A Fishy CD Ad

On today’s show, we talk about a fishy CD ad.  It reminds us if things sound too good to be true, they probably are.

Watch: A Fishy CD Ad

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Recently, the Federal Reserve reduced short term interest rates, again. And this move impacts savers in a big way. Earlier in the year, we were able to find short term CD’s—meaning 1 year or less—with an annual yield of 2.3% or higher.

Since then we’ve seen those rates drop significantly. The national average annual yield for 6 month CD’s is 0.91%. The highest annual yield reported is 1.85% to 1.9%.  If you are a saver, this low-interest-rate environment is awful. CD buyers are begging for any kind of yield right now.

A Fishy CD Ad

Recently, a client asked us about an ad he saw in a newspaper in Myrtle Beach. The advertised rate for a CD was over 3.5%. That’s almost 4 times the national average. And it is nearly double the highest reported rate by bankrate.com.

An ad like this is going to get people’s attention.

But things like this also make the alarms go off in our head. What is this company doing that allows them to offer a CD with this kind of yield? So we did a little digging, and to no surprise things look a bit suspicious.

1.  It’s Not A Bank Running The Ad

The first thing of note, this isn’t a bank advertising this. Brokerage firms have access to FDIC insured CD’s. And at times those rates are better than what local banks offer. But, when the advertised rate is this much larger?  It raised an eyebrow.

2.  An Insurance Agency Advertises This.

The second thing which got our attention: The company running the ad primarily sells insurance products. And this made us dig a little deeper.

We found this gimmick has been around for a few years. Here is how it works.

The Gimmick

The agency has an ad for a 3.5% 6 month CD. You want to invest $10,000 in one. The agency buys a CD for 1.3%. After 6 months, the bank issuing the CD pays you $65. The agency then pays you $110. You get your 3.5% yield.

A Fishy CD Ad

CAUTION! High Pressure Sales Tactics Ahead

For that $110, the insurance agency gets a captive audience with a yield-hungry, conservative saver. Then they use high-pressure sales tactics for annuities and other insurance products.

Ads like this aren’t necessarily a scam.  But the tactics push ethical boundaries. These agencies design these ads to get your attention and get you in the door. You see, they’ll only talk to you about this in person. And when they have you sitting in front of them, they can put on the full court press to try and sell you something else.

Many times, what they are selling is not always in your best interest. So, if you see an ad like this, be careful. Remember, if it sounds too good to be true, it probably is. And if you are in doubt, talk to an advisor you know and trust.

What's On Your Mind?

Do you have a question about what’s happening in the world of finance or investing?  Is there a topic that has you curious?  We’d love to hear from  you.

 We’ll do our best to answer it in a future episode.  To submit your question, fill out the form.  If you prefer, you can send us an email directly.  That email address is neal@flemingwatson.com

Enter Your Question Here

Financial Planning

About the Author

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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Stocks Climb A Wall of Worry

Stocks climb a wall of worry.

What does this mean? 

Today, we talk about:

  • The news always seems bad
  • Recessions, trade wars and now impeachment dominate the headlines.
  • But the stock market? What has it done.

We’ll talk about it on this episode of Monday Morning Money.

Watch: Stocks Climb A Wall Of Worry

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Do you have a question about money or personal finance? Submit your question using the form below or send an email to neal@flemingwatson.com

Each Episode of Monday Morning Money is also broadcast on Local Radio, WMOA (1490 AM and 101.3 FM).  You can hear it at 11:07 every Monday. 

Listen Now: Stocks Climb A Wall of Worry

You can also watch this on our YouTube Channel.

We would love to answer your question on a future episode

Do you have a question about money or personal finance? Submit your question using the form below or send an email to neal@flemingwatson.com

Stocks climb a wall of worry.

What does this mean? Think about all the stuff which has circulated in the headlines over the past year.

A Looming Recession

We continue to deal with the threat of a recession. A major economic slow down can lead to higher unemployment. It can also impact businesses big and small. In some cases, a recession can mean a bear market.

The talk of a recession tends to darken the mood though, and people’s attitudes tend to sour on things like stocks.

Trade Wars

We are still in the midst of a trade war with China. Something many experts feel could contribute to our economic woes. Both countries are taxing goods imported from the other. This serves to drive prices higher for the consumer.

