We seek certainty in all facets of our lives. But financial planning and life don’t have “laws” like physics. Financial planning is a game of probabilities. When we use financial planning software or any kind of software assistance in projecting anything, almost all outputs are measured in some sort of probability. But our monkey minds turn these probabilities into certainties and financial advisors don’t often help this confusion. But if… Read More
Real Return Is All That Matters
Many pundits and market experts (if there is such a thing) have been forecasting below average market returns for a couple of years now. Interestingly, since this started becoming a “thing” around 2018, the market returned 31% in 2019 and 18% in 2020. It’s not important to the topic of this post, I just think it’s funny. The idea that future returns will be lower is widely accepted. I’m not… Read More
Nobody Saw This Coming, Part Two
Last year around this time, I wrote a post titled, Nobody Saw This Coming about the performance of the markets in 2019 when it surprised everyone. Then 2020 came along and said, “Hold my beer.” Nobody saw the global pandemic coming. Nobody could have presumed global shutdowns. Nobody saw a 34% decline over 33 days. In part, because that combination of things had never happened during the life of anyone… Read More
The Ultimate Retirement Lever
There are plenty of technical planning topics that can add value to your financial life that range from tax optimization to long-term care planning to estate planning. But if you blow up your portfolio, each one of those planning areas is exponentially worse off which is why I write so much about the simple value of staying the course through all markets. Imagine that around March 23rd of this year,… Read More
Should You Expect Dividend Cuts?
The predictions for dividend cuts sounded dire for quite some time. Many were predicting cuts of between 20%-30% here in the U.S. The jury is still out for now, but it doesn’t seem as likely based on what the data has shown thus far from Janus Henderson in their Global Dividend Index report. Here is their record of dividend cuts with regard to global dividends: Global dividends fell $108.1bn to… Read More
Rethinking Investment Risk in Retirement
Investors love to talk about risk. What’s the downside risk? How can you hedge your risk? How can I evaluate the risks in my portfolio? Should we address investment risk in retirement the same as during the accumulation phase? What about my personal risk tolerance? These days, risk tolerance questionnaires are all the rage and there are companies springing up out of nowhere trying to cash in on this CYA… Read More
Why Study Market History?
While I am personally not an advocate of active investing, I follow the writing of many active managers. There are a few who have both a wonderful way with the written word and a track record to boot. Bill Miller of Miller Value Partners is one of them. I wanted to both make you aware of his work and point out a few insightful excerpts from his most recent 2Q… Read More
Where do we go from here?
I have said before that the primary goal of successful retirement income investing isn’t growth OR income, but growth OF income. For people who are nearing retirement today, as we look over the horizon toward the thirty years that lie ahead, we must ask the question: Is it time to rethink the conventional wisdom of decades past? Historically, the popular answer for providing retirement income (though not necessarily the correct… Read More
Perceived Safety of Bonds
Imagine standing in the middle of a field as a thunderstorm starts to roll through. About 50 yards away is a tall solitary tree. As someone who grew up in farming country, we grew up knowing that standing underneath the tree is the absolute worst thing we could do, even if it feels safer. The smart thing to do is to make yourself as small as possible by laying down… Read More
The Stock Market and Predictions
Predictably unpredictable and unpredictably predictable. This is the market in a nutshell. The markets are predictably unpredictable because the market has a way of surprising the greatest number of people. Few people (nobody) saw the market returning 29% in 2019. I realize that’s a distant memory now, but it was still surprising, to say the least. Just as surely, nobody saw an economic shutdown caused by a global pandemic that… Read More