The stock market has continued its steady climb since the lows reached on April 8th at the depths of the tariff concerns. The S&P 500 has risen 30% since the low point in April and has climbed about 3% over the last month. Both the S&P 500 and the Nasdaq are now up about 10% year-to-date.
In the chart below you can see the extreme price volatility in April and the steady move higher over the last three months.
Economic news has been mixed over the last month. Corporate earnings have mostly exceeded expectations for the most recent quarter. Inflation ticked up slightly in July due to the tariffs. Jobs numbers have been weak lately. But the Fed has indicated that it will begin lowering interest rates in September.
It was a wild ride to nowhere in March, April and May. Discipline and patience paid off over the last six months. Following a disciplined system in times of volatility always produces better results than letting emotions drive your investing decisions.
The biggest cloud that I see hanging over the stock market currently is valuation levels. My valuation gauge indicates that the stock market (S&P 500) is now 21% above its fair market value in late August. This is higher than we were in January 2022. The last time the market was overvalued by this much was in 2000 during the dot-com bubble.
I do not trade based on market valuation levels and you should not either. It is just a reminder that you need a strategy in place to protect your savings in case we experience a bear market. Older investors in particular need loss protection.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
Are you afraid of running out of money in retirement?
Most people are. It is the biggest fear of people in or near retirement.
You can eliminate this risk if you follow these steps.
Knowing where you stand.
Understanding and managing your expenses in retirement.
Having an investment strategy that produces high growth AND protects your savings against major losses during market meltdowns.
KNOW WHERE YOU STAND
Unfortunately, most retirees do not have a clear picture of where they stand financially. They know how much money they have saved, but they are unsure of how much income they will generate or should generate in retirement from their savings.
Too much emphasis is placed on “the number” – the size of your retirement account. The income you generate from your retirement account is way more important than your account balance.
It is easy to look at one figure – your retirement account balance. But when we start talking about the annual income that your retirement account will support, things get fuzzy.
It is not difficult to create a solid set of retirement projections based on your account balance, your investment strategy and your spending needs. We can do it in less than 5 minutes. And we do this for free for readers of our blog.
These projections need to be revisited on an annual basis.
UNDERSTAND YOUR EXPENSES
Some people are good budgeters, and some people hate the concept of budgeting. Just the word budget can bring up strong feelings in many people.
This is why I prefer the term “Spending Plan”. A budget feels restrictive. Most of us like to spend.
A best practice is to sort all your spending into two buckets – fixed or discretionary.
Fixed expenses are the items that you are obligated to pay each month. This includes mortgages or rents, utilities, car expenses, health insurance, food, etc.
Most of the items on your fixed expense list cost the same amount every month. Some things like your electric bill may vary seasonally, but using an average is good enough.
All you need to do is to add up your fixed expenses monthly. As an example, your monthly fixed expenses might be $3,000.
Everything else falls into the discretionary category - things like entertainment, travel, clothing, repairs, etc.
Your discretionary expenses will vary quite a bit month to month. The big variable here for most retirees is travel. In one month, your discretionary expenses could be only $2,000 and, in another month, they could be over $6,000 if you take a big trip.
Your total expense needs will be the total of your fixed expenses and your discretionary expenses plus taxes owed to the state and federal government.
Your total spending needs must be less than your retirement income to avoid running out of money.
THE RIGHT INVESTMENT STRATEGY
Your investment strategy is the most important factor for your financial health in retirement.
Financial professionals will have you focus on taxes or fees but everything else pales in comparison to your investment results.
A $1,000,000 retirement account at age 65 will support an annual income of about $65,000 over 30 years (until age 95) if your investments generate 5% per year in returns. A $500,000 retirement account at age 65 will support an annual income of about $65,000 over 30 years (until age 95) if your investments generate 12.7% per year in returns.
So, someone with half as much money ($500,000 vs. $1,000,000) can have the same retirement income if they have a better investment strategy.
In addition to generating higher investment returns, your investment strategy needs to protect your savings during stock market collapses.
The investment services industry does not offer any good solutions to address the most
important needs of older investors – growth AND safety. This is why they focus on taxes and other less important issues.
The lack of a good investment solution from the industry is why I created my superior investment system. I created something that all investors need but particularly people at or near retirement - High growth and Protection against losses.
I love helping people generate higher returns and create more enjoyable retirements, but my greatest satisfaction comes from allowing my clients to live worry-free in retirement.
Too many retirees spend their golden years constantly checking the financial markets and worrying about their savings. That is no way to live.
Knowing where you stand, understanding your expenses and using a better investment strategy will allow you to truly enjoy your retirement and help you avoid the risk of running out of money.
You deserve a more comfortable and more secure retirement.
Click here to schedule a FREE Retirement Planning session. Let us show you how to create the retirement of your dreams. It is easy and it is painless.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
A retirement investor with a $1,000,000 account will pay a Financial Advisor over $10,000 per year to manage their investments. That is a lot of money.
If the Advisor were able to generate excellent investment results, that fee would be well worth it.
But the sad truth is that Financial Advisors are not highly skilled investors. They are financial generalists that simply follow the plain vanilla investing advice pushed by the investment services industry. They put you in “cookie-cutter” portfolios that only earn about 7% per year.
You could get the same results by investing in a Target Date fund with a mix of stocks funds and bond funds. And you would save yourself $10,000 every year.
Financial Advisors are good people who can help you with financial planning, tax planning, estate planning and complex financial transactions. But the business model for Advisors is supported by investment fees that are based on a percentage of your total investment assets.
Adding insult to injury, Financial Advisors don’t have any effective ways to protect your savings against big losses in stock market meltdowns. You are forced to settle for mediocre investing results and the risk of getting crushed in bear markets. The standard advice from financial advisors for surviving bear markets is simply to just “hang in there” and “ride it out”.
This is a lousy deal for retirement investors.
It is also why at any point in time roughly 40% of people who work with Financial Advisors are looking to change Advisors. People change advisors more frequently than they change the tires on their cars. Unfortunately, they end up getting more of the same and they don’t ever solve the problem.
Fortunately, there are much better investment options for people over 60 that can provide the growth you need AND protect your life savings against big losses in bear markets.
I am an investment strategist and former hedge fund manager who is on a mission to help people achieve the retirement of their dreams. I am leveling the playing field by giving ordinary investors access to the investment solutions that were previously only available to the big financial institutions and wealthy investors.
You have worked hard and saved a lot of money over the last several decades. You deserve to enjoy the fruits of your labor. I have helped hundreds of people to finally solve their investing challenges.
Most people can and should be generating twice as much income in retirement.
And this additional income can be generated without taking on additional risk. In fact, you can double your retirement income with less risk than you are exposed to right now.
I have created an investing system that provides what you can’t get elsewhere - Growth AND Safety.
If you don’t improve your investing, you will limit your income in retirement.
You owe it to yourself and your family to learn about a Smarter Way to Invest.
Click here to schedule a quick call. Let us show you how to create the retirement of your dreams. It is easy and it is painless.
Time is not on your side so act now.
You deserve a more comfortable and secure retirement.
Schedule your call today.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
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