Officials from both countries continue to talk. Unfortunately, nothing has happened, yet.

Impeachment

And now we can add the possibility of impeachment to the list of big things affecting the mindset of the American public. Regardless of where you stand on this issue, it casts a dark cloud over the future.

What the impact will be? Nobody really knows. Since the 1920’s this has only happened twice, with presidents Nixon and Clinton. Nixon’s problems started in late 1972.  The stock market in 1973 and 74 declined nearly 50%.

Clinton’s problems happened in 1997 and 1998.  In both years, the stock market was up over 20%.

So we don’t have a lot of data to help guide us on what to expect.

Wall of Worry
Stocks Climb A Wall

With all the uncertainty, the dismal news cycle, and overwhelming pessimism, what has the stock market done?

Last Monday – the 28th –  the S&P 500 set a new all-time high.

Stocks Climb a Wall of Worry

At that time the popular large-cap index was up over 23% on a total return basis for the year.

Climb a Wall

On the same day, The Dow Jones Industrial Average closed to within less than 1% of it’s all-time high.  

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This is what it means when people say, “Stocks climb a wall of worry.” The doom and gloom surrounds us. In fact, it is hard to imagine there is anything good happening in the world.  But yet, the stock market just quietly marches higher.

Beneath the noise are great businesses. Companies who find ways to improve profits and deliver value to their shareholders. And sometimes it leads to a pleasant surprise waiting for us when the dust settles.

Stay Informed.

Monday Morning Money is a podcast talking about current events which  impact your bottom line.  

If you would like to be notified when a new episode is released, sign up for our mailing list.  Just complete the form.

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Financial Planning

About the Author

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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Do You Need A Million Dollars To Retire?

Do You Need A Million Dollars to Retire?

For some reason, people are fixated on this big round number. Some people will need at least that much if not more. Others will be able to make it work with less—sometimes much less.
We’ll talk about the factors which determine the answer to the “how much” question. And we’ll give you a brief example of how much income a $1,000,000 nest egg can provide.

Continue reading

An Ice Cold COLA

The Social Security cost of living adjustment, or COLA, is designed to help retirees combat inflation.  The SSA recently announced the improvement for 2020.  Spoiler alert:  This is an ice cold COLA.

Video: An Ice Cold COLA

Each Episode of Monday Morning Money is also broadcast on Local Radio, WMOA (1490 AM and 101.3 FM).  You can hear it at 11:07 every Monday. 

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In addition, you can also hear this episode on our YouTube Channel.  Please take a moment to subscribe, as it helps our analytics and improves our reach.  This also appears on Facebook and LinkedIn.  

Audio Only Version: Click Here

What's On Your Mind?

Do you have a question about what’s happening in the world of finance or investing?  Is there a topic that has you curious?  We’d love to hear from  you.

 We’ll do our best to answer it in a future episode.  To submit your question, fill out the form.  If you prefer, you can send us an email directly.  That email address is neal@flemingwatson.com

Enter Your Question Here

Every Year, Everything You Buy Costs More.

Every year, everything you buy costs more. That is the simplest way to explain inflation.  When we use the consumer price index, something you bought for $1.00 in 2010 would cost $1.18 today.

One of the key parts of Social Security has been the annual cost of living adjustment—or COLA. This has helped retirees adapt to the constant increase in prices.

COLA

This Year Expect an Ice Cold COLA

Social Security announced the cost of living adjustment for 2020,  and the COLA is ice cold. This year the increase is 1.6%  

For the average benefit, his translates to a monthly increase of $24. Unfortunately, Medicare premiums will also increase next year. The premium should go up almost $9. This means the average net increase from Social Security is only $15 per month.

Not Like It Used to Be

Before 2010, Social Security benefits increased by 3.8% per year. But over the last 10 years, the increases have been far more modest, averaging 1.4% per year.

The statistics don’t always reflect what we see when we go to pay our bills. Some goods and services increase at a faster pace than others. Medical costs are a good example. And as we get older, we tend to incur more medical expenses.

The government is considering a change in how they compute the Social Security cost of living adjustment. But as you know, there is little productive work getting done in Washington DC.

