I previously commented on the dilemma of one who has too much cash and not enough risk-based investments, yet is deterred from investing because of high valuations. I suggested that buying value stocks would be logical, as it would reduce cash levels and presumably skirt the valuation problem. However, a reader wondered if an annuity purchase would address the “too much cash” problem. I explain how it actually might do so.
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Last week, the Alliance for Lifetime Income introduced a new online tool for assessing your retirement income readiness, akin to your credit score. Also last week, the Treasury Department issued its Social Security Trustees Reports, showing that just 16 years from now, Social Security’s funds will be insufficient to meet its obligations. The coincidence is relevant for anyone for whom Social Security will be an important part of their income in 2035 and beyond.
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Physicians since at least Hippocrates and Galen, up to the authors of a comprehensive study published this month by the Lancet, have credited a proper diet to health outcomes. Does a proper portfolio then influence wealth outcomes? For example, the Lancet study suggests the need to allocate eating across a variety of nutrition sources and not overconcentrate. Does that sound applicable to investors?
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Bread-deprived during Passover, your humble correspondent offers thoughts for investors on the connection between bread and money. Bread satiates and sustains our bodies just as money makes our world go round. Making money is the core of the struggle for our material existence, in a way surprisingly akin to the struggle to make bread. To earn money, and save it for our futures, we need to invest blood, sweat, toil and tears – in the same way we produce bread.
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Investing can be grim. Each day’s news and analysis merely add to our list of worries. But the father of Modern Portfolio Theory, Harry Markowitz, offers a rare upbeat image of investing, through Antonio in Shakespeare’s Merchant of Venice. BlackRock’s annual Global Investor Pulse survey tell a similar story.
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The popular media’s image of retirement as a period of continuous partying is not reality, nor could it be. Joseph Coughlin, the head of MIT’s Age Lab, observes that today’s two-decade retirements equal about 8,000 days, or one-third of one’s adult life. That unit of time marks completely different eras in an individual’s life. Thinking about how to ideally fill the pages of the final chapter of your life’s story should be an uplifting experience.
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The ninth annual survey of boomer retirement preparedness by the Insured Retirement Institute finds that 45% of boomers have zero savings for retirement. That’s not news to most people nowadays, but I share two points I think are. The first was not included in the report, but mentioned in a press call; the second was one interesting statistic. The upshot is that some retirees have resources not reflected in the statistics and that others lacking resources are being quite rational about it. I conclude with the story of a Chilean waterside enclave to underscore the key point I believe this survey brings out.
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The Bank of Mom and Dad is apparently one of the nation’s largest financial institutions, providing over a quarter of the FHA’s mortgage volume last year. The question arises as to how parents should financially structure their support: through outright gifts; via formalized loans, as guarantors or as co-borrowers. This podcast also considers the question of how much to give.
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From a big-picture point of view, none of the primary sources of retirement income is working well for the public, on average, today. We look at data on private savings, employer-based plans (both defined-benefit and defined-contribution), and Social Security. Given these shaky foundations, individually and collectively, we offer a rational perspective on what nevertheless can be done to secure our financial futures.
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A cyclone storm that has left at least 1 million acres of prime Midwestern farmland underwater has not particularly agitated traders. Live cattle futures pricing, the USDA Prospective Plantings report and other data are essentially telling us there is not much to worry about. But if NOAA is correct about above-average rain over the next two months, then it’s hard to see how farmers will be able to plant corn on time. Also, farmers stored a record amount of corn and soybeans as a result of the U.S.-China trade dispute. Those supplies have washed away.
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