COMMENTS

Is there any hope?

FAMILY UPDATE

My daughter had her sweet sixteen party this week. We hung out at the beach with her friends and even hired fire dancers. She is so beautiful and kind. I'm proud to be her Dad.

She is also going to take her driver's test this week. She doesn't need to parallel park or anything. But we've been hitting the roads (even the highway). I think she is fully prepared.

We have never given our six-month-old puppy a haircut We've been told that once he gets that first cut he will never be that soft again. I think it's time. I don't know how he even sees through the fluff.

Please read through the following statements and check the ones that apply to you. If you need more information on the topic I have linked past articles.

__ I look at my phone daily to see what the stock market is doing.

--- Whenever I hear someone on TV prognosticating, I say to myself, I better listen carefully. They are wearing a suit and have a nice haircut.

---I am afraid that the stock market will crash and my account will go to zero.

---This time is different. The world economy is more uncertain than at any other time in history.

---I am not going to spend any money from my retirement accounts unless I absolutely have to.

---Social Security is going insolvent. I cannot rely on it to be there throughout my retirement.

---While on Medicare, if I have a $300,000 medical bill from heart surgery it will bankrupt me. (Not true, the maximum out-of-pocket is $6700 a year)

---Unexpected retirement expenses will ruin my retirement.

---I know that my family will get along when they receive any sort of inheritance.

---I will only spend money from my retirement savings once retired unless I absolutely have to.

---I am too old to invest. I need to stick with CDs and savings accounts.

---I believe that I need to take my money out of my investments while this “blows over.”

---Buying physical gold off of a TV commercial is a great idea.

----If I spend enough time studying the market, I can make a lot of money trading in and out often.

---I will spend a lot more money in my 80’s and 90’s than in my 60’s and 70s.

__I go to as many “steak seminars” as possible.

---I’m afraid of being generous with my money because I might run out.

__I don’t have a will, power of attorney, and healthcare proxy.

---I am going to stop putting money into my 401k when the stock market is going down.

__I need a million dollars to even consider retiring.

---I know that taxes will eat me alive in retirement.

__I make sure to read any financial article with a scary title.

0-5 Great work! You accurately understand the complexities of retirement finance and planning.

5-10 Uh oh. You have some misconceptions that need to be addressed. It might be helpful to click on some of the links above to correct some of your thinking.

10-20 Danger! Danger! You may be living scared for no reason. You need to do some homework (and read some past articles) so that you don’t make significant mistakes with your retirement finances and lifestyle.

20-22 I’m afraid there’s no hope for you.

Be Blessed,

Dave

 

 COMMENTS

Inflation Will Destroy the World

You may have heard the news.  The first half of this year had the worst market returns since 1970. That’s over 50 years!  Let’s take a look at how statistics can lie.  

In 1970, if you look at the whole year, the markets went up 3.56%.  That’s right.  The market completely recovered and then some by the end of the year. Don’t let the news trick you by twisting around data and history.

Does inflation have a direct correlation with lower stock market returns?  No.  Inflation does not mean the markets will go down.  The markets are fundamentally unknowable.  I know it is frustrating, but stock and bonds and illogical and unpredictable.  

So much of today’s market fluctuations are based on fear, greed, and speculation.  Companies are not showing lower profits.  Bonds are not defaulting on loans.  It’s all a game to see who can make the most money by guessing at market returns.  Long-term returns will remain the same.

See below for some perspective on the correlation between inflation and stock market returns.

Inflation  S&P Return  Year
14.4%         5.2%        1947
13.6%         31.7%      1980
11.3%         18.5%      1979
11.1%         -25.9%     1974
10.9%        19.2%       1942
10.3%        -4.7%        1981
9.1%          37.0%       1975
8.5%          -8.4%        1946
7.9%          23.7%        1951
7.7%          5.7%          1948
7.6%          6.5%          1978
6.5%         – 7.0%         1977
6.2%         -14.3%        1973
6.1%         20.4%         1982
6.0%         25.1%         1943
5.8%         3.6%           1970
5.7%         23.8%         1976

As you might notice:  There is no correlation.

What is up with all this recession talk?!  Sure the markets are having a tough time, and while the markets may drop even more, it has no bearing on your life.

You cannot listen to any news source lately without hearing warnings of a pending recession.  I’ve had several people in my office recently scared to death.

It is completely out of control.

Remember that the news will report on anything that will get and hold your attention. Stock market pullback? Big news!  Network executives are thrilled. It’s great for ratings, but it is terrible for you.

Why? It gives you the faulty perception that anyone and I mean anyone, can predict what will happen over the next days, months, and years.

Stay the course.  In a couple of years you won’t even remember this happened.

I’m sorry this article is so short this week.  My daughter is celebrating her Sweet 16, Grammy is coming into town, and we are very very busy.

Be Blessed,

Dave

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