How Does This Impact Your Retirement?

Over the past decade, retirees have had to rely more on their savings to cover their cost of living increases. And we should expect that trend to persist.

Many expect the smaller cost of living increases to Social Security to continue. Likewise, many also expect bigger increases to medicare premiums. This combination results in you getting smaller net increases in your Social Security benefits.

We all need to account for this trend in our plans.  Our savings will be a key element to fighting the constant battle of maintaining our purchasing power.

Stay Informed.

Monday Morning Money is a podcast talking about current events which  impact your bottom line.  

If you would like to be notified when a new episode is released, sign up for our mailing list.  Just complete the form.

Join Our List Today!

* indicates required
Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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When Planning for Retirement, Where Do You Start?

When preparing for retirement, where do you start?  That is a question submitted by Tony.  Today, on Monday Morning Money we’ll answer it.

Video: Answering A Reader Question, Where Do You Start?

Each Episode of Monday Morning Money is also broadcast on Local Radio, WMOA (1490 AM and 101.3 FM).  You can hear it at 11:07 every Monday. 

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In addition, you can also hear this episode on our YouTube Channel.  Please take a moment to subscribe, as it helps our analytics and improves our reach.  This also appears on Facebook and LinkedIn.  

Audio Only Version: Click Here

What's On Your Mind?

Do you have a question about what’s happening in the world of finance or investing?  Is there a topic that has you curious?  We’d love to hear from  you.

 We’ll do our best to answer it in a future episode.  To submit your question, fill out the form.  If you prefer, you can send us an email directly.  That email address is neal@flemingwatson.com

Enter Your Question Here

The Question:

“I’m 60 years old and want to retire in a few years. My wife and I have been saving in our 401k’s, but the thought of retiring seems overwhelming. I need to figure this out, where do I start?”

-Tony

The Answer: Where Do You Start?

This is a great question and one we hear quite often. 

Navigating retirement is about managing cash flow. And we need to follow one of the key rules for real-life financial success: spend less than what you earn.

In retirement, our income changes. We go from earning a paycheck to receiving Social Security or a state pension plan. It also means we need to use what we have saved to produce income. For most of us, there is a limit to how much income those resources provide.

So where do you start? Begin with understanding how you spend your money.

Many People Don't Create A Budget

Unfortunately, most Americans don’t know what they are spending.  They are happy if they have money in their bank account when the next paycheck arrives.

According to a survey conducted by the Certified Financial Planner Board of Standards, almost 60% of Americans don’t track their spending. So, unless you are part of the 40% who do, this should be your first task.

Getting Started

Get out those bank statements and credit card bills. It’s time to see where it all goes. It also helps to categorize those expenditures into 3 major categories. Fixed expenses, essential expenses, and discretionary expenses.

Fixed expenses include things which are difficult to change. This is going to include car payments, mortgage, rent, insurance premiums, prescription costs, and taxes.

Essential expenses are necessary items to living, but you do have some control. This will be groceries, your electric bill, cable bill, and other utilities.

Then the discretionary expenses include everything else. Hobbies, eating out, recreational expenses, vacations, entertainment. These are things you could eliminate.

Download Our Free Cash Flow Worksheet

To help you with the budgeting process, we created a free worksheet. You can download it by clicking on the picture to the right. It will help guide you through each of the categories mentioned above.

Where Do You Start

Why Should You Do This?

Why is understanding your spending so important? In our experience, overspending is the biggest threat to your retirement savings. When you can control your spending you improve your chances of longer-term success.

After you go through this exercise you can begin to work on the income part of your retirement puzzle. But that’s a topic for a different episode.

Stay Informed.

Monday Morning Money is a podcast talking about current events which  impact your bottom line.  

If you would like to be notified when a new episode is released, sign up for our mailing list.  Just complete the form.

Join Our List Today!

* indicates required
Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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People are Living Longer

People are living longer. This creates bigger challenges for your nest egg.  

Video: People are Living Longer

Each Episode of Monday Morning Money is also broadcast on Local Radio, WMOA (1490 AM and 101.3 FM).  You can hear it at 11:07 every Monday. 

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In addition, you can also hear this episode on our YouTube Channel.  Please take a moment to subscribe, as it helps our analytics and improves our reach.  This also appears on Facebook and LinkedIn.  

