STOCKS....Bob Brinker did not talk about the incredible stock market, which went from 25,000 to 26,000 in just a matter of days. And it looks like the market is saying "ho-hum" to the so-called shut-down.
MARKETIMER MODEL PORFOLIOS I, II AND III.....Caller Bill in Springfield, a new subscriber, asked Brinker about portfolios I and II being presented as "current income is not a factor in this portfolio," but not P-III. Brinker pointed out that P-I and II are growth portfolios, but P-III is balanced - stocks and bonds. Since Bill was retiring in a couple of months, Brinker recommended P-III.
Honey EC: Clearly Marketimer portfolios I and II are for growth since they are 100% stock funds. The only differences between the two stock portfolios is the addition of a 10% holding in VDAIX in P-II. Portfolio-III, which Brinker always recommends for those in or near retirement, is a balanced portfolio - 50% stock and 50% bonds.
INTEREST AND MORTGAGE RATE RISES....BB said that we have now transitioned from Quantitative Easing to Quantitative Tightening. ==> Thanks to DRHAME, audio clip: Interest Rates, The Financial Media and their veracity or lack thereof.
DAY-TRADING....Brinker said that he gets really upset when he hears ads for day-trading, or moving money in and out of the market, because it is "very damaging."
SIPC INSURANCE AT VANGUARD..... Caller Bill from Virginia has over $500,000 invested with Vanguard and was concerned about it being over the limit for SIPC insurance. Brinker said that when it comes to companies like Vanguard, he would not lose any sleep about it, or move any of the money.
Honey EC: Include Schwab and Fidelity in those rock solid companies.
INCREASES IN TAX-SHELTERED CONTRIBUTIONS..... The amount that can be contributed to 401K, 403B, and 457 qualified programs has increased by $500 to $18,500. It is higher for those over 50. Regular IRA is now at $5500 - over 50 - $6500. (Roth IRAs are after-tax money.)
GE IS LOOKING LIKE A DISASTER AND MAY DAMAGE PENSIONS....Caller Rob from Lincoln is worried about his $3400 a month GE pension - saying it was underfunded by $30billion. Brinker could not give him much reassurance and pointed out that the stock had lost about 50% of its value.
==>Thanks to DRAHME, audio clip: Contribution limits; Brett in Wash; Rob in Lincoln about GE
BOB BRINKER SAID IT WOULDN'T HAPPEN:
Apple, already the largest US taxpayer, anticipates repatriation tax payments of approximately $38 billion as required by recent changes to the tax law. A payment of that size would likely be the largest of its kind ever made.
Alabama will be the site of a new $1.6 billion Toyota Motor Corp (tm, +0.78%) and Mazda Motor Corp (mazda-motor) auto plant, a victory for President Donald Trump who had prodded manufacturers to build new U.S. facilities and threatened tariffs on foreign production, sources said on Tuesday.
ECONOMY..... According to BB is "doing fine."
LAND OF CRITICAL MASS....BB teaches that it means having a nest filled with enough eggs to live as your own boss without alarm clocks.
MULTI-MILLIONAIRE CALLERS AND THEIR PROBLEMS.....
1. Dennis in Kansas City, net worth of $1.25 million and a pension of $57,000 per year was worried about how long his money would last using the 4% withdrawal that Brinker recommends. Brinker explained that Dennis was on "cruise control" in the Land of Critical Mass, and due to the dividends, capital gains and growth, Dennis would likely be a net saver using the 4% rule.
2. Caller Clark from Baton Rouge, net worth $2.3 million and $40,000 pension wanted advice about raising $180,000 to send his 26 year old son to law school. He was considering taking out a loan on his home which is worth $200,000. Brinker wondered if he needed to borrow it all it once, but seemed non-committal, and pretty much left it in Bill's (obviously) capable hands.
3. Caller Brett in Washington, net worth $3.4 million at age 60 has Critical Mass, but will soon retire and is thinking about using Roth money to pay off his house which has a mortgage at 2.78%. Brinker said that was the kind of mortgage that the bank would send a stretch-limousine to pick him up if he decides to pay it off.
WEEK AHEAD MEBBE....Thanks to DRHAME audio clip: The week ahead and home sales
FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY:
Bob’s guest this 21st
day of January 2018 was Leslie Berlin, the author of the recently released book
titled “Troublemakers: Silicon Valley’s
Coming of Age.” She is the historian for
the Silicon Valley archives at Stanford University.
There was some puckering at
the outset of the interview when Bob welcomed her to the program and was
greeted by silence. Seems they lost the
connection but Bob handled it like the broadcast professional that he is and in
a few moments, Ravi got Leslie on the line.
Here’s what I got out of
the interview before the half hour mark:
·
5 American high
tech firms are among the most highly valued companies in the world.
·
50% of people
asked said they cannot live without their cell phone.
·
Robert Noyce, a
pioneer in microchips does not get enough recognition for his contributions in
the late 60’s and early 70’s.
·
There was some
inside baseball chit chat about pioneers and Bob Taylor was mentioned as the
guy who convinced the Dept. of Defense to develop the Arpanet (? spelling )
precursor to the internet.
·
IBM and
Microsoft are not covered extensively in the book.
After the break the author
mentioned the first woman to take a tech firm public, Sandy Kurtzig (?) and the
ASK software company.
·
In 1974 it
became illegal to deny women credit.
·
Work place
harassment laws were passed in 1977 – therefore when tech was in its infancy
there was still pervasive discrimination against women in tech.
·
More inside
baseball chit chat on Bob Noyce, Bob Taylor, Steve Jobs, Gordon Moore.
·
Noyce and Moore
were founders of Intel.
·
Noyce was
running the tech operations at Fairchild Camera and Instruments and it was
making money but the company thought he was too young to be in charge.
·
He bailed and
the rest is history.
·
The Valley is
linked to countries outside the US by virtue of immigrants working in tech.
·
Two-thirds of
people working in the valley in certain companies were born outside the US.
·
Either there
were no calls after the half hour, or none were worthy of air time.
After the interview ended
Bob allowed as how he bought shares of Intel for 70 dollars per share when they
were getting going, and had only 4 million shares being traded.
Honey here: Thanks very much, Frankj.....I notice that the number one tech news this week didn't get mentioned before or during the guest today, and that is Apple moving several $billions back to the USA and will be giving Americans thousands of new jobs.
http://710knus.com/
READ AND POST COMMENTS
106 comments:
rjb posted from previous page: Blogger Bluce said...
"rjb: Bobby is in his fifth year of predicting lousy bond returns. Hahahahahahahaha!"
++++++++++++++
He has "lost" a lot of money (or left a lot of money on the table) from avoiding great bond funds because they have a duration that he fears.
-----------------------------------------------------------------
Haha, yes, my bond-heavy portfolio has done quite well all those years. Bobby trying to time interest rates: FAIL! Just like him trying to time the stock market.
rasputin here - Sounds like Bob's all in on the Trump economy. He shouldn't be surprised by negativity from the leftist media.
.
Ras....When Brinker was on two weeks ago, the whole program was dedicated to "negativity" about the tax reform, and other things to do with the economy.
Interesting change of tone in those comments, but I still don't hear a word about how the black unemployment rate is the lowest ever reported in history. And women jobless rate is lower too.
And Brinker is wrong when he says no one is talking about the National Debt. I hear several Republicans talking about it regularly.
"....Bobby trying to time interest rates: FAIL!......
+++++++++++++
Yeah, his bond market timing sure has been a failure these past several years. Keeping duration so very short......
