Retirement challenges for single people

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The financial industry tends to focus on married couples or widows.  The assumption one is tempted to make is the retirement planning for single people is easier and that single people don’t need help.  The opposite is actually true – single people have more complex retirement planning needs and the need for outside help is just as great as for married couples.  There are several reasons for this.  Below is my list of issues that single people face that married ...

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China’s real impact on your portfolio

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The stock market has fallen by about 7% in the last four weeks as measured by the S&P 500, ostensibly because of China’s growth slowing down and other international issues.  The question that every investor needs to ask themselves when the markets experience big swings is “Am I okay with this?”.

There is no way to anticipate the exact date of a market decline or the date the market starts is recovery.  Attempting to do so is pure folly.  The best ...

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Should I move my 401(k) to my new company or do an IRA rollover?

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This is one of the most common questions I get from clients and friends when starting a new job.  While there are many issues to look into, two of the most important are the fees in the 401(k) plans and the investment selections available.

Recently, a study was done by Pension Data Source about the fees in 401(k) plans.  Among other things, the 2012 study found that 401(k) fees in large plans averaged about 1.03% per year versus 1.47% for small ...

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Small investors regain confidence and return to markets

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This headline wins the first “Reasons Why You Need A Financial Planner” headline award of 2013.  Why is this so scarry?  Because the equity markets are near their pre-crash highs after a trying 5 years in the markets.  If small investors ran from the markets during and after the crash and are just coming back now, they have done exactly what people say they don’t do – buy high and sell low.  How else do you explain selling as the market drops ...

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401(k) fees

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New rules by the Department of Labor took effect Sunday July 1 that require your employer to fully disclose all of the fees you pay in your401(k) retirement account.  These disclosures will be sent to you by the end of August, then annually thereafter.  This rule has been around for several years, but has been delayed multiple times because the 401(k) providers lobbied the DOL for more time because they could not decipher all the fees that you had to ...

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Holding Cash

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There were two interesting articles about holding cash yesterday.  One was about retirees holding several years worth of cash  (click here to read) and the other was about companies holding cash on their balance sheet (click here to read) .  What is interesting is that both articles came to the conclusion that holding large amounts of cash is detrimental to overall performance.  However, both articles miss the same critical point – ...

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401(k) rollovers – make sure you know all the rules before you start

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Here’s why:

A 56 year old attorney left his job.  Soon thereafter, he did a 401(k) rollover into a SEP IRA.  The next year (age 57), he took $240,000 out of the SEP IRA account.  Because he took the money out of a SEP IRA before age 59 ½, he had to pay the 10% early withdrawal penalty, or $24,000 in taxes.  The fact that the money started in a 401(k) account, is irrelevant (Kim, 7th Cir).

Unknown to the attorney (and ...

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Roth versus Traditional IRA – the hidden assumption

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It’s almost tax day, and as usual we are seeing a lot of articles about whether people should use a Traditional IRA or a Roth IRA.  The difference between the two options is when you pay taxes.  When you use a traditional IRA, you get a tax deduction today and all the earnings in the account grow tax free until you take the money out.  When you withdraw the money, it is taxed as ordinary income.  With a Roth IRA, ...

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Dividend Investing

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In the last year or so, I have seen a renewed interest in “dividend investing”.  Dividend investing means that people select what stocks to buy based primarily on the amount of dividends that the company pays as a percentage of the price of the stock.  This is called the Dividend Yield.  Before getting into more details, let me define some terms and concepts:

What are dividends and why do companies give them?  A dividend occurs when a company distributes a share ...

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Buffett versus Gross – We have a winner!

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In August, 2010, I wrote about the opposite approaches that arguably two of the most successful investors of all time have taken related to bonds.   Bill Gross not only sold all of the US government debt in the PIMCO Total Return Fund, he was so convinced that the price of US Government debt would drop he went so far as to sell the debt short.  Warren Buffett, on the other hand, felt that US Treasury Bonds were a solid investment ...

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