You will learn that investing, like life, is unpredictable, so your planning must be strategic in nature. And the best strategy is to maximize your greatest possibility of winning right from the get-go. That approach is not the same as trying to win the most. Many investors wrongly think, “I don’t have enough to keep up my lifestyle, so I’ll shoot for (more…)
Let’s look at two different retirement scenarios based on some research done by T. Rowe Price Associates. They hypothetically invested $250,000 at the end of 1968. Sixty percent of the portfolio was invested in the S&P 500 index, 30 percent into U.S. government bonds, and 10 percent in U.S. thirty-day treasury bills. From January 1969 until January 1999 the portfolio had an average return of 11.7 percent. In the first (more…)
My study of endowment funds has helped me to form a strategy that can help you manage your portfolio and make it produce a life income. Knowing what endowment funds do to ensure a future cash flow and still allow you to spend today can help you make sense of investing. Did you know that most colleges and churches have between 4 percent and 5 percent annual withdrawal rates even if they are earning 15 percent to 20 percent annually? Even if they have a negative return they still spend (more…)
In reviewing many retirement plans, I find that many times too little thought is given to life insurance as a retirement benefit. Too often, pre retirees do not even engage in life insurance planning at all. Why bother? Life insurance is about dying and not about living, they think. On the other hand, most people want to take care of their spouse after they die, but without the proper insurance (more…)
As you can see, market returns are not like returns from CDs. Although bank yields are usually much lower than stocks, they are more predictable— that is, less variable. The market, because it is uncertain, can be said to be risky. Here risk is not the same as the risk of losing all your money or (more…)
Some people say they will never retire, and they mean it honestly—but the truth is that almost all of us do. The harder the physical labor or the job stress, the more difficult work becomes as you age. Even those who know this still find that time creeps up on us, catching us off guard and slowing us down. If you say you will (more…)
Many popular investment books offer good information for people over fifty, but some of it is simplistic. One popular book by a well-meaning financial planner comes to mind. The chapter entitled “Keep Your Retirement Bucket Full While Drawing the Income You Need” includes a table showing how a sixty-five-year-old can remove 5.75 percent per year and still make 4.25 percent growth each year. The book does not (more…)
Financial forecasts are the financial consequences of your strategic and operating plans. Your financial goals are mostly concerned with profitability and liquidity. Profitability fore-casts are based on the sales estimates in your market analysis and the expenses related to achieving those sales. Liquidity refers to providing sufficient cash to pay your bills as they become due and is based on projected cash receipts and disbursements.