Does anybody know where the sweet spot is for interest rates? I seem to remember reading years ago that if you can lock in 8% yields from bonds then you should back up the truck. OK, well 8% right now is a dream but is it possible that a 8% yield competes enough with long term equity growth that that is why that percentage is sound to go all in with?
In regards to the catch up provision in a 401K he says over 50, that is not exactly correct. It is 50 or older. The catch up provision starts in the year in which you turn 50.
Bob’s Portfolios had a great 2017! Great Job Bob and thank you. With these kind of returns you can take all the time off you want!
I.) 22.78%
II.) 22.75%
III.) 14.19%
S&P 19.42%
VTSMX 20.9%
Call of Fame in the 2nd hour: Brett in Seattle has a net worth of $3.4 million and owes $130,000 on his house which he said was worth $700K. His mortgage interest rate is 2.875% and he wants to pay the mortgage off. Bob said, No Way. During the conversation Bob mentioned that he still would have the mortgage interest deduction.
Well, yeah, but it doesn't amount to much with that small an interest rate.
Ohh, that word is to sophisticated for me! I just know I followed Bob’s advice (90% of the time) and I retired at 54 years old. Is he perfect? No. Has he made some blunders? Yes. But his advice is sound and you can make money. Educate yourself, take responsibility and don’t count on our government leaders to take care of you. Take the bull by the horns and do it yourself!
Seems to me some callers, call just to brag about all the money they have.
They ask some question about something, then Bob says, "what's your net worth?" they say 4 million or some millions making the question academic.
I am such a Brinker junkie.........listening to the show on vacation in Panama City Panama...live, clear stream fron KNUS!!! All bueno!!! SHIFTY
Everyone keep your eye on the mid-term election prediction Bob made in a recent MT and Honey shared last month. It has been 100% accurate prediction for the last 50 year and averaged around 8% decline each of those years. Interesting that the last mid-term decline came in 2014, I believe in the October time frame, and followed a 30% market increase the year before (2013). Sounds like a similar set-up from all the record gains last year and now we are in another mid-term election year. Keep some powder dry.
And why does Bob always have trouble connecting with his guests at the start of the last hour? Someone needs to learn to push the right button.
KC said...
And why does Bob always have trouble connecting with his guests at the start of the last hour? Someone needs to learn to push the right button.
There's a rumor floating around that a gentleman from Hawaii has been hired as a Consultant to assist with that project.
JC
Apple moving money back and other companies repatriating money and doing things with it that Bob said they would not do. Raises, bonuses. One hopes that companies with defined benefit plans that are underfunded would make a contribution to bring them up to snuff. That isn't as sexy as giving bonuses or raises, but for those companies who need to do that it does something positive for their balance sheet.
On the topic of Toyota putting production in Alabama vs. Illinois ... DUH. They can read the tea leaves and the chicken entrails as well as anyone. IL is circling the drain because it is a fiscal wreck despite the efforts of Gov. Rauner. He is stymied by the Dem dominated legislature in Springfield.
Go to the website called Howmoneywalks.com if you're interested in seeing the migration of money as measured by Adjusted Gross Income leaving various states (and counties) and moving to other states. It is based on filed tax returns to the IRS.
Hey JC, howalya??? I trust all is well.
As for Bob's technical problems, maybe he should take a better look at "Ravi Shankar," his tech guy that used to be a drugged-up sitar player with the Beatles.
I'm not getting your [vague] point about Hawaii. ? ?
Two Things:
1. I always get a laugh when Bob uncloaks a millionaire and chuckles at the caller's insignificant predicament (3 million net worth and wants to prepay a 2.75% mortgage "just to keep things simple").
2. Keep in mind that the off-presidential election year stock market decline could begin at any time, even after the market increases 15% from today. So an 8% pullback from there would seem to indicate that "I should've been in the market the whole time." I guess Bob's more important point is the market always advances nicely after the pullback.
-Ex's and Oh's, Steubenville OH
I like the "Brinker said it wouldn't happen" part of the summary. It does seem he has gone silent on the manufacturing surge going on in the U.S. since Trump was elected. He opened the program talking about the bond market after years of silence. I guess now that rates are finally rising he'll talk about it more. He's probably a bit relieved after being wrong for so long. He may do a dance when the 10-year Treasury finally hits 3%.
Before the tax cuts were passed Bob was ranting and angry and calling people fools who thought some of the money would go to increased wages. I have been waiting for him to address this since a ton of the money from the cuts is being returned to employees. I did not hear the whole show, but to my knowledge he has side-stepped how wrong he was. His words were dripping with contempt a month ago when speaking about the new tax law. He seems to have settled down. Affable Bob is better than Liberal, Angry Bob.
.
Jerrod said: "There's a rumor floating around that a gentleman from Hawaii has been hired as a Consultant to assist with that project."
ROFLOL! I had to think about it for a little bit, then laughed out loud.
Yes, that button pusher in Hawaii should be looking for a job - but gubmint workers almost never get fired.
.
Terry, you are right. Brinker spent several weeks slamming the tax cut proposals every which way but loose!
All the good things he so adamantly claimed would not never happen, started happening immediately after it was passed.
And we are just getting started! :)
Will he ever say he was wrong. He will the day that I see a flock of pigs flying over the Santa Cruz Mountains.
rasputin here - Sounds like Bob's all in on the Trump economy. He shouldn't be surprised by negativity from the leftist media.
Brinker is part of the leftist media.
Hey, wait a minute, pigs can't fly.
But let me tell you about Hawaii and the culture there. Amongst native Hawaiians, there's a culture of not calling out a coworker who's making a mistake. It goes back to Asian culture about embarrassment (losing face).
Learned this from a guy who moved to HI from NJ as a teen with his folks. He grew up and started work as a FedEx delivery guy to businesses there. He said he'd enter a room full of secretaries at their desks but none would look up for 10 minutes because it wasn't their responsibility to accept a package.
Then he joined the HI Nat Guard and saw mechanics making obvious mistakes in front of their native coworkers but nobody would step in and correct it because it was embarrassing.
Last month I met a HI Guard guy in Reno and presented that scenario to get his opinion. He said yes, that's the culture.
Dimples (who now lives in Temple)
I think Bob Brinker's assessment of what corporations will likely do with tax cut windfalls now or in the future is based on what they said they will do with them in recent surveys and what they have rather consistently done with them in the past:
Shocking nobody, corporations say tax cuts won't go to workers
12/01/17
http://thehill.com/opinion/finance/362753-shocking-nobody-corporate-tax-cuts-wont-help-workers-innovation
Trump's Tax Promises Undercut by CEO Plans to Help Investors
November 29, 2017
https://www.bloomberg.com/news/articles/2017-11-29/trump-s-tax-promises-undercut-by-ceo-plans-to-reward-investors
Thanks Honeybee. I’m glad you saw it too. Bob was
so self-righteous and indignant about it. That’s what got me about the whole deal.
Advice I've heard finally agree with BB on short term bonds. The prime rate gaining with 3-4 hikes per the good economic growth. Finally, we will see +3% annual GNP growth and 2% inflation target. Inflation will not be a concern, but a bonus. Bad time to own any bonds and those you own should be short duration. So, basically cash. Funny, with good prognosis of economy the cash holdings will flow into stocks. There were much concern within investors and much of that concern is fading. International investors will help.
Typical analysis with good economic news across the board including international community has always resulted in good returns the following year. Buy the dip when it comes. As already suggested the -8% may be coming. I see no reason to utilise your cash at this time, but good to keep the powder dry for dip purchase. Bond ownership may be a poor bet. First the economy is riding with low risk of recession. Second, bonds will lose appreciation due to increase interest rate. So, '18 is projected to high single digit growth, while bond values go south. The gap is large. Maybe use your bonds to buy the dip? This leads me to believe that bonds will not offer you much advantage for '18.
