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“Doc” was a friend of my father. He had been a P-51 pilot serving in Europe during the Second World War. One day I asked “Doc” what his greatest worry had been as a pilot. He looked off in the distance and then sighed: “Son, you never want to run out of runway!” “Doc’s” words have come back to me many times over the years; especially when talking to clients about their retirement planning! How many time I have met with retirees and pre-retirees who...
View ArticleThe short answer is; I don’t know… but I wish I did! Before you give up on me and keep searching, hear me out. If I knew with certainty the answer to that question, I would devote 100% of my energy and money to playing the stock market because I would know the direction and amount of volatility to expect in the future. Of course that’s not possible so we have to make our decision based on what we do know. Let’s take a step...
View ArticlePotential can be such an enticing, positive word. I’ve recruited and coached young men with potential. In my opinion, potential can also be a negative word. The young man that still has potential is not real useful in the game. Potential checks don’t cash very well at the bank. Potential returns are marketed to consumers, and consumers invest for potential all the time. Potential returns, at some point, are not real useful to you. If I could guarantee you an average rate of return of...
View ArticleThe next time you hear that the market has averaged 7% or 10% over the last so many years; you need to be wary about who is making the claim and how they are basing their assertion. An average rate of, say, 7% is only an average of the rates of the past so many years divided by the number of years. If you were to apply the formula to your actual money, you will find quite another result if the market has been in...
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Creating wealth is one of the most challenging, while at the same time, one of the most rewarding endeavors one might undertake. To be certain we have the right perspective on wealth, money isn’t everything and it certainly won’t buy you happiness. However, having money (and lots of it) certainly can help make life easier while you focus on other aspects of life that bring intrinsic joy and happiness to you – separate and apart from money. With that being said, if you take a...
View ArticleIn the workshops and classes I teach, I often remark that “one good thing about deferred annuities is that they get tax deferral (that the interest earned is not taxed until it is distributed in a withdrawal or surrender); one bad thing about them is that they get tax deferral”. That’s not merely a lame joke. It’s a recognition that tax advantages always come with a cost. In the case of deferred annuities, the “cost” of tax deferral is twofold: All distributions from any annuity,...
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When most people hear the term Philanthropy they picture the Gates, Buffets, Rockefellers and Carnegies of the world; or maybe the person with a wing of the local hospital or the business school of the college named for them. This is true of course, but it’s not the whole picture. Every time you leave a check in the collection plate at church or send that annual donation to the Cancer Society, Heart Association or your Alma mater, you too are a Philanthropist. Most major charities...
View ArticleI recently read an article from an advisor referral website that claimed the only type of advisor one should use is a fee-based (or fee-only) financial advisor. Not only is that reasoning weak, but also very short-sided. Let’s examine. We live in a free-market capitalist economy. Someone creates a product or service to sell. The entrepreneur incurs expense to market the product or service. He or she also has potential other cost to incur before the product or service is sold, among those are, but...
View ArticleIn the years before Indexed annuities were offered (pre 1995), fixed annuities had only one rate you needed to know to compare policies; the fixed interest rate. Assuming the companies had similar financial strength ratings it was pretty easy to pick the best annuity for your needs: Who was offering the highest interest rate? Fortunately (or unfortunately if you long for simpler times), annuities today come with many moving parts. Riders that provide guaranteed lifetime income, long term care benefits and enhanced death benefits are...
View ArticleHere’s a question I have been getting more and more lately. With the bulk of Americans retirement money in qualified plans such as 401ks and IRAs, it makes sense. So let’s go through this bit-by-bit and give you some examples: When you turn 70 ½ Uncle Sam and his buddy the IRS will force you to start taking money out of your IRA or 401k regardless if you want to or not. It’s called the Required Minimum Distribution. You can read a table for calculating...
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