How Can CIA Help You?

Request Consultation