Also, due to earning growth and tax cut benefits already kicking in the stock value evaluations have automatically improved +15%. Stocks are currently priced right, but will go above that mark as often the case in bull market. However, year end will still result in evaluations at present level.
Also, interesting that historically our annual stock growth occurs within 20 day time period. Not all at once, but just 20 days. This 20/365 day period is very small and reason #1 why timing market is impractical. Still, if one can pull money or push money to more conservative investment within "bad" economic environment not a bad idea. Basically, investments should hold as the biggest danger is time out of markets. Corrections just result in bumpy road. The real danger is recession. When lights start flickering of recession woes, retirees should probably go conservative.
The average returns for some years out not a good indicator of wealth accumulation. When they add up annual returns percentage and divide for average. It is a measure, but always much higher than real income growth, especially with much volatility. This is why lower steady returns may actually earn you more over the long run. The real growth best to rate utilizing CAGR. This calculation would be up to you with your specific entry point of investment.
Growth stocks expected to do good. Tech and health. Gold supposedly a poor showing. Industrials good. They singled out John Deer since they are buying a German heavy equipment company. I've worked a few years in Engineering within heavy construction equipment. I did respect John Deere manufacturing. UPS may follow the Amazon online shopping popularity. I read UPS plans on outfitting delivery trucks with drones. No need to park in your driveway. That is a clever process improvement. Both are solid companies with good dividends. Not as much risk in buying quality.
Yes BB did spend the last several weeks slamming the tax bill painting a bad picture for the individual worker / tax payer. I guess now we are hearing the other side of the story - business benefits - and how some of them can be good for the individual. Did it really take that long for him to assess that?!
Cheers,
Mike
klashelle,
You retired at 54, can you share how you are handling the health insurance costs, just curious since this is one thing keeping us from retirement prior to 65.
smile
.
Mike....If Brinker said it once, he said it fifty times (over several programs) that there would not be a tax cut for the "middle class."
Perhaps he agrees with Pelosi that those $1,000 to $2,500 checks are "crumbs" and not really a tax cut.
The tax cut plan seemed like a win for most of us, yet every newspaper & online editorial I'd seen in LA Times, NY Times, etc., wrongly said it would be bad for us little guys. Their opinions were devoid of analysis and reeked of liberal politics, as usual. And speaking of misleading economics with a lefty agenda, Krugman was the #1 winner of Trump's Fake Media Award. Well-deserved!
1 – 22 – 2018
Source: IMF
Latest Projections
Brighter Economic Prospects (includes growth chart)
Current Economic Sweet-Spot
Global growth continues to pick up and is broad based. But no matter how tempting it is to sit back and enjoy the sunshine, policy can and should move to strengthen the recovery.
Bluce,
Thanks for asking. I'm doing fine - hope you are also.
Re: the consultant: I was referring to our Hawaiian bruddah who "pressed the wrong button" and launched an erroneous incoming missile alert.
JC
Honeybee,
Thanks for your kind comments. I always enjoy coming here for your weekly synopsis and all of the comments!
This week I particularly enjoyed the "BOB BRINKER SAID IT WOULDN'T HAPPEN" rundown!
Bob of all people should know better - NEVER SAY NEVER!
Bob should have kept his powder dry on what corporations would do in the event of a tax cut and a tax break on repatriation. Instead he got aboard the naysayer's wagon and proclaimed what would and wouldn't happen. Now he looks foolish to those who follow along with his pronouncements.
When all the speculation was going on prior to the tax cuts, it would have been the time for him to say, "We will know in the fullness of time." He made a misstep that is now part of the record.
1 – 22 – 2018
Source: IMF
Latest Projections
Brighter Economic Prospects (includes growth chart)
The Current Economic Sweet Spot
https://blogs.imf.org/2018/01/22/the-current-economic-sweet-spot-is-not-the-new-normal/
Global growth continues to pick up and is broad based. But no matter how tempting it is to sit back and enjoy the sunshine, policy can and should move to strengthen the recovery.
What a Ride!
Honey, it seems to me that you actually appreciate Bob very much. You are honest to his face and hold his feet to the fire. If not, he may have gone full throttle shark. He has done a lot of good for a long time, but seems to have strayed into left leaning politics these last ten plus years, A little humility would do him some good. Thanks for your efforts to keep the Starship on course.
Pavlov’s Cat
.
Pavlov's Cat....Actually, I do appreciate Bob Brinker very much and think he has done a great service in teaching the basics of investing.
And most of all, I appreciate that he has always taught that most anyone can learn to be their own financial manager.
He single-handedly (via Moneytalk) gave me the courage to escape from a shark in the form of a "full-service" broker who had his hands deep into our pockets. When my husband passed suddenly at an early age - on a hiking trail - I knew it was time to learn to do for myself what the "broker" said he was doing.
I went down the learning curve that Brinker pointed to, and to the dismay of the shark, moved all my investments to Charles Schwab and made my own decisions ever since.
Does that mean that I won't/don't be totally candid, and as honest as possible about Brinker? Nope, never has, never will.....
Jerrod responded to my question about the Hawaiian comment: Re: the consultant: I was referring to our Hawaiian bruddah who "pressed the wrong button" and launched an erroneous incoming missile alert.
Haha, of course -- I'd totally forgotten about that. For some reason, the story got buried about as deep as the story about the Las Vegas mass-murderer.
BTW someone mentioned early retirement health care costs. If you have Christian values and not one so motivated to support alternative sex operations, abortions, pre-existing conditions coverage, and the lawyer industry, check out Samaritans. This is not insurance or a for profit business, but comes under the heading cost sharing. The standard coverage cost is $340/month for us and that covers both. My wife retired from local hospital that offered good insurance. This was half the cost and in my opinion better coverage. Also, no better health care at the cost than "direct pay" for primary care. I have subscription insurance from CHC that works well with Samaritan.
BB mentions the well heeled investor shouldn't pay off his cheap mortgage. Laughing that the bank would offer to pick him up in limo for such. I think it is wise for pay off. First, the return is not merely mortgage interest, but a tax free return and a return that rates above short term bonds presently. Why would a wealthy investor hassle with mortgage company? Even wealthy investors have risk upon catastrophic event. Best to have your dwelling PIF for security. Why would anyone bother with a legal jeopardy or hazard by purchasing an annuity if the house isn't paid for? The house is your first line of defense for security. At any time in your mortgage history the bank can foreclose and do so with multiple reasons. Do you want to be bound by the legalease of your contract? Also, with no monthly payments your cash flow increases. Your cost of living expenses drop and improves the cushion for your play money and will do so at a lower tax rate. Social security income has amazing tax rate. Best to be in some of that zone if possible. It is possible if you drop your cost of living. Really, your retirement enjoyment is not a factor of wealth as often portrayed. It is a factor of healthy time to enjoy it. Healthy time is your most precious asset not money. Buying new expensive toys or going on boring international trips or voyages gets old fast. Spending quiet precious time with loved ones is 10x better. Setting up a bike trip with picnic for grandkids better than eating rich food and booze on an ocean liner. Probably getting sick afterwards. How about donating some time to help other per personal reward?
