Friday, September 4, 2020

Is a FREE financial plan right for you?


How do teachers and civil servants reach over $1 million retirement fund?
Teachers and civil servants with life-long salaries of under $100,000 have always amazed me in their account accumulations. Whether they invest via their pensions or IRAs, they seem to stick with a buy and hold strategy to save over $1,000,000 for retirement. I got a hint about how they did it from a study by Fidelity: customers that did the best were the ones that forgot they had an account. Also, the customers that were dead. The strategy is the one ascribed to Warren Buffett: buy and hold. You don’t sell—no balancing or trading or market timing. Buffett bought and holds stocks like Coke, AmEx, GEICO. He never sold them. The secret to ending up with enough retirement money is to buy and hold stocks like these at low cost. According to the rating firm DALBAR, a stock market index returned 11% at year. So any person could accumulate a million during their working years: investing $250 a month for 35 years may earn $1.1 million. And that is exactly what Buffett and Bogle, Vanguard founder, recommend. Bogle was a fiduciary. The Bible called it being a steward of assets: The Bible’s parable of talents.


Wall Street firms ignore SEC mandate to give investors the facts
A new survey found that most firms just ignore the mandate. 1,300 firms failed to disclose the misdeeds of their advisors. Trump made regulation irrelevant early in his administration by canceling Obama’s Fiduciary Rule. Instead of brokers/advisors being under the rule to give us the best products, Trump made it clear they were free to fleece us again: regulators would not prosecute bad advice. Result: Wall Street is now free to sell risky “private placement” investments in our pension accounts. Our 401k holds our serious money not our speculative money. Instead of a stock market index with steady 11% growth over time, Wall Street can offer us ‘take a flyer’ like MCI WorldCom or Enron. Insider trading is NOT prosecuted unless the perp is followed in the press. We investors are not protected in the TrumpWorld. We must protect ourselves.

Investment behavior research and your biases
Why do we hold on to losers and sell winners? Why do we engage in vigorous trading when studies show we lose money? New studies about our way of thinking about money have provided some guard rails that may keep us from big mistakes. Fact: we spend more time planning a vacation than planning for our financial future. People with money have a plan—investment and retirement plan. People who most NEED a plan don’t think they need one. Set goals, find strategy, set up plan. List financial goal priorities. Know your biases and avoid them with help. For example, we buy a stock or fund that just went up. It goes down but we don’t face it and lose more money. Or if the stock goes up we feel we must sell to win. Instead of diversifying a portfolio for safety, we buy more of the same. Many keep buying their own company stock. We know this strategy is risky so we worry instead of investing in a plain index fund. Even with new information, investors stick with their original purchase. We tend to think we are super brilliant when our purchase does well. Most of us mistakenly rely on past performance. Usually winners become losers during the next period. Buffett’s strategy beat best advisors.

Is a FREE financial plan right for you?
Schwab is now offering Schwab Plan, a free digital financial planning capability that assists investors in establishing and staying on track towards financial goals. You must have an account—any account. After completing a 15 minute questionnaire, you can model how changes might impact your lifetime financial picture. You can see the probability of reaching goals with Monte Carlo simulations. Changes and updates to the financial plan are dynamic – when you update your plan, you will automatically receive an updated probability of reaching your goals. A similar service is available at other fund complexes including Vanguard’s Nest Egg Calculator. You can play with the factors that determine your total accumulations: time, stock bond mix, age. The challenge is to know what your data means. Unless you have $ millions or $1,000 one-time fee, you don’t have a professional planner to customize your plan.



Is using your bank’s online bill-pay safe?
Is electronic bill pay safer than personal checks? If you are using a well-established bank with FDIC insurance, you can be assured that your bank is aware of the risks. Given the Trump mandate to slow the mails, you are at greater risk using personal checks. Your check may end up in a pile of mail at a sorting center. Some sorting machines that are used to speed those printed bill payment vouchers have been removed. If your check is inside those thin voucher envelopes they can easily get stuck on other mail or literally fall through the cracks in sorting tables. I have been using bank bill pay for 10 years—hundreds of bills paid with no late fees. Most banks will actually pay the late fee if they are responsible for the late payment. Most banks use ACH (Automated Clearing House) which is a network that coordinates electronic payments and automated money transfers. I usually enter the bill amount and date to actually get to the vendor when I receive the bill. Then I don’t have to worry about remembering to send it on time. Most banks use electronic transfer—my payment, account number, etc—and send payments in a batch with others to each vendor on date I enter. So my utility bills are always paid on time. I don’t give my bank info to the vendor to let them take the money from my account. I tried that once but they messed up and I had trouble fixing it. The downside to this arrangement is that I have to keep a balance in the account to make all transactions free. I feel it is worth it since I don’t have buy stamps and I don’t have any more late fees.

