Friday, June 28, 2019

Just $9 a day provides great retirement fund

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  ( 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.

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.

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. to ‘obliterate’ a whole country: nuclear winter to follow
Did US send the drone into Iran to provoke event to justify our attack, then cancel?

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

John Schmidt Ohio caught stealing from elderly in Ponzi-like scheme. Jail 5 years
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.

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.

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!

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