Also, is it no shame within the financial industry to always push their clients to work longer, save more, and utilize low return investments? They push safety as if we live forever. You already know your prognosis, it's death. They push a bundle to possible long term health care costs, but offer no strategy to avoid the cost in the first place. They want to sell a annuity, but offer little motivation to spend down you wealth per the maximising the safest annuity aka Social Security, They even scare you by mentioning not to depend on SS. Well, my money is on SS on not on their ability to sustain my living expenses. If these financial advisors were actually worthy of are full attention they would first inform you of minimising your cost of living and shooting for more tax free income from SS. Also, they would have both spouses maximise SS benefits for security. If you have the misfortune of not receiving benefits, well money in general not your problem anymore. They would also suggest an HSA savings account investment for long term care insurance instead of insurance. Consider the hype, promotion, advertising costs upon these insurance products. Also, the legal jeopardy involved. I wouldn't trust them to be there when it counts. There is much risk in insurance. Sure, early deaths benefit the insurance company, but that may not flow into survivor lower cost of the benefit. Insurance has much overhead. Better to always handle the finances directly yourself and realise life has risk even when temporarily enjoying salesman's or confidence man's talking points.
.
Almost every day now:
(Reuters) - JPMorgan Chase & Co unveiled a $20 billion investment plan on Tuesday to hike wages, hire more, open new branches and expand its business as it takes advantage of sweeping changes to the U.S. tax law and a more favorable regulatory environment.
The bank joined several other U.S. companies that have already announced spending plans after the federal tax overhaul was signed into law in December, bringing lower corporate rates and other changes.
Something worth reading:
http://stockcharts.com/school/doku.php?id=chart_school:trading_strategies:bob_farrell_10_rules
Summary if you don't want to read it:
1. Markets tend to return to the mean (average price) over time.
2. Excesses in one direction will lead to an opposite excess in the other direction.
3. There are no new eras - excesses are never permanent.
4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways
5. The public buys the most at the top and the least at the bottom.
6. Fear and greed are stronger than long-term resolve.
7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.
8. Bear markets have three stages - sharp down, reflexive rebound and a drawn-out fundamental downtrend
9. When all the experts and forecasts agree - something else is going to happen.
10. Bull markets are more fun than bear markets.
Where are you Gabe ? No pony report or stock performance report, I miss your comments. Sp 5000?
Many folks are celebrating like it's 1999 about corporate "announcements" of bonuses and "new jobs"... fine, I'll have another glass of Dom as well.
But let's take a peek behind the curtain just a bit. A few months ago the WSJ printed info of Chase Bank reversing course from their 10-year strategy of expanding local branches to every street corner in America because it didn't pan out. Not enough consumer banking was sold at the prolific locations, such as new savings accounts, new checking accounts, new fees, new ATM card accounts, new mortgage accounts, et al. Jamie Dimon said they're cutting back on that.
Following the tax legislation, it seems like some announcements from big industry players sound more like panders to the political tide than real, accountable strategic moves. Hey, talk is cheap. It's easy to tell folks what they want to hear. And in show business, all publicity is good publicity.
Let's wait for the accounting instead of gleefully waiting in line to view the two-headed bearded lady.
Just sayin', take it with a grain... (a Belgian white, Blue Moon's not bad)
Ricky, Levelland TX
Yosemite Sam sez,
Ruyfa - don't encourage him. Let him hibernate. No offense, but his commentary was totally worthless, not to be unkind.
Cashin on CNBC - fear of missing rally fueling the rally - train leaving station
saying maybe Feb looking for a small pullback based on some of his cycle work not sure what will cause it though... maybe Geo-political (smile says - grasping for straw
TINA market but if Fed continues QT and nudging fed funds up you begin to get the competition.)
smile
Anyone (me) who got sucked into the tech/b2b craze late 90's and leading into y2k with Kevin Landis and took a pounding, if you made the right moves and held on and did not get sucked down by some of his other funds you are at least net positive currently... with tefqx.
missing in action are:
tifqx went away
tvfqx merged into svvc if you had the misfortune of letting that happen
tlfqx went away
all of which exploded up leading into Y2k but imploded in the ensuing correction...
Kevin even gave the opportunity for those owning tvfqx to transfer into his venture capital fund SVVC. I took a passer on this sold all my tvfqx in the upper 20's and put proceeds into tefqx hoping it would recover.
Fees on tefqx were/are high 1.85% but 1 yr, 3yr 5yr 10r annualized performance of 62.57% 22.64% 21.18% 15.89% certainly is nothing to sneeze at. Obviously this is not a recommendation but a recovery story.
But just like the QQQ's for Brinker, and Tefqx for Landis which I think Brinker may have endorsed, I wound up making money by hanging on and avoiding additional traps.
Shark attacks have nothing on Landis in fact I think sharks are offended by the comparative.
smile
Yosemite, that was uncalled for. Gabe, ignore that comment.
Pavlov’s Cat
Ricky,
A tip of the hat to you!
Also a tip of the hat to Ronny Jackson (President Trump's Physician) who hails from Levelland, TX.
JC
Honeybee,
Do you hear anything from Gabe? Hopefully he is still with us and OK.
JC
Honey why don't you have a Gabe appreciation week honoring Gabe for his many contributions here?
.
I do not know why we haven't heard from Gabe for awhile.
I do hope he is well.
I may send an email to him and confirm that he is okay - but that would be later.
May be good to read this comment chain. It's on the active fund that is growing in my respect. First, in down turn, an active fund has a better history of reduced loss as compared to passive index. I've read the commercial investors, currently, have moved more capital to active funds. During the 08-09 Great Recession, my Contra fund did shave off 12% of loss as compared to index funds.
https://www.bogleheads.org/forum/viewtopic.php?f=10&t=209617&start=50
What caught my attention, this investor group vetted the bond funds during historical rate increases. Not that bad of performance in this environment. The hype of losing returns per the loss of the great bull bond run may be exaggerated. BB has really hyped the threat. This is loss of the base or value of the bond. Also, a comment on how mixed funds of bonds and stock do better within actual performance as compared to investors that pick an independant stock index fund and bond. The reasoning goes to the point that the professional management does a better job of picking bonds and within an environment of stocks vs bonds. I would suggest it's like getting a fund with financial advisor internal to the fund if that makes sense to you.
Guys, thank you for all of your comments. A special thank you to you HB.
I had a family setback....had to assist my sister (84 years old) into a memory care facility. Spent a great deal of time in New Jersey and in New York city handling this issue. A lot of emotion within the family. It is now settled....just on Tuesday of this week.
I will be back in full by Friday. Again, thanks to all!
Gabe
Gabe,
Sorry to hear about your sister.
We are looking forward to your return here. I promise to be nice (at least on your first day back)!
JC
Not meant to be crass. On the contrary, it's a tip-o-the-jockey-cap to Gabe. For those fans who need a Gabe Fix, allow me:
Two horses running today, one has alot of chrome, should do well. Yesterday, 1 out of 6 in the money.
Amazon up again! Lucky I held.
Dow record again, how high can it go!!
Thinking of Gabe, wherever he may be...
-Spurs N' More, locations near you (just follow a horse trailer behind a pickup)
Hi all,
I'm seeking your wisdom. I just retire and am in critical mass. My financial adviser, also life insurance agent, introduces me to a Lincoln Financial's product. It provides a list of mutual funds for me to choose and put monies in -- stock/bond up to 80/20. So the investment will go up and down with the selected funds. However, Lincoln guarantees 6% return in the down year. It allows max 6.5% withdrawal each year. The cost (total expense) is about 3%+ a year.
