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 Personal Money Planning'se-Newsletter for March 21, 2009 (to look at past issues, click here) |
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$1 Trillion |
Just how much is $1 Trillion dollars?
First, it is written $1,000,000,000,000.
$1 trillion is almost enough to buy a controlling interest in all 30 of the companies in the Dow Jones Industrial Average.
$1 trillion is more than the combined state tax revenue of all 50 states.
$1 trillion would be enough to buy all of the single-family and multi-family residences in the state of Texas.
$1 trillion in 2008 dollars would cover the entire U.S. federal budget from George Washington's inauguration to the end of World War I.
And if today you started spending $1 million a day, it would take you more than 2,700 years to spend $1 trillion.
(excerpt from a U.S. Global Investors e-mail, with modifications)
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Disclosure |
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This newsletter is produced by Gary Silverman, dba Personal Money Planning, a registered investment advisor located in Wichita Falls, Texas.
Information in this newsletter is believed to provide accurate and authoritative information in regards to the subject matter covered. However, the accuracy, timeliness, or applicability of the information is not guaranteed and is provided with the understanding that we are not rendering legal, accounting, tax, or other professional advice or services.
This publication should not be construed by any consumer and/or prospective client as Personal Money Planning's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. Nor should links provided to other sites be construed as the recommendation of the services or products mentioned on those sites. If such services are required, the help of a competent professional should be sought.
Remember that past performance may not be indicative of future results. Therefore, you should not assume that the future performance of any specific investment, investment strategy, or product made reference to (directly or indirectly) on this Website will be profitable or equal to indicated performance levels. Different types of investment involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for your investment portfolio.
Historical performance results for investment indexes and categories generally do not reflect the deduction of transaction or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance results.
A copy of Personal Money Planning's current written disclosure statement discussing Personal Money Planning's business operations, services, and fees (known as an ADV Part II) is available from Personal Money Planning upon written request (and can be downloaded from our web site).
Personal Money Planning does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Personal Money Planning's web site or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
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Okay, I've had enough. I'm going to give you my two-cents about this AIG bonus mess.
1) I don't think AIG should have been allowed to fail, but I think that a large number of executives should have been booted out when the government effectively took over.
2) I don't think retention bonuses should have been offered. What should have been offered was a chance for the people involved to straighten out the mess that they were responsible for creating.
We all make mistakes. At times we think we're infallible (which is another mistake). But when we make mistakes we should fix them. You shouldn't have to be bribed to stick around to fix it. Heck, you should volunteer to fix it.
3) But if a company says they are going to do something (especially under contract) they should do it. Even if it is to their harm. Then, if that proves to be a mistake, the people who made the decision should answer up for it, whether that means getting fired, or demoted (personally, I am against suggesting Suppuku).
Because of all the above,
1) I don't think AIG should have offered the bonuses.
2) I don't think the executives should have demanded the bonuses.
3) But since AIG offered and the executives accepted, then AIG is on the hook for those bonuses. And that means that you, the taxpayer are and should be on the hook for the bonuses. A deal is a deal.
4) So, after you pay them, I have no problem with you firing everyone who offered the bonuses. And if someone, whether they got a bonus or not, messed up the company, you can fire them too.
That said, this whole thing is a mess. And it has given Congress a mob mentality. I don't blame them for being mad. I do blame them for being vengeful.
They have now effectively said that anyone who earns over $125,000 per year and got a bonus is undeserving of it if the government bailed the company out. Do we know that every single person that that applies to is undeserving? Do we know that everyone who earned less than that deserved theirs? Are we starting class warfare where we only punish those with better incomes?
What is truly troubling is where this ends; or, more importantly, where it doesn't. Does Congress get to decide, after the fact, if they like an employment agreement for a civil servant? ...a government contractor? ...a federally regulated business?
Am I the only one that sees the camel's nose under the tent.
Don't worry, I do see that AIG's actions were wrong. It's just that I see Congress' actions as dangerous--and that bothers me more.
Gary
Gary Silverman, CFP
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Retirement: Part Two |
Last week we looked at determining your retirement cash flow. Next week, I'll tell you what to do with the information. But first let me convince you of the importance of planning for retirement, whether you are looking forward to it, or are already in it.
You see, most people never plan for the eventuality of retirement. They don't figure out how much it is going to cost. They don't figure out how they are going to pay for it. They don't even figure out what they are going to do during all those hours they now have.
(This article was previously published in the Wichita Falls Times Record News.)
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Next Weekend in the Falls
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It's spring now, so it is time to get out and do stuff. Here are a couple of events that might interest you if you are in the vicinity of Wichita falls:
Attic Affair
Think of it as a gigundous garage sale (yes, Mona, I just made up a word). That's what Attic Affair is like. Stocked with hundreds of new and used items, The Junior League of Wichita Falls is having their annual Attic Affair. On Friday and Saturday March 27 & 28, you can shop to your heart's content. Friday hours are 6-9 p.m. That's the best time to get the best selection before others pick through it. Want to save money? Prices are cut in half on Saturday from 8 a.m. until the close at 2 p.m. All festivities are held at the J.S. Bridwell Ag Center. You can learn more about the Junior League by clicking here.
Soap Box Derby
On March 28 the Wichita Falls YMCA will hold a traditional Soap Box Derby exhibition on Ninth Street in downtown Wichita Falls.
For some time, YMCA president Brandon Brown has wanted to revive the Soap Box Derby concept, which was once a fixture on the YMCA calendar dating back to the 1940s.
Four 4-man teams will "compete" for top honors in the non-motorized car race, which starts at the hilltop in front of the First Baptist Church and ends in front of the Downtown YMCA, Brown said. It will be held Saturday, March 28, at 11:30 a.m. on Ninth Street in downtown Wichita Falls.
The public is invited and admission is free. For more information, call the Downtown YMCA at 322-7816.
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parting thoughts
When the SEC calls |
Getting audited by the Securities and Exchange Commission (SEC) is part of the life of a financial advisor. After the Madoff scandal, we might argue how effective the audits are, but it's easy to argue that they are needed. And in light of the Madoff scandal, the SEC is doing something rather new.
They are calling you.
It used to be that the SEC usually assumed that if an advisor showed he had received $100,000 from a client to invest then the advisor received $100,000 from a client to invest. The problem is, all they know, you sent in $300,000 and before the money hit the account $200,000 made it into the advisor's pocket.
So, to protect against this, many audits are including a letter or call to the advisor's clients questioning them on the money they have given the advisor. They may also ask other questions to see if what the advisor represents to them matches what the client remembers.
Basically I'm quite in favor of this. Yet there is a danger. First off, I'm wondering how many clients can tell me how much money they sent through us to their accounts during calendar year 2008. I'm pretty sure it's nowhere near 100%. And an answer from a client's memory that doesn't match our books will raise a red flag during the audit.
But secondly, many clients will wonder why they are getting a call from the SEC about their investment advisor. If the SEC is investigating their advisor, something must be fishy. And it might take a few conversations to convince the client otherwise.
All-in-all though, I give it a thumbs-up. It's a good addition to the tools the SEC can use to protect investors. And it seems they need a few more tools in their belt.
That's all for this week.
Gary
Gary Silverman, CFP
Personal Money Planning
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©2008 Personal Money Planning. All rights are reserved by Personal Money Planning and content may not be reproduced, disseminated, or transferred in any form or by any means, except with the prior written permission of Personal Money Planning unless specifically noted. (Permission is not difficult to obtain.) The one exception is for downloading and printing information this newsletter for general education by the original recipient. |
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