For regular readers of my messages you will recognize this message from last year. I am repeating it for two reason. One, it is a great message and two, I am a bit lazy this week. So, enjoy!
An American Dream (song) (Photo credit: Wikipedia)
As we celebrate Memorial Day 2014 let us not forget those who fought and died for us and those who continue to fight for us. To protect our freedom.
You will never know how much it cost the present generation to preserve your freedom! I hope you will make good use of it!! – John Adams
This week will be a short message. Please remember and honor those who fought and continue the fight for our ability to seek the American dream. Every one of us has the ability to seek the American dream, however it involves sacrifice. There are no short cuts to prosperity.
The free markets are part of the reason our veterans fought. It does not involve speculation but rather prudent investing. The American dream is not a get rich scheme. It requires sacrifice, hard work and planning.
As John Adams said above “I hope you make good use of it!!”
Honor our veterans, past and present, by making good use of it.
The current equity market downturn has, predictably, brought out the annuity salespeople selling fear. This is an example of the Wall Street bullies encouraging people to move their money. These bullies will find some obscure evidence that ‘this time it is different and the equity markets will not recover’. They use fear to sell the ‘safety’ of annuities.
The Statue of Liberty front shot, on Liberty Island. (Photo credit: Wikipedia)
With the help of the media these bullies will entice people to sell their equities, thereby locking in losses and buy annuities.
The bullies will find ‘predictions’ that justify moving to safe investments like annuities or CDs or cash or maybe alternatives like gold. These predictions might sound something like “3 reasons the pullback could become far worse”. Although possible, yes it could get worse, NO ONE can consistently predict what will happen in the future. Anyone who correctly predicted an event cannot be relied upon to correctly predict future events.
In other words there is no correlation between past performance and future results.
Remember the reason the equity markets provide a superior return over the long term is because of the volatility (risk) both up and down. As a point of reference from 1926 through 2012 the Standard and Poor’s 500 has earned approximately 9.82% per year on average. During this time there has been downturns of 10% or more 87 times. So to earn a superior return over time we need to deal with downturns.
Hopefully I am wrong about this but perhaps Americans have given up on the American Dream. They might believe that it is hopeless and they need someone to take care of them, like the government or an insurance company. I do not believe that you can rely on the government or any insurance company for your financial future.
There is no such thing as a ‘free lunch’.
I do not believe the American Dream is dead. In fact I believe this is a great time to be an American. If we work hard and remain disciplined we will succeed in the long run. Of course, there will be bad times but these bad times will pass.
There is a tendency for people to believe that when times are good they will always be good and when times are bad they will always be bad. This past winter has been a great example of this. It seemed like it would never end. But as I look outside today the snow, what’s left of it, is melting fast. Spring is finally here. The ‘bad times’ are ending. Ok, as I write this there is a snow storm predicted for Sunday April 13, but still it will end.
Most people do not understand, including most ‘financial advisors’, how to engineer a mix of assets (portfolio) to capture the return premiums that are available to them in the market—and to do it consistently over time. Understanding risk/return dynamics is essential to seeking market rewards.
Because we are emotional beings we need the help of an investor coach to build the right portfolio for us and remain disciplined. We need constant reinforcement of the academic principles that will lead to financial success that coaching provides.
Has the American Dream changed? Has your American Dream changed? When I was first starting out, which was quite some time ago, the American Dream was something different than I currently perceive it to be. I remember the American Dream being work hard and save your money.
If you wanted something you would save your money and then buy it. Debt was avoided whenever possible, especially when used for recreation. There was a certain sense of satisfaction and appreciation when you reached your goal and bought it. If you wanted something, whether it was a new home, a new car, or a boat, snowmobile or even an education you needed to earn it before you bought it.
What I believe the American Dream has become is instant gratification, at least this is how I perceive it. I have no research to back up my discussion only my personal observations. The American Dream has become finding the next hot stock or asset class, like gold or real estate or large cap stocks or internet stocks becoming rich and retiring very young.