Further google search, the product appears to be Lincoln Max 6 Select Advantage. I also look into Vanguard, teaming with Transamerica. They offer similar variable annuity that offers 3 Vanguard Balanced funds to invest, 5% withdrawal under Secure Income rider (Guarantee Life Withdrawal Benefit - GLWB).
What's you opinion about the variable annuity in general? Lincoln and/or Vanguard in specific? Can you recall Bob Brinker's view on these? Thank you very much in advance.
Tom
Tom said: " The cost (total expense) is about 3%+ a year. "
Suggestions:
1) STOP. Brinker would say that he wouldn't touch high-commission variable annuity products with a ten foot pole.
2) Don't do anything until you feel educated on the subject.
3) The wiki pages here are a great learning resource: https://www.bogleheads.org/wiki/Main_Page
4) Read the book "Common Sense on Mutual Funds" by John Bogle.
5) Fire your financial advisor.
6) Pick an asset allocation in which you are comfortable.
7) Invest in low-cost no-load mutual funds such as are available at Vanguard.
Tom: Bob Brinker speaks highly of the Vanguard annuity products. You said you are at critical mass, do you think you're at risk of running out of money in retirement? Some people buy annuities because of that fear.
The Lincoln annuity might be one that is advertised as never losing money in a down stock market. My understanding of how they do this, is they "cap" the money you can earn in an up market. Think about that. They'll rake off some of what your money earns and you get the remainder. And a 3% annual fee? If it were me, I would have ended the conversation right there and told the "advisor" I was going to move my account.
My recollection is Bob has only commented about the Vanguard program, and favorably. If other blogsters have information to add I hope they step up.
Here are some comments on Lincoln Financial's variable annuity products:
https://www.bogleheads.org/forum/viewtopic.php?t=190547
Headline 4th qtr 2017 annualized GDP came in at 2.6% and those that followed my December 21, 2017 at 1:45 PM discussion on this easily misinterpreted reporting of GDP understand the importance of viewing this measure of the US. economy properly.
I stated as we go forward a better view of GDP is simply the YOY chained constant dollar comparison of actual output.
So here it is: 4th Qtr 2017 GDP grew YOY at a rate of 2.4989% which represents how much the economy as measured by GDP grew for 2017.
https://www.bea.gov/national/index.htm#gdp (click on Current-dollar and "real" GDP for the xcel spreadsheet and look for the GDP in billions of chained 2009 dollars column 2017Q4 17.2725T vs 2016Q4 16.8514T)
The good news is we are still growing and not coming in too hot which would have potentially greater Fed tightening implications if that were the case. The underlying numbers look good on consumer and other measures.
Steve Liesman CNBC's economic reporter always states in order to get GDP growth you need increase in Population and productivity.
smile
Shark attack - run.
Tom,
Personally, I would never get involved in a variable annuity.
Here is a Forbes article you may want to peruse. It was published in 2015, but I believe most/all of the commentary would still hold true today:
5 Reasons Why You Should Never Buy A Variable Annuity.
https://goo.gl/RnidvU
JC
Tom,
I would make sure to study this investment very very carefully and perform due diligence.
"The cost (total expense) is about 3%+ a year."
That's a HUGE annual expense.
"Can you recall Bob Brinker's view on these?"
I can only guess that as soon as Brinker found out the annual expense is 3%+ per year, he would say to avoid the investment.
What if the mutual funds you select have expense ratios of 1%, does the 3% get added to the expense ratio of the mutual funds?
I think Larry Swedroe may discuss variable annuities in some of his books.
Has Bob Brinker discussed the high expense ratios of some of his bond funds?
For example, the Metro West bond fund he recommends has an expense ratio of 1.04%
That's very high for a bond fund. Two of his other bond funds have expense ratios that Morningstar lists as "Above Average".
Regarding his junk bond fund....which is an odd choice for retirees.....Morningstar has an Analyst rating of Neutral and their headliner comment is: "A handful of concerns result in a downgrade to Neutral"
Robert
smile: Thanks for the 4th quarter GDP update. Using the BEA data you referenced, here are the quarterly YOY GDP numbers for the past few years:
2013Q1 1.31%
2013Q2 1.04%
2013Q3 1.69%
2013Q4 2.66%
2014Q1 1.72%
2014Q2 2.67%
2014Q3 3.19%
2014Q4 2.70%
2015Q1 3.76%
2015Q2 3.30%
2015Q3 2.40%
2015Q4 2.02%
2016Q1 1.36%
2016Q2 1.23%
2016Q3 1.52%
2016Q4 1.84%
2017Q1 2.00%
2017Q2 2.21%
2017Q3 2.30%
2017Q4 2.50%
As stated before, we are in a definite uptrend since the 2nd quarter 2016 low.
.
Biker...Please send (via comments) a link to your economic numbers. I want to see and confirm the source before I publish them.
I do not believe your source is correct.
The link with the data used to compute the year-over-year (YOY) GDP is the same one as posted above by smile:
https://www.bea.gov/national/index.htm#gdp
As he or she stated, "click on Current-dollar and "real" GDP for the xcel spreadsheet and look for the GDP in billions of chained 2009 dollars column 2017Q4 17.2725T vs 2016Q4 16.8514T"
All I did was make the same computation for single year periods ending at various calendar quarters ranging from 2013 to 2017.
To add to others above:
The only annuity to even consider is a single premium immediate (or delayed) annuity. Bob mentions Vanguard because the cost is very low, although there are other places to compare with. I believe there is a website called "annuities.com" or something that has good info not tied to any company.
BEWARE OF THE EXPENSES, and be sure there is a stable, secure firm that is offering it.
This unbelievable move in the equity market has thrown my asset allocation way out of wack. I feel comfortable at about 73% in equities. At today's close, I sold a bunch to get me to the above allocation in equities. Because everything looks so pricey...except bonds, I bought CD's ranging between 1 to 5 years and keeping a bunch in a money market account as dry powder awaiting a pull back.
Gabe
Gabe,
Welcome back, I hope things are going better for you.
Just to confirm, I promise to be nice to you for the next 9 hours and 2 minutes.
After that, all bets are off! :-)
JC
Reading the SWR calculations and perpetual withdrawal rates that is a concern of retirees. One has to understand this is the sweet spot of vulnerability to exploit those with money. So, forget the advisers and infomercials articles. You have to do the home work to be able to first avoid the sharks and when you have that ability you have enough to go it alone.
You do know that their is much money to be made to guarantee investors a stable return. To remove risk. Also,these salesmen are known as confidence men such as Bernie Madoff. When you have money, risk isn't that scary if you have some competence and self education to make good decisions. I've never seen it good, to trust others with your money. That is the burden we have to commit to.
My to date evaluations of permanent portfolios that do need to re-balanced annually and have very respectable safe withdrawal rates include 20% total stock market index, 10% mid cap, 10% small cap,20% international developed, 10% emerging, 10% international small cap, 10% intermediate bonds, and 10% intermediate corp bonds. That is a well diversified portfolio that has strength in each financial cycle and will improve stable and good returns. Not that much for SWR of 8% and perpetual of 6.9%. But, historically over a very long long time Wellington proves a SWR of 7.8% and perpetual of 6.9%. So, maybe just leave the financial decision making to them?
Also, the safe withdrawal rates are just a rough guess. They are historical, so future rates may vary. Consider that most investors should be cognizant of pushing more capital to equities within low risk time periods. Also, most will minimize spending in recession. The financial people have no calculations for these basic human characteristics, but they do much good to your returns. Consider a more educated or competent investor that will hearken to push more money out of stock within growing concern of future growth. The same investor knows during recession the bottom is easier to time and is not so interested in the very bottom, just better stock deals. This investor would push more out of "safe" bonds into stocks and minimize living expenses during the the risky low economic growth times. That would be the path to very much improve returns. So, why the need to spend a premium on minimizing risk. This would only grantee low, but stable returns. Personally, I would prefer more risk, lower cost of living, and early retirement. The enjoyment of last years on earth depend more on youthful health and not money.