Audio Only Version:  Click Here

What's On Your Mind?

Do you have a question about what’s happening in the world of finance or investing?  Is there a topic that has you curious?  We’d love to hear from  you.

 We’ll do our best to answer it in a future episode.  To submit your question, fill out the form.  If you prefer, you can send us an email directly.  That email address is neal@flemingwatson.com

Enter Your Question Here

Longer Life Expectancies

There is an old joke in the life insurance industry. What is the difference between an actuary and a mob boss? The actuary can approximate when you will die. The mob boss can tell you the date and time.

people are living longer
women live longer

According to the Social Security Administration, a 65-year-old man has a life expectancy of 84 years. Women live longer than men. A 65-year-old female should expect to reach age 87. Keep in mind these are median ages. This means half of the people will live to be even older.

Are you married? The “how long” question becomes more complicated. 

couples live longer
living longer

There is a 51% chance at least one spouse reaches age 90. And there is about a 9% chance both will live that long.

What does this mean to you as you think about your retirement? It means—at a bare minimum— you should plan to live at least 20 years in retirement. But that may not be enough. The Social Security Administration estimates one in four of today’s 65-year-olds will reach age 90. They project 1 in 10 will reach age 95. It is very possible your retirement savings might need to last up to 30 years.

Living Longer Creates Challenges

A couple of weeks ago we shared a statistic with you. Almost half of Americans say running out of money in retirement is their primary concern. The idea you may live 30 years in retirement adds to the stress.

Here is the challenge we all face. Your retirement savings has to:

  • Generate enough income for today.
  • GROW over time to produce MORE income in the future
  • And not go to zero before your pulse does.

And you have to deal with a lot of external forces such as

  • A historically low interest rate environment which shows little sign of improving.
  • A volatile investment world. Which despite current events has always been, and will always be like this.
  • And the ever-present rising costs of the things we buy.

Living Longer Means We Have To Plan Better

This is not an easy puzzle to put together. But it helps if you look at the big picture. Many of the choices you make impact your retirement savings. Here is a quick example of what we mean.

Let’s compare your decision to retire at age 62 vs age 65.

People are Living Longer

Starting your Social Security early results in a permanent reduction of benefits for both you and your spouse. It can result in a larger out of pocket expense for health insurance.

This can place more stress on your savings in two ways. Your savings has to last three years longer, and it may have to generate more income.

But if you wait until age 65, those early Social Security discounts shrink. You are eligible for Medicare.  This can reduce the stress on your savings.

And this is just one example. We face a lot of choices which can impact how long your nest egg will last.

Living longer poses one of the biggest financial challenges to retirees. It requires thoughtful planning and good choices to improve our chances for success.

Stay Informed.

Monday Morning Money is a podcast talking about current events which  impact your bottom line.  

If you would like to be notified when a new episode is released, sign up for our mailing list.  Just complete the form.

Join Our List Today!

* indicates required
Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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Earnings Matter

On any given day, a headline—or even a tweet—can move the stock market. And sometimes those moves are extreme. But what really drives stock prices over the long-term?  Spoiler alert: Earnings matter.

In this episode we discuss:

  • Do Presidential tweets move the market?
  • There is a lot of noise, but over time, profits drive the market.
  • There is a strong correlation between stock prices and earnings.
  • Business in America is good.

Video: Earnings Matter

Each Episode of Monday Morning Money is also broadcast on Local Radio, WMOA (1490 AM and 101.3 FM).  You can hear it at 11:07 every Monday. 

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In addition, you can also hear this episode on our YouTube Channel.  Please take a moment to subscribe, as it helps our analytics and improves our reach.  This also appears on Facebook and LinkedIn.  

Audio Only Version: Click Here

Tweets Moving The Markets

If you haven’t heard, our current president likes to tweet. A lot. Since 2016 the president has tweeted over 10,000 times. About 10% of those tweets are about something important to the financial world.

Some of the big firms try to track the impact of the tweets on the markets. JP Morgan found his musings have had a significant impact on the bond markets. And Merrill Lynch discovered his twitter activity has had a modest impact on the stock market.

But does it really move the needle on stock prices over the long term?

