If you follow financial "journalism" at all you will inevitably hear how volatile the market is and how you should take action to protect yourself from the volatility. However, when we turn off the "news" and look at things rationally, we can see a completely different story. One that is actually true. It's not the market that is volatile. It's the investors that are volatile.
Every single day each one of us is inundated and sometimes overwhelmed by the tsunami of noise from the 24 hour "news" cycle. Much of it centers around timing of the market and the perfect selection of funds. The "experts" say things like "Big correction coming soon!" or "Here's the three next big technology stocks to jumpstart your portfolio!" and "Inflation is coming, buy gold now!" on and on and on.
Did you know that the S&P 500 Index Mutual Fund available to you through your NRECA 401k options has historically averaged a return of approximately 10 percent? Did you know over that same period of time the average cooperative employee in the 401k plan has averaged a return of only 3.9 percent?
Typically, you pay an advisor the same reason you pay a mechanic to repair your car. If you wanted to repair it yourself, you probably could, but what's your time worth? Is that really what you want to do? Can you do it right? What is your strategy for doubling your income in retirement? What is your strategy for tax planning in retirement? What is your strategy for claiming Social Security in retirement? If you aren't sure of those answers, it would be wise to sit down and talk to an advisor about your retirement planning needs.
Everyday the financial “news” tells us the status of the S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite because these are the three most followed indexes by media and investors. I’ve found through the years that many people have no idea what an index is or specifically what these three indexes represent. Today I’m going to give you a Cliffs Notes version of what an index is as it relates to the stock market, a brief explanation of the three major indexes
Today I want to discuss, what I feel, is the single most important benefit the co-op offers you. And that is your NRECA 401k plan. It’s important because it’s the fastest and simplest way for you to grow your wealth over time.
Inflation is affecting all of us right now. And for many of us, we personally feel the hit in our wallet and our bank accounts. I've calculated that it's costing me and my family right at $8,000 per year just on the basics like fuel, food, and utilities. I shouldn't have to write this disclaimer but in today's political climate, I feel I should. This is not a political or a partisan opinion. Although I do have plenty of both of those, I intentionally keep them out of my blog. So who or what causes inflation? The answer is very simple thus this blog will be short. Here's a hint: It's not the Federal Reserve.
The impulse to get out of the market before something bad happens is an impulse in all of us but it's at best only half of a strategy. What impulse would you listen to for re-entry to the market? Impulses don't make a strategy, but they can totally destroy a strategy.
It was 8 years ago today. I had visited a good friend of mine and was traveling home from St. Louis, MO. I took a bit of a detour to go look at a motorcycle I had been checking out online. The dealer happened to be in St. Louis so I decide to do some window shopping. It was a Sunday morning. Probably around 8 am so I knew they would be closed, but I was hoping to get a glimpse of the bike in the window.
If we know that on average our money is losing a value of between 2-3% yearly, then we know that in 20 years from now our money will have lost about half of its value. Or simply put, in 20 years our cost of living will double. That means if you make $50,000 per year now, you’ll need to be making around $100,000 in 2041 to maintain the same standard of living you have today. So what is your plan in retirement to double your income in 20 years?
What if you're age 55 or older and you just don't want to wait until age 62 to retire? Many of you are stuck in that 50-58 age range where the thought of retirement can be a little scary. Let's look at some options.
High Blood Pressure is often referred to as the silent killer of human beings. It has no obvious symptoms to indicate something is wrong. Many people don't even know they have it. It develops slowly over time and although it can't be cured but it can be managed. Your retirement plan has a similar killer...inflation.
Yearly portfolio returns are literally meaningless in retirement and conversations about them put me into a deep REM type sleep. The only thing that matters in retirement is that you don't run out of money (also known as purchasing power). That's it! It turns out that "beating the market" or an imaginary benchmark in retirement doesn't really matter if you don't have two nickels to rub together and you're looking for a job when you could be hanging out with your grandkids.
With the Russian invasion of Ukraine, we’ve seen first hand how world events can affect the markets here in the United States. We’ve seen lots of market volatility since the beginning of the year. But guess what? The market is always volatile. And the reason for that is many investors make all their decisions based on emotion. And by doing this they blur the lines between volatility and risk. Risk and volatility are not the same thing. In fact, they aren’t even remotely related.
The secret to investing is complex. There is no silver bullet, there is no pill to take, there is no hot new stock, etc. Everyday we are bombarded by advertisers trying to sell us quick fixes to complex problems.
If you are about to retire or already retired, chances are you've been approached or heard a pitch from an Annuity Salesman. (I'm referring to after market annuities in this blog. Not the annuity option available from your NRECA R&S Plan).