Bob Brinker mentions Vanguard as a source for variable annuities because they apparently have some available with no surrender charge. Probably not because he thinks variable annuities are a good investment, but rather as an example to show how you could, if you really, really had to have a variable annuity, you do better than the horrible high-commission variable annuities with surrender charges.
Looks like Brinker will have to adjust his target range for the S&P in the next Marketimer. Record inflows into stock mutual funds right now could indicate we are nearing a short-term top. I'd say a Mid-Term election year correction in the near future seems likely since such gains cannot continue.
.
Biker and Smile:
So I have always admitted that math is not my long suit, and I sure don't understand what you are doing with the "chained" numbers.
So for the sake of those like me who only care about keeping it simple. Here are the yearly GDP numbers for each of the past nine years:
2009: 2.8%
2010: 2.5%
2011: 1.6%
2012: 2.2%
2013: 1.7%
2014: 2.4%
2015: 2.6%
2016: 1.6%
For 2017 Quarterly:
Q1 = 1.2%;
Q2 = 3.1%
Q3 = 3.2%
The preliminary 2017 Q4 estimate is 2.6%. The final report will not be released until the end of February:
Real gross domestic product (GDP) increased at an annual rate of 2.6 percent in the fourth quarter of
2017 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the
third quarter, real GDP increased 3.2 percent.
The Bureau emphasized that the fourth-quarter advance estimate released today is based on source
data that are incomplete or subject to further revision by the source agency (see "Source Data for the
Advance Estimate" on page 3). The "second" estimate for the fourth quarter, based on more complete
data, will be released on February 28, 2018.
.
Correction to post above - should read "for each of the last EIGHT years."
HB,
The advantage of doing the YOY comparison data is that it is current. I actually heard this morning CNBCs Carl Quintanilla reference the year over year (YOY) numbers saying that they were growing for the last 6 qtrs. Smart guy that CQ for reporting and looking at this GDP data correctly. I wouldn't be a bit surprised if CQ may have been a visitor here and saw our discussion on the correct way to analyze the GDP data on a YOY basis.
The numbers you are using are the same chained 2009 dollars output comparison data however it looks a little dated. If you look at source data on the right side for the table you got your numbers from it shows... Release date January 2017 - close enough if you want to keep it simple but the link Biker and I are using is the most up to date data.
All we are doing is comparing same qtr output to the prior year same qtr output. As Biker showed it is easy to spot trends and changes and as Brinker mentioned when we initially took on this subject we are still stuck in the lower 2's, however with Global recovery we will likely tick up a skoosh. The goal for the markets in my view is continued growth with low inflation to keep the Fed from over-tightening.
Even though the preliminary data for Q4 will probably be updated it is probably very close to what actual will be since I think economists consensus estimates for 2017Q4 GDP were in the 2.7% range for the 2017Q4 annualized unusually close to the preliminary number. As Biker and I showed the 2.5 rounded up range using YOY 4th Q data will likely be the growth for GDP for 2017 based on prelim. data. I think the market took off today on this Goldilocks data along with INTC and others earnings beats after the bell yesterday.
I am keeping a close eye on this because of the potential deficit issue from the recent tax cuts. The GDP trend looks good but we have to stay vigilant given the rise in this market. No recessions hopefully and continued growth is good.
smile
Before the day is done, check out today's Google home page logo.
To me it implies that Google wants Jeff Bezos to think he is burnt toast. The two are in competition, you know.
Maybe it's Google's response to the recent WSJ book review that outlined how Amazon is kicking Google's butt. Basically, Amazon is a bigger search engine than Google because most consumer product searches start at Amazon, not Google. Amazon is a search engine with a sales warehouse attached. That's huge.
Just guessing,
Ray
.
Well, Smile...You guys have at it - just keep me informed if and when the market is going to correct. :)
.
Ray...I think you are right about Google and Jeff Bezos. It sure looks like him and then the burned toast.
But it's pretty hard to make burned toast out of someone with a net worth of over $116 billion - I'd guess.
I do subscribe to a newsletter for economy evaluations. Not something big, fancy, and expensive such as BB's money maker (pun intended), but very capable and well respected. I know they do a much better, accurate, and thorough job than my vetting for example the GNP growth. It's a composite index with historical best and simplest benchmarks when decisions should be made. Not an overly skittish newsletter, as often said time in the market is the most important factor for good returns. Also, there is no pretense to attempt to predict corrections. That's just normal stock market gyrations. I just want help to estimate risk.
Did you read "A wealth of Common Sense" article on market risk? Twenty five percent of the time the market is in bear operation. Seventy percent we experience lower than high markets and the resulting remorse. The only predicable element of stock investing is the frequent moves and the short time marching up. So, in my opinion we have excellent trade winds for investing. We still have investors with dry powder waiting for correction. No over abundance of bitcoin exuberance, at least in general market (froth). So, don't fight the trend. Also, historically, our excessive evaluations don't matter much, at least within a couple years time frame. The price of stock is just what investors are willing to pay at present time. IOWs, you can't always explain the market and the market can be irrational for good gains. Sure, good to put away a bigger safeguard, but good to stay the trend as well. Personally, I wonder if bitcoin could cause a bear market as the investment is terribly risky. If and when that investment implodes could that trigger a bigger selloff in overall market? I read nothing of this risk?
I was reading another retirement SWR historical analysis, wherein the general stock market is sorely needed within the portfolio. Holding cash is the biggest risk. A big risk to drop below 30% stocks. That the portfolio draw down risk for retirement needs are o.k. between 30%-70% stocks. Actually, history indicated about the same risk for 30%-70%. So, there must be little risk in sliding that bar of stock percentage 40%? You know for protection or gain within good or bad trends. The risk of running out of money the same, but the chances of more appreciation better with higher percentage of stocks.
Reading the comments of California politics and costs. Comparing those quality of life issues to Michigan residence. I've grown to appreciate Michigan since losing Grandholm Governorship. That time period was insufferable. As of lately the state is rated very top (2rd) for retirees and low cost of living. Coming from northern Wisconsin vacation paradise and moving to SW Michigan a wise decision for my needs. This evaluation only good if you can get out of Dodge during most of the winter season. Winter is fun at it's peak, but the slow start and slow end is boring. I hear visitors pleasantly surprised that we are only 2rd to Alaska for beach front. Our wonderful hunting and fishing. Our large camping and outdoor opportunities, including much public, federal, and state land. Sailing is excellent and the best downhill skiing east of Rockies, at least in Midwest. Many snowmobile trails, breweries and wineries. Not many gators or poisonous snakes, but Lyme disease a threat I've heard.
Thank you for the comments and advices on variable annuity (VA). Yes, I’ll be careful and do due diligence. I come across one of the suggested websites which quotes John Bogle, “Simplicity is the master key to financial success.” And I don’t think VA is such simplicity. I also read a Vanguard brochure that IMO is a clear and complete description of its VA product and riders. Its plain explanation raises and answers lots of questions, some of which I couldn’t come up on my own. It shows mostly the positive side of its product (understandably for marketing purpose). Yet one statement in the brochure catches my attention, “The illustration doesn’t include any charges for the optional rider or any taxes that may apply at distribution. If it had, performance would be lower.” Indeed the Secure Income rider fee is 1.20% of the Income Base. It can be increased but capped at 2%.