Earnings Matter

The real driver of stock prices and returns extends beyond headlines and tweets. In fact, that stuff is mostly just noise. Sure, it has a short-term impact. But over longer periods of time, people forget those things.

The real driver of prices and returns are corporate profits. When you buy stocks you are buying the future earnings of those companies. When earnings increase over time, the prices tend to follow. And when earnings decrease, you see the impact on stock prices.

In other words, earnings matter a lot.

Consider this:

  • Over the past 30 years, stock prices have increased 7.7% per year. And that doesn’t include the return from dividends. Corporate profits have increased 5.7%.
  • Over the past 20 years, prices have increased 3.8%, profits 6.3%.
  • In the last decade, prices are up 12%, earnings are up 34%.
  • And in the last five years, prices are up 8.5% and profits are up 5.75%.

If you look at a graph of stock prices and corporate profits, they tend to follow a very similar path.

(Click On the Images To Enlarge)

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30 Years
Corporate Earnings Matter
10 Years
Corporate Earnings
20 Years
Earnings matter
5 years

So why is this important to talk about now?

There has been a lot of noise lately. We have a trade war, talk of a recession, an election and political bickering. But what tends to get lost in the shuffle is how American businesses are really doing.

According to Standard and Poors, 498 of the 505 companies in the S&P 500 have reported earnings for the second quarter. Nearly three quarters of those who have reported earnings have beaten their estimates. Only 17% reported lower earnings than expected. The “misses” are well below average for the past several years.

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Click To Enlarge

Things Can Change (Without Notice)

Right now, the earnings news has been quite good.  But that may not always be the case. Profits go in cycles just like the economy.  There will be another period where earnings contract.  In fact, we are starting to see some predictions for a decrease in profits. 

Whether the contraction happens or not remains to be seen.  But that is the nature of the investment world.  We don’t know, in advance, what these outcomes will be.  And that adds to the challenges we face.

The financial world can be a noisy place. It is difficult to sort through what matters and what doesn’t. In our experience, earnings matter.  And like most things in the investment world, the future is very unpredictable.

Stay Informed.

Monday Morning Money is a podcast talking about current events which  impact your bottom line.  

If you would like to be notified when a new episode is released, sign up for our mailing list.  Just complete the form.

Join Our List Today!

* indicates required
Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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Why Do People Run Out of Money During Retirement?

Nearly Half of Americans say running out of money is their primary concern.  So, why do people run out of money during retirement?  

In this episode we will discuss:

  • There is almost never just one singular reason, it is a combination of factors.
  • A major stock market decline is one factor, but it takes more than a bear market to derail retirement.
  • We identify four of the other common factors which lead to disaster.

Watch Now: Why Do People Run Out of Money During Retirement?

Each Episode of Monday Morning Money is also broadcast on Local Radio, WMOA (1490 AM and 101.3 FM).  You can hear it at 11:07 every Monday. 

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In addition, you can also hear this episode on our YouTube Channel.  Please take a moment to subscribe, as it helps our analytics and improves our reach.  This also appears on Facebook and LinkedIn.  

Audio Only Version: Click Here

What's On Your Mind?

Do you have a question about what’s happening in the world of finance or investing?  Is there a topic that has you curious?  We’d love to hear from  you.

 We’ll do our best to answer it in a future episode.  To submit your question, fill out the form.  If you prefer, you can send us an email directly.  That email address is neal@flemingwatson.com

Enter Your Question Here

Last week AARP published an article. It had the results of a survey conducted by three organizations. They asked workers about retirement. Here are some key findings:

  • Only 36% of Americans were very confident they could retire comfortably.
  • 44% said declining health as a major concern.
  • 49% listed running out of money as their primary concern.

So, Why Do People Run Out of money During Retirement

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The first contributing factor is a major bear market. That includes one like we saw in the great financial crisis or the dot com bust. We could define this as a period where stocks decline 30% or more. Fortunately, these are not a frequent occurrence. Since the 1960’s, it has happened five times.

Many want you to believe bear markets are the sole reason people run out of money. But, that’s not usually the case. There has to be something else at play.  Sometimes those other factors can be more significant.