What experienced investors do when uncertain?
When there is a crisis or the future looks uncertain, savvy investors go back to basics: diversification and low cost. They confirm why they are investing in the assets they own: stocks for the long term and cash equivalents for the short term. Every investor that has weathered the storm of 2007-8 has learned that a balanced portfolio helps maintain their long-term accumulation goal. They know that stocks earn 11% over time and yet bonds and other assets can offset temporary downturns. By weighting these assets, experienced investors stayed fully invested during the 2007-8 time of crisis. They benefited from the bull market: doubling their money since 2011. They recognized that earning less than 2% on ‘safe’ investments costing 1-2% was really a losing proposition.

Women want more control of their money
59% believe they lacked sufficient financial and investment literacy, and 13% believe that they are not very or not at all knowledgeable about finance and investing. Most women don’t have time to learn about finance. Women don’t feel well-served by advisors. Perhaps it is because there are few women advisors to hire. Women who feel they control the money they earn are not considered in charge of finances by their spouse. Women who work have retirement as their primary goal. Their spouses don’t agree with their goals and thus there are disagreements. Thus divorce after age 50 is on the rise. The burden of divorce after age 50 falls heavily on women especially since many say they are not prepared to control their money and assets. Pension benefits and retirement accounts must be divided equitably—women are entitled to part of the payouts. Several calculations are necessary to determine the correct division of assets—current and future.
Women will have more money in the future but lack the knowledge to manage it.
“An unprecedented amount of assets will shift into the hands of women over the next three to five years, representing a $30 trillion change of ownership. Few women have trustworthy advisors so many fortunes will be guided by salaried groups at large fund families. The trend to passive low-cost investment will accelerate. The age of the single investment ‘gun-slinger’ is over. Most women will seek security not market beating advice from ego-centered men. Wall Street gurus have lost their allure.

Middle-class retirement in jeopardy of losing living standard
New study: “40% of households in the top third of the income distribution are at risk of not being able to maintain their standard of living [in retirement].” So taxes do make a difference. The retirement spending strategies in the study did not yield much difference in tax rates. Further, this study did not include state taxes, which could raise tax burdens by 25%. In short, a $1 million nest egg does not go as far as it used to given that 85% of Social Security benefits and 100% of the required minimum distributions from our pensions and IRAs are taxed. The wealthy have always found ways to avoid paying the IRS statutory tax rates. Even billionaires like Warren Buffett have disclosed that they pay less tax than their employees. Unfortunately, most of us do not use strategies that allow a tax-free retirement.


**********ACCOUNTABILITY**************

Like 1776, this period is a test of democracy—do we really want ‘low-IQMobster?

Philly DA: we have an “authoritarian dictator."

GOP platform: I could shoot someone on 5th Ave and pardon myself
Dictator: Police state and vigilantes assure re-election

How Govt wastes our money: Congress gives 3.7 Trillion to the wealthy! 
Trump EPA endorses new regs for more coal pollution in our lives: OK to pollute!

SCAMS/SPINS:
Trump supports Kenosha terrorists: he blames us Americans for protesting police killings

Trump promised to pay for virus patients recovery: he failed and patients get bills

Trump’s SEC allows insider trading: computer shows it as it happens: no regulation
Trump’s eviction moratorium not working: no legal authority over landlords


Dennis Jali Smart Partners caught Ponzi $27 million on church: offered 6-42% returns trading FX
Virtual apartment rental scam: check landlord; visit and listen in neighborhood
Avoid senior scams: home, ID, fake check, fake trouble, romance, invest, tech support

Debt collector scam: don’t avoid; fight back
Oportun debt collector caught intimidation lawsuits over high interest loans
Trans-Fast Remittance caught deceiving; violating problem resolution rules: fine no jail

Service 1st Mortgage caught misleading deceiving offer statement mailers; fine no jail
Hypotec FL caught false, misleading, and inaccurate statements in mailers; fine no jail

CA unemployment scam: someone else receives your benefits Hackers steal your data
Liberty Auto: “only pay for what you need”: every agent would starve if they did that 
WellsFargo advisors cost retirees $ millions: fees and charges moving to costly items
Matthew Clason CT caught stealing $300,000 fake bank expenses, promised investment

Corporations co-opting ‘religion’: marketing brand with fake ‘religious’ rituals: worship idols?


Jobs
Best states to work in: virus and health protections for employed and unemployed: WA

Who owns your account now?
Student loan blues: starting college at community college cuts lifetime debt in half


Miracle:
Our new Toyota flies: you can afford a used one: 2030

CO has been on all-mail voting system since 2013: “it’s a system that works …” no fraud

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