does what it says, gives you a simple set of rules you can easily follow to help ensure your retirement security. For Investment Success, Keep it Simple
This one is a little more complex, but it pretty clearly explains the tools you can use to get you retirement security through protecting your downside risk. Protect Your Portfolio Like a Pro
One way to protect what you have is to be prepared for ‘unexpected’ expenses. This study shows what has tripped up retirees before you. 17 unexpected expenses in retirement
As expected, the government is planning to do more to help your retirement security, too. Of course the DOL Fiduciary Rule is out there now and will go into effect by 2018, but that only covers your qualified money, i.e. 401(k), 403(b), IRA, KEOGH, etc. Now the SEC has announced they are following suit on the non-qualified money. No doubt the industry will bellyache and it will take a while, but it should be a good thing in the balance. We just hope there are few unintended consequences, like the potential for smaller investor (most people) to be frozen out of personal financial planning and advice. SEC plans to propose fiduciary rule next April
Construction Marvels Opening: These two projects represent meaningful change.
The Alps by their very nature are a natural obstacle of immense proportion. Here and there they have been breached in various, physical ways, but this takes things to a new level. Switzerland is opening the world’s longest-ever railway tunnel
On a much more impactful note, for the US economy, the Panama Canal expansion is finally set to open. The new Panama Canal is opening soon and will cause an ‘evolution’ in a vital US industry
A little entertainment from the coming election.
The Trump secret is finally out there … it’s all about Mar-a-Lago. Trump could win noise battle with the airport if he is president
The good and the bad of being in the public eye for ever. Clintonism screwed the Democrats: How Bill, Hillary and the Democratic Leadership Council gutted progressivism
Then there’s the other Trump secret … what’s up with that? A hair surgeon explains what’s going on with Trump’s hair