About the fee structure of Lincoln VA, according to my adviser it includes roughly 1% for the selected mutual funds expense, 1% for the sponsor insurance company to do its hedging that helps insure the guaranteed riders, and 1% for the sale agent.
A reason I look into VA or annuity in general is not out of concern for running out of money. I’ve tried to find means to have a regular stream of incomes (coming in as nicely as social security payments), and ways to autopilot the investments/incomes at some point in life. Especially when I’ll be no longer sharp enough to balance the investment portfolio to 60/40 stock/bond, or keen enough to manage 4% withdrawal. Or in case -- as my wife bluntly puts it -- when I’m gone, what’s she going to do. I already set aside 3-year living expense in prep for a prolonged market downturn (although my wife insists on 4-year :) I’m consolidating our mutual funds to All-in-one funds -- Vanguard STAR and Life Strategy funds -- hoping to ease the portfolio balancing work. I seem still far from setting autopilot. Yet at this point I wonder if the goal to automate the income stream is possible or still I will need to retain some kind of services from other parties such as a trusted financial advisor, a trusted institution like Vanguard. Thought?
Tom
I think now would be the perfect opportunity to give Gabe an enhanced role in the blog.
.
Josie....what would you suggest as an "enhanced role" for Gabe?
I already have a co-writer (Frankj), and a wonderful BRT (Blog Research Team). I have said anyone, including Gabe, is welcome to join that any time.
If you read through all the comments, you will quickly see a lot of those offering good information and answering questions for others - they are all on the BRT.
This explanation for the Google thingy seems more credible:
"Friday's Google Doodle Honors Neurosurgeon Wilder Penfield"
https://www.forbes.com/sites/kionasmith/2018/01/26/fridays-google-doodle-honors-neurosurgeon-wilder-penfield/#617bcf267f9e
"Today's Google Doodle celebrates the 127th birthday of Canadian neurosurgeon Wilder Penfield, who developed a groundbreaking epilepsy treatment called the Montreal Procedure.
In the 1930s, while working as a neurosurgeon at the Montreal Neurological Institute at McGill University, Penfield had a patient who reported smelling burned toast just before her seizures. He realized that he could use that hallucinatory scent to pinpoint the part of the brain that was seizing - and put a stop to it."
Tom
Consider moving all assets to Vanguard or Schwab.
Using their advisor service you determine your target asset allocation.
Vanguard gives you a clear picture of your likely success in meeting your financial targets.
Vanguard advisor service fee is .3%
They use a blend of in house stock and bond index funds that are usually managed for less than .25%
Using this service will save you about 2.5% a year....thats big.
Your assets will match the market, outperforming most mutual funds.
They will rebalance as required to maintain your desired asset allocation.
They can be set up to distribute your IRA annual required RMD's when you want them.
The transfer of assets is very easy.
Vanguard and Schwab services and fees are very transparent.
Using these services will insure you avoid trying to market time.
Your spouse will be taken care of and will not have to deal with offers for free lunches and portfolio reviews.
You will avoid the shark attacks.
Your financial requirements are on auto pilot.
Enjoy your retirement.
Bellevue Mike
Make Gabe a co-owner of the blog.
Bellevue Mike,
Great advice/post. I just copied and pasted your post into my folder for retirement info.
Occam's Razor is satisfied with your solution.
When I moved from Scottrade to Schwab last year we met with one of their advisors and asked the very question Tom asked (in my words - when I am no longer capable or not here what service is available from Schwab to manage the assets for wife if she is not inclined to take this over) the answer if I recall was their advisor service. Low cost solution to this issue. Simple.
smile
Great advice from Bellevue Mike to Tom. Go with Vanguard or Schwab. Your advisor is simply following the playbook: offering a certain type of product to a certain type of client -- one who is at a stage of their investment life where they might be "susceptible" for lack of a better word. I saw the same thing happen with a relative of mine. It blew up in the advisor's face when we decamped for Vanguard.
.
Josie..... LOL!!!
Sorry to disappoint, but the 1/26/18 Google home page logo (burnt toast) refers to Wilder Penfield.
https://goo.gl/nuwnU4
JC
Oh well, another good day at the track. A second place finish yesterday and a winning ride today! Scooped up a few bucks.
I am in my 18th year of blissful retirement. Where did the years go?
Gabe
"I’ve tried to find means to have a regular stream of incomes (coming in as nicely as social security payments), and ways to autopilot the investments/incomes at some point in life. Especially when I’ll be no longer sharp enough to balance the investment portfolio to 60/40 stock/bond, or keen enough to manage 4% withdrawal. Or in case -- as my wife bluntly puts it -- when I’m gone, what’s she going to do....I seem still far from setting autopilot. Yet at this point I wonder if the goal to automate the income stream is possible or still I will need to retain some kind of services from other parties such as a trusted financial advisor"
Tom
+++++++++++++++++++++++++++++++++++++++++++
Tom, you might consider 2 options:
1. The Vanguard Personal Advisor Service, in which you get a personal advisor for a 0.3%/year fee. That advisor can handle everything for you. Another blogger mentioned this also.
2. You might consider a fixed annuity. (This is very different from the high expense variable annuity that you were considering before). If I recall correctly, in exchange for a lump sum "investment", you can get a monthly income stream for life. That would accomplish your stated objective to automate the income stream. You still need due diligence to choose the company carefully, one with very strong financial stability. Vanguard might even offer these in conjunction with an insurance company.
Good luck.
Robert
Good job Gabe, welcome back. 18 yrs of retirement and 72% or so equities? Wow im still working and have 70% im nervous and thinking about raising more cash for a probable correction , I dont like all the strong dollar talk.
I just ran the numbers on Swab's easy peasy annuity estimator. $200k will achieve $1,000/mo. That's a 6% annual rate. So, not very impressive given this example is not inflation adjusted. Buffet told his wife upon his death, just stick the money into S&P 500 index. I do know many widowers that invest in a few or solitary good stock and not concerned. They should be, but seem to do good. You wouldn't go wrong with Swab or Vanguard services. My opinion is Swab is more in tune with helping. It's not hard to just pick a good balanced fund. Your wife can monitor growth and withdraw funds at her own pace. It would be good to set up the transfer to checking now and have her trained for some years. Nice to have a known person available on the phone if things get confusing. Have your wife do more stuff on her own while your still breathing. It's good to train spouses on financials and to ensure dual coverage when someone gets sick. Also, a trusted relative if available.
The 4% withdrawal rate is perpetual. Meaning at this rate if historical data continues the trend, you will have have high confidence that the monthly payment at 4% withdrawal will not go down, most probably up. IOWs you will probably die with the most lifetime money. Safe withdrawal rate is better if you just don't want to run out of money for lifespan. I personally think one would or should just watch the growth of funds and adjust spending accordingly. Meaning spend less in recession and pull more out during high growth. Also, best to lower cost of living so one Social Security check could do the basic job. This is more enjoyable as the investment can then be thought of play money. If your single and run into poor health, well, they take it all anyways. Forbes and Ivestopedia has good articles on the risk of annuities. "Passing the Buck".
To Gabe,
I too am in my 18th year of blissful retirement. I retired in January of 2000, three weeks after turning 60 years old.
Vanguard recommends 40% exposure in International holdings of both equity and bond funds. Bogle recommends no direct exposure citing that large equity funds such as the Total Market already provides such. Brinker agrees with Bogle, however, has a smaller international exposure than Vanguard recommends. Any observations, corrections or recommendations out there?
