Greetings!
Welcome to summer! It's about time we get some nice weather! We finally got to enjoy some boating on Lake Norman this past weekend, along with a ton of other folks. Hopefully all of you got to spend time with family, enjoy the long weekend, and give a word of thanks to all our veterans that we honor on Memorial Day. Business has been keeping us busy, and hopefully all of you have been enjoying our updates. Kelly has been a tremendous help to me and will soon be studying to become a Registered Investment Advisor like her father. Needless to say, I'm very proud of her and thrilled that she's decided to make financial services a career path. We've continued to add additional services for our clients and potential clients. Money managers and insurance companies are continually coming up with new programs to help baby boomers and retirees moving into the next decade. We are very fortunate to be associated with some of the brightest minds in the business. The trick is to take advantage of this and think "outside the box". If any of you have any concerns about low interest rates, market volatility (when is the next market crash coming?), health care, long term care, or taxes, please give us a call and let's sit down for a educational chat. New strategies exist that are very powerful when used properly, but you must learn about them!! Application of these strategies is the key to future success. Kelly will be on vacation the rest of this week. but I'll be at the office holding down the fort if anybody needs anything. Kelly & her husband Matt are in Florida celebrating their 2 year wedding anniversary today! Hope all of you enjoy this month's articles. As always, if you have any questions please feel free to call, go to our website, or stop by the office. Sincerely,  James D. Stillman |
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Why Retiring on CD's Is No Longer Viable
Lake Norman Magazine, June 2013
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I often say there is a war declared on savers; especially senior savers that rely on the interest earned from CD's, savings accounts, etc. to supplement their income. The days when anyone besides oil barons and royalty can live off of the interest are gone. Today's low interest rates could cause retirees to run out of money before they run out of life. Not only is it not possible to simply collect interest on savings, but retirees can no longer withdraw from their portfolios at the rate that was previously believed to be safe.
The old rule of thumb that allowed retires to withdraw 4% of their savings per year should be thrown out the window in today's low-yield world, a study released in January found. Using the traditional 4% withdrawal rate, portfolios will run dry at a higher rate than ever before, according to researchers Michael Finke, Certified Financial Planner; Wade D. Pfau, Certified Financial Analyst; and David Blanchett, CFA and CFP. Based on the real yields offered on five-year Treasury Inflation Protected Securities as of January 2013, the failure rate for retirement account withdrawals (having them run out of money) using a 4% per year schedule is as high as 57%! Ouch, that's scary...
Read more...
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Diversification: More Than Meets The Eye
GFPC Thought for the Week (252)
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*Diversification is the "Golden Rule" of investing, and proper implementation is absolutely mandatory in a well-constructed portfolio.
*Despite popular belief, diversification is not achieved by simply buying several high quality assets in a portfolio because many securities react similarly to economic and market factors.
*A well-diversified portfolio requires deep understanding of the drivers of the performance of securities to avoid gaining too much exposure to one factor.
*Portfolios should maintain a mix of geographic, asset class, sector, and style diversification.
Diversification is the "Golden Rule" of investing, and most long term investors will tell you that without diversification, an investor is playing with fire. However, there's much more to the concept of diversification than meets the eye.
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Are Stocks Cheap?
GFPC Thought for the Week (253)
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*The recovery of the U.S. equity market since March 2009 mirrors the equity rally in the late 1990s.
*Despite a rise of 160% in returns since March 2009, stocks are actually cheaper by 35% on a price-to-earnings basis vs. the late 1990s.
*We feel that the reason for the discrepancy is that the late 1990s run was mostly valuation driven, whereas today the market has been fueled by strong earnings growth.
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