A Guide to a Conservative Return Assumption
A simple approach for building a financial plan is to decide on a rate of return for the investment portfolio and to plug that value into a spreadsheet to represent assumed asset growth. Historical data may be used to calculate historical average…
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Planning For The Future – What About Bond Yields?
Adjustments for Current Bond Yields An important consideration is that current interest rates are lower than the historical averages. The historical average return is not relevant for someone seeking to estimate future market returns from today’s starting point. The general problem with…
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What To Do When Markets Plummet – Investor Behavior Gap
Another concern is whether investors are disciplined enough to stay the course with the investment strategy in order to earn the underlying index market returns. Studies on retirement spending from investment portfolios typically assume that retirees are rational investors who rebalance right…
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Making Your Investments Work For You: Things To Consider
Inflation We must remove inflation so the numbers allow for a better understanding of purchasing power growth. Real returns will be less because they preserve the purchasing power of wealth over time. Providing the discussion in terms of real returns allows us…
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How Much Can Retirees Spend On March 11, 2020? It May Not Be What You Think
Turbulent market volatility and declining interest rates are leaving many people wondering about the viability of their retirement plans. Given where markets are today, will you have enough to meet your retirement spending goals? Attention often turns to the 4% rule, which…
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How Much Should We Depend On The Stock Market?
Simple analyses, which look to historical returns as estimates for what retirees should expect in the future, tend to provide an incomplete picture that may overstate the potential for stocks relative to other strategies. We will investigate some of the adjustments that…
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Unpacking Today’s Market Returns
Today, March 9th, 2020, was a bad day for the financial markets. There are four main elements to this story that I want to pick apart…
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Inflation, Deflation, Confiscation & Devastation- The Four Horsemen Of Risk
Noted financial advisor and historian William Bernstein makes a compelling case for stocks in his e-book Deep Risk: How History Informs Portfolio Design. In the introduction, Bernstein begins by offering an operational definition of risk. Risk is the size of real capital…
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What To Make of Market Volatility
In recent days, the significant market decline has resulted in renewed anxiety for many of you (I know this is blatantly obvious but stick with us). While it may be difficult to remain calm during a substantial market decline, it is important…
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Lessons For The Next Crisis
“I find your lack of faith disturbing.” I gotta say, we agree with Darth Vadar on this one. When times of crisis arise, people naturally have a range of emotions, including fear, panic, and mistrust. This can lead to behaviors that directly…
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The Coronavirus and Your Investments
The Coronavirus is scary. When it’s possible to make reasonable comparisons with the Spanish Flu, that should make you sit up and take notice. Aside from the reasonable precautions that you should be taking, what should you be doing to protect your…
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The Case for Stocks
The case for using an aggressive investment portfolio with a high stock allocation to fund retirement expenses rests on the idea that it will probably work. Stocks are expected to outperform bonds, and if and when that happens, a retiree will be…
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