The Other Contributing Factors To Running Out of Money in Retirement

Run out of money during retirement spending

Let’s start with how much you spend. There are plenty of debates about what constitutes a safe withdrawal rate.  If you talk to ten different financial planners, you might find ten different answers. But you can reach a point where you are taking too much income from your nest egg.  That dramatically increases your risk of running out of money.

Why do people run out of money

The next is when the bad year—or years—happen early in your retirement. There have been many studies about sequence of returns risk. This data shows bad returns early in a person’s retirement can create big challenges.

Reasons 4 and 5

Click to enlarge.

The fourth contributing factor: people get too aggressive with their allocation. The better the stock market does, the more people want to pursue those returns. They often get more aggressive near the top of a market cycle. Growth is important. Remember, increasing your allocation to stocks to pursue returns increases your risk.

The fifth common element is selling low. It is hard to stick to your long term plan when you see your nest egg shrink. The declines can be extreme. Remember this. In every prior instance of a major market crash, stocks have recovered their losses and set new highs. If you sell your stocks at low points, it makes it impossible to participate in the recovery.

Rarely does “one thing” cause a financial disaster for retirement. Creating a plan can help you address these factors and avoid a potential disaster.

Stay Informed.

Monday Morning Money is a podcast talking about current events which  impact your bottom line.  

If you would like to be notified when a new episode is released, sign up for our mailing list.  Just complete the form.

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Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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Are Your Kids a Risk To Your Retirement?

Are your kids a risk to your retirement? Many parents provide financial help to adult children. That assistance could impact your retirement.

 
A Preview: 
  • We share some interesting statistics
  • How it can impact when and how you retire.
  • In extreme cases, how it can deplete your nest egg.

Are Your Kids A Risk To Your Retirement?

Each Episode of Monday Morning Money is also broadcast on Local Radio, WMOA (1490 AM and 101.3 FM).  You can hear it at 11:07 every Monday. 

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In addition, you can also hear this episode on our YouTube Channel.  Please take a moment to subscribe, as it helps our analytics and improves our reach.  This also appears on Facebook and LinkedIn.  

Audio Only Version:  Click Here

What's On Your Mind?

Do you have a question about what’s happening in the world of finance or investing?  Is there a topic that has you curious?  We’d love to hear from  you.

 We’ll do our best to answer it in a future episode.  To submit your question, fill out the form.  If you prefer, you can send us an email directly.  That email address is neal@flemingwatson.com

Enter Your Question Here

When you think about the financial threats to your retirement, what comes to mind? Most people would immediately answer a “stock market crash.” Others might say “a prolonged nursing home stay or health care expenses.”

Both of those are legitimate concerns.

Are your kids a risk to your retirement?

For most of us, money is a finite resource. Helping our kids financially means we sacrifice our own needs. For some, that could mean not taking a vacation or delaying the purchase of a new car.  For others, it could mean they don’t save as much as they should for retirement. 

Statistics, Lies and More Statistics

ARe Your Kids A Risk To Your Retirement

79% of parents with adult children provide some sort of financial support for their kids. This would include things like cell phones, car expenses, rent or paying on student loans.

Kids Risk Your Retirement

Parents of 18-34 year olds spent twice as much on their kids as they added to their retirement accounts. 

Kids Risking Your Retirement

On average, parents spend about $7,000 per year helping their kids. This amounts to over $500 billion dollars annually.

Helping Your Kids Can Impact Your Retirement

For many, not saving enough for retirement can translate into working longer— if you can.
 
But, working longer may not be possible. Many Americans retire early because they have to. Lower Social Security benefits and a smaller nest egg create a difficult situation. Your lifestyle in retirement may suffer.

Could Your Kids Cause You To Run Out Of Money?

Over the past two decades, we can point to a handful of real life examples.  The extra income taken to help children was the primary reason a few clients saw their accounts go to zero.  These were extreme situations, but the outcome was not ideal.

Set Healthy Limits

There is nothing wrong with helping your kids.  My wife and I have adult children, and we have helped them at various times. And, if necessary, we will help again.  

You need to set a healthy limit to the assistance you provide.  Your retirement savings comes first.   If you are concerned about what is reasonable, check with a trusted professional.  They can provide an objective viewpoint to help you make a good decision.  