Many believe that by studying the markets and watching all the business TV programs they can find and identify ‘something’ that will make them rich over night. They believe that there is an easy way to riches. Many are unhappy with their jobs and therefore seeking a way out.
A vast majority are unsuccessful and consequently believe that the American Dream is dead.
These get rich schemes are the result of an unrelenting media push to keep Americans speculating and gambling with their money. These bullies contend that others have been successful and why not you. Remember there will always be someone who wins when they are speculating and gambling.
There are three signs that you are gambling and speculating
Stock picking
Market timing
Track record investing
The American Dream is not about:
Get rich schemes
Getting something for nothing
Instant gratification
Speculating and gambling
The American Dream should include
Developing a plan
Working hard at your plan
Practice discipline when investing and making career decisions
Set goals
Many do not enjoy their career and therefore looking for a way out. The Wall Street bullies have convinced you that they can help you reach easy street. However, a more prudent choice would be to find a new career path and then learn the skills necessary to achieve your goals.
The Statue of Liberty front shot, on Liberty Island. (Photo credit: Wikipedia)
Because of all the media attention that is bombarding us each and every day. We all need the assistance of a mentor or coach. We are all emotional beings and therefore susceptible to empty promises that can solve our problems.
As far as investing goes you need an investor coach to help you remain patient and reach your long term goals.
As always there a three simple rules to investing:
Own equities and fixed income
Globally diversify
Rebalance
With the help of an investor coach you can follow these rules and reach your long term financial goals and realize your American Dream.
As we celebrate Memorial Day 2013 let us not forget those who fought and died for us and those who continue to fight for us. To protect our freedom.
You will never know how much it cost the present generation to preserve your freedom! I ho
The Statue of Liberty front shot, on Liberty Island. (Photo credit: Wikipedia)
pe you will make good use of it!! – John Adams
This week will be a short message. Please remember and honor those who fought and continue the fight for our ability to seek the American dream. Everyone of us has the ability to seek the American dream, however it involves sacrifice. There are no short cuts to prosperity.
The free markets are part of the reason our veterans fought. It does not involve speculation but rather prudent investing. The American dream is not a get rich scheme. It requires sacrifice, hard work and planning.
As John Adams said above “I hope you make good use of it!!”
Honor our veterans, past and present, by making good use of it.
Employers offering a retirement plan to their employees often treat it as a necessary evil. The 401(k) plan is often the sole source of retirement for most employees. It is time to treat it with the importance of health insurance.
Retirement plans are similar to homes. They also are a cornerstone of the American dream. Retirements plans are generally implemented to save money for employees for their retirement. Like homes, our government encourages retirement savings by offering tax deductions to employers that sponsor and contribute to them while also offering tax deferrals on a participant’s retirement savings until distribution at retirement. The tax benefit comes at a huge cost because the retirement plan must go through important compliance testing so that the plan doesn’t discriminate in favor of highly compensated employees. The problem with retirement plans is that most of the dangers to the plan sponsor as a plan fiduciary are hidden and if the plan sponsor doesn’t surround themselves with the right retirement plan providers, they run the risk of breaching their fiduciary duty. Unfortunately for plan sponsors, they don’t often realize their duties as a plan fiduciary until after they breached them, So this article will try to illustrate the hidden dangers of retirement plan sponsorship and how they can be prevented.
Like your home many of us take for granted the responsibilities of ownership, you must maintain and update over time. With the proper guidance your company retirement plan can help you and your employees to a successful retirement.
Please comment or call to discuss how to be sure your plan is efficient.
Related articles
Things employers should tell employees about their retirement plan as new participant fee disclosure rules come into effect (401kplanadvisors.com)
Starting A 401(k) Plan: 5 Things You Need To Know (401kplanadvisors.com)
The Next Generation Retirement Plan. (401kplanadvisors.com)