Gabe
.
I hope Bob Brinker reads this and doesn't embarrass himself today:
It’s Official=> President Trump Decreases the Debt to GDP Ratio in His First Year in Office – First Time in More than 50 Years!
The higher a country’s debt to GDP ratio, the less healthy the country’s economy. With the GDP numbers released yesterday, President Trump’s policies have officially decreased the Debt to GDP ratio by 1.2% in the President’s first year in office.
In contrast, President Obama increased the US Debt to GDP ratio his first year in office by 14.5%. Obama increased the rate a total of 37% over his 8 years in office
gabe said...
Vanguard recommends 40% exposure in International holdings of both equity and bond funds. Bogle recommends no direct exposure citing that large equity funds such as the Total Market already provides such. Brinker agrees with Bogle, however, has a smaller international exposure than Vanguard recommends. Any observations, corrections or recommendations out there?
Gabe
++++++++++++++++++++++++++++++
Gabe, I'm reading a bond book by an author named Rick Van Ness, who is associated with the Bogleheads. In his section on international bond funds, he says this:
"International bond funds invest in a range of taxable bonds issued by foreign governments and corporations. The argument against investing in these is that they don’t offer anything beyond the rich choices that already exist in the U.S. bond markets. Worse, investors are not compensated for the currency rate risks which are introduced. The argument in favor of these is that they help investors diversify by spreading interest rate and economic risk across the globe. I’m not an expert about this, but I am not even tempted."
Van Ness, Rick. Why Bother With Bonds: A Guide To Build All-Weather Portfolio Including CDs, Bonds, and Bond Funds--Even During Low Interest Rates (How To Achieve Financial Independence)
That's also the reason people give for investing in stocks outside the U.S.....to diversify risks....currency risks, economic risks, interest rate risks, and stock valuation risks. For example, on WealthTrack this weekend, Jeremy Grantham said that US stocks currently have valuations way above the rest of the world. And that emerging market stocks have low valuations in comparison
Robert
Honey, I think you are half right. Bob will have read that info but he will still embarrass himself today.
Pavlov’s Cat
Bellevue Mike. . . Thanks for your January 27, 2018 post.
Concise, articulate and accurate. A perfect 10!
I, also, placed a copy of your post in our retirement folder, particularly, in the event my wife had to go it alone.
HB
The debt continues to climb and the economy continues to recover from the deep hole of the Great Recession/economic collapse left by Bush which left Trillion dollar deficits for multiple succeeding years.
Statistically speaking from book learning and real life application in audit anything below 4% is considered (by me) as insignificant. Others are welcome to disagree.
Also the trade deficits are widening e.g., for Nov. 2017 -69.9941B which impacts GDP and did so in the Q42017.
https://www.census.gov/foreign-trade/balance/c0004.html
https://www.treasurydirect.gov/NP/debt/search?startMonth=01&startDay=20&startYear=1993&endMonth=01&endDay=28&endYear=2018
I'll share an even better way of looking at GDP growth across time for the last 6 presidents in the new thread for today.
When there is real accomplishment most level headed individuals will acknowledge.
Grasping for statistically insignificant straws - IMO, is what it is.
smile
.
Well, Smile. IMO, you are desperately looking for a way to avoid facing the truth. And you're hoping something will derail what's ahead for the economy, jobs, the market before it reaches a level when there are no more straws to hang on to.
Just because this ship is not easy to turn, does not mean it won't turn - even though we've been solidly on the Titanic while the National Debt doubled under Obama.
But you have fun, okay?
HB,
I think Bob is likely to be live today if nothing else to crow about being right on the GDP numbers stuck in the lower 2's as he mentioned November 19, 2017.
https://honeysbobbrinkerbeehivebuzz3.blogspot.com/search?updated-max=2017-11-26T13:12:00-08:00&max-results=2&start=2&by-date=false
You are correct it is a big ship at 17.2725 Trillion GDP output.
The facts will speak for themselves.
smile
.
Smile...I copied your post to the new Summary thread and responded there.
Thanks for the summary and discussion. Tim's future's sound a little bleak? He thinks Apple has wonderful approach to business. Let's not forget Apple approach is to utilize the cheapest foreign labor for manufacturing, thus avoiding all are labor laws and unions. They employ U.S. techies and salesmen and most businesses will treat this staff well as they directly reflect on the company image. Silicone Valley has a business plan that utilizes as much foreign workforce as possible. These companies know they are susceptible to much criticism, so they are emitting as much sympathy to Left politics as business defense/ploy. Most companies are not threatened by the Right.
Robotic automation is not a economic or societal destructive force. Maybe this guy thought our refrigerator ice machines would put the ice business in shambles, too? This is Union mentality thinking that goes something like work less and employ more. Outlaw self service gas stations and require attendants.
There is so much work needed to be done, we shouldn't be wasting manpower within boring repetitive jobs. Also, we shouldn't allow government to regulate burdens to citizens ship such as poor schools, burdensome tax, labor, safety, or health regs. Too many on the Left are o.k. with this per mentality that make work regulations are good for jobs.
It does look like we have a setup for good correction. Media will hammer and fear monger as much as possible to motivate voting public and drive down economy. This may impact the mid terms more? Lot of motivation to accomplish this. Voters seem to shy away from one party power and like stagnant politics. Stock market likes this, too. It will depend a lot on Trump prowess within his popularity and push back on typical politics. He is very adept at this. State of Union show will be a barometer. We have an incredible pro business foundation, so the politics of stagnation will not be as destructive. Good economic growth should continue for years, earnings as well. Interest rates should slowly raise as predicted. If we get a good correction, the snap back should be strong. Also, we have set up, a good economic condition to put the U.S. in its best performance as the leader of capturing and profiting on new technology. If we don't succumb to politics of self destruction it could indeed be a very rewarding future. Unbiased history may show this CIC came along at a cross roads time of U.S. history at peak risk.
Reread Vanguard '18 forecast. Their arguments of future of '18. Also, some 10 or 30 years out projection. They claim the tilts will not be as effective in future. That risk upon high evaluations is real and the bull bond market over. Altogether best argument for future risk adjusted returns is still the classic 60/40 equity/bond blend. That foreign investments need to be in your portfolio. That the coming environment will make it even more important to keep financial costs down. You may do better, but could easy do worse as compared to simply investing in global equity fund at 60% and global bond fund at 40%. This investment makes more sense within current market forces and especially the future forces. Expect low returns as they may be the best you can do.
Reading between the lines and invoking their thoughts and what the impact of reduced spending and continued investing have. That this practice is very very good for your long term wealth accumulation and returns. To my thinking it is good to spend high evaluation money, currently. At least within your current tax rate bracket. To spend the money in effort to lower your cost of living. To invest your non tax advantaged financial savings likewise. Best not to keep buying equities or bonds in this poor risk reward era. At least the non IRA and 401 matching fund types. Their are hundreds of expenditures outside of investment market that will result in extremely high returns for an entire lifetime. Utilize your financial analysis calculator and enjoy tremendous returns. This is always overlooked per return on investment. Unfortunately, as the returns are guaranteed.
Also, after reading the bond environment it makes little sense to my thinking to just buy the average. That low cost active management with their history of good returns would be superior choice. My current choice of Wellesley may give way to Wellington after I do more research on the international holdings. Bonds just an inferior investment for long term to practice to justify the 30/70 safety of Wellesley. They did perform well during the long bond bull market. I will have to think about if these funds will do any better than simple global bonds fund.
It looks to be a good investment choice still to spend high appreciation investments to forestall Social Security payout until 70.
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