And if you aren’t working with a financial planner, we would welcome the opportunity to talk to you.  Click here to arrange a complimentary consultation.

Stay Informed.

Monday Morning Money is a podcast talking about current events which  impact your bottom line.  

If you would like to be notified when a new episode is released, sign up for our mailing list.  Just complete the form.

Join Our List Today!

* indicates required
Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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Not As Bad As It Seems

In the investing world, things are often not as bad as they seem. The data doesn’t always match the headlines.  

Today we talk about:

  • August was not good, but was it really bad? It felt really bad.
  • The worst month for stocks (so far) this year is…
  • Have we even had a correction in stocks yet?
  • Don’t look now, but the US stock market is having a really good year.
  • So is everything else.
  • Things also aren’t as good as they look either.
  • The fourth quarter is the “money quarter” for the stock market.

Monday Morning Money: Not As Bad As It Seems

Each Episode of Monday Morning Money is also broadcast on Local Radio, WMOA (1490 AM and 101.3 FM).  You can hear it at 11:07 every Monday. 

blank

In addition, you can also hear this episode on our YouTube Channel.  Please take a moment to subscribe, as it helps our analytics and improves our reach.  This also appears on Facebook and LinkedIn.  

Stay Informed.

Monday Morning Money is a podcast talking about current events which  impact your bottom line.  

If you would like to be notified when a new episode is released, sign up for our mailing list.  Just complete the form.

Join Our List Today!

* indicates required

August Was Bad, But Not As Bad As It Seems

I’m a big Ohio State Football fan. I admire Jim Tressel who was the head coach for one of the more successful periods in school history. One of the things I can remember him saying in his press conferences, was “things are rarely as good or as bad as they seem.”

You can say the same thing about the investment markets. August seemed like an awful month. We had “headliner” down days of 767, 623, and 800 points. We were bombarded with the negative news. The trade war with china, the inverted yield curve, and the looming recession all dominated the headlines.

It felt like August was a dismal month. If I didn’t keep score, I would have guessed things were far worse than they were. On a total return basis, the stock market, as measured by the S&P 500, was down a little more than a percent and a half. It was not as bad as it seemed.

In fact, August wasn’t even the worst month this year. That distinction belongs to May when stocks declined more than 6%.

(Click image to enlarge)

The Headlines Make it Sound Bad, But It's Not As Bad As It Seems

If you only follow the headlines and sound bites, you may think we’ve had a difficult year. The maximum draw down in stock prices this year is less than 7%. That doesn’t even classify as the textbook definition of a correction. A correction is a 10% decrease in prices. And it is half of the average correction we have seen since 1980.

The endless parade of pessimism makes us think things are worse than they seem. August was not a good month. But, The S&P 500, which is the primary index we use to keep score, is up over 18% on a total return basis through the end of August. 

(Click images to enlarge)

Most of the Major Asset Classes Are Doing Well

In fact, most of the major asset classes we follow have had an outstanding year—so far. Bonds are doing well. Remember last week we talked about the relationship between yield and price. When yields fall, bonds prices go up. And yields continued to fall.

Gold is up more than 18% for the year. And Real Estate is up more than 27% for the year. International stocks are also up for the year.

(Click image to enlarge)

An Interesting Nugget

Over the past 25 years, October has been the 3rd best month for stocks. November has been the 2nd best. And December has been the 5th best. Combined, the fourth quarter has generated an annualized return of 4.3% per year.

Over the past 25 years, the stock market has averaged a gain of 8.9% per year. Nearly half of the return for the last quarter century was generated in the fourth quarter.

(click image to enlarge)

What's On Your Mind?

Do you have a question about what’s happening in the world of finance or investing?  Is there a topic that has you curious?  We’d love to hear from  you.

 We’ll do our best to answer it in a future episode.  To submit your question, fill out the form.  If you prefer, you can send us an email directly.  That email address is neal@flemingwatson.com

Enter Your Question Here

Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

Our Most Recent Videos

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Watch Now

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Should You Refinance Your Mortgage? One of the things not mentioned much in the wake of the big stock selloff was the impact on bonds and interest rates.  This has
Watch Now

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Watch Now

Should I Sell My Stocks

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Watch Now