What is $9 a day
worth compounded over time?
Unfortunately my public
schools never told me about compounding. Or if they did, they never showed me
how much a stock fund compounding can be worth to me. As a teen, I found out the
value of a dollar I earned did not go very far. However, if they had shown me
this string of earnings, I might have been inspired to invest part of my
salary. $9 a day is about $3,000 a year. Using a simple calculator like this, I
see that my investment might (http://www.moneychimp.com/calculator/compound_interest_calculator.htm)
be worth $50,000 in 10 years, $190,000 in 20, $570,000 in 30, and $1,600,000 in 40
years at 10%. If you think you could not find $3,000 a year to invest,
remember that the average tax refund is over $3,000. If you think only the most
sophisticated traders could compound their investments to $1.6 million, remember
that a low-cost stock market index fund like the one Warren Buffett recommends,
earned
over 11% in the last 30 years. So even if I had learned nothing about
investing in school, I didn’t need to know a thing except to call a low-cost mutual
fund like Vanguard to sign up for automatic
monthly contributions of $250. I could have managed that instead of
buying/leasing a new car. Yes compounding!
Are Target-Date
Funds right for you?
Automatic
rebalancing from stocks to bonds can work well because you don’t need an
expensive advisor to handle this mechanical task. Paying someone for 30 to 40
years to keep you invested in the right mix is not cost effective. Almost every
advisor suggests you invest in stocks during your working life. Once you are 10
years from ending full-time work, you should be at 50-50 stocks/bonds. Some
research shows that your
accumulation is at risk if the market dives at the beginning of your drawdown
period. However, for most of us, we don’t use all of our retirement dollars
the first years of non-payroll living. Given time, we can recover our nest egg
for later years. Researchers have hindsight so they noticed that some retirees suffered
a loss just as they retired. However, they don’t realize that no advisor can
foresee the downturn and so help you avoid it. Timing the market is the number
one reason most people don’t have enough to retire. Since your advisor can’t
foretell the future and help you avoid the market fall, you don’t need to waste
money on their timing guesses. There are other ways to make up for any
temporary shortfall at the wrong time. Use emergency funds saved from advisor
fees.
Advisor fees go to
that fund: https://www.amazon.com/Your-Retirement-Spending-Plan-enough/dp/1461084016
How were investors
hurt by killing the Fiduciary Rule?
Lawmakers are asking
the GAO to study several items related to the DOL fiduciary rule: The degree to
which financial services firms and advisers serving defined-contribution plans
and IRAs assumed a fiduciary role due to the regulation; how firms' product
line, compensation structure, product sales and revenue, and compliance costs
changed; and the extent to which firms and advisers maintained or abandoned a
fiduciary role following the 2018 appellate court ruling. Also, for those
firms that didn't continue to be fiduciaries, what was the effect on
product line, product sales and revenue, compensation structure and compliance
cost? Instead of our broker/advisor having to disclose their conflicts, we must
‘understand and ask them’ about ‘these conflicts.’ Since we don’t know the
industry tricks, we would not know the conflicts. Sales people can make sales
legal if they can show customers were not harmed by the product. They don’t
need to act as fiduciaries—giving us the ‘best’ deal. Most firms don’t even
offer the best deal because the owners must
make money. Fiduciaries are required to protect us=Conflict.
Half of employees
moving their 401k do not know fees spent
According to a new
survey, 47%
of departing employees don’t know the cost of staying in their old plan.
Most don’t know the options of leaving, transferring or rolling over their
funds so they may mistakenly pay tax, penalty and an advisor’s expensive fees. Most
people don’t have a paid advisor. On the other hand, if they use an advisor,
they may get locked into an expensive alternative like annuities. There are few
unbiased sources of information. Employers, old and new, don’t want the
responsibility of helping. 69% of survey participants didn’t consult an
advisor. Most fear the cost or don’t know about unbiased information sources.
Regulators have thousands of cases where the employee was misled in those
dinner seminars. Unfortunately, the requirement for advisors to act as a
fiduciary (customer comes first) was overturned in 2018 after heavy lobbying by
the industry. There are only two financial providers that are not-for-profit:
Vanguard, USAA and TIAA. Their staffs are well trained and licensed to offer
unbiased advice.
Use unbiased
advisors: https://www.amazon.com/Best-Robo-Advisor-Ultimate-Automatic-Management/dp/1537111957/
How does your
advisor get paid?
The industry is
changing. Its compensation plans change too. Be sure to ask for details. Don’t
be surprised if they are ready to answer your questions with a printed
statement. More experienced advisors are using the old revenue model: product
sales are rewarded by a percentage of revenue from the product on a grid. For
instance, a $100,000 annuity sale earns the firm 4-6% or more and your advisor
earns 30-40% of that before taxes and expenses. A new incentive is a specific
bonus: bonuses for net new assets, the breadth of the household
relationship and penetration of financial planning, among other business
objectives. Salary is favored for some wealthy clients. Specific activity fees
like asset planning and customer satisfaction and quality outcome achievement.
This leads you to be very specific in your needs. If you only need a financial
plan for retirement income conservation, a single fee is cheaper than paying
1.5% of your growing assets for years.
**********
How Govt wastes our money: Congress spends $1.3 Trillion we don’t have!
Trump changes mind: Delays
deportations he promised at 2020
kickoff.
Trump: U.S.
Did US
send the drone into Iran to provoke event to justify our attack, then cancel?
SCAMS/SPINS:
EPA & Interior hide
information available under the Freedom
of Information Act
When concentration
camps are not concentration camps: no hygiene, beds, guards fences.
Border
guards refuse
needed supplies (soap, diapers, etc) just like concentration camps.
Patrick Churchville
caught selling
through own firm: $21 million Ponzi scheme
Citigroup caught
overcharging on unit
investment trusts sales: refund and fine.
Donald Fowler NY caught
excessive trading of customer accounts: fine
State Street Bank caught
overcharging clients for asset custody 20 years: Fine no jail.
Jason Sugarman CA caught
$43 M tribal bonds fraud; stole $9 M.
Bitcoin’s
rise to $14,000; then fall to $10,640 same week: speculator dream.
NJ millionaires caught
a break: no tax increase by Gov this year: Dems baulk
Home
prices rise faster: share of homes bought by ‘investors’ reached 11.3%, new
high
Marketing magic:
Brain Health Council says supplements
waste of $3 Billion spent.
Jobs:
He plans to stay in our
White House: even if it takes outside
help—rigged 2020 election?
Manufacturing
jobs under pressure as automation costs go down: Robots are cheaper.
Who owns your account now?
Consumer Reports on
appliances: you
DO NOT get what you pay for. EG:Viking.
3M Co. cut
retirees benefits of life insurance nearly in half to $8,000.
Sears retirees
can fight to keep their cancelled life insurance: Judge agrees to
challenge.
Miracle:
When is an election
debate no debate at all? 10 get to
talk 30 seconds at a time. Bedtime.
GOP
plans another tax cut for the rich: just in time for the election!
IAN
41 Watchung Plaza,
B242
973.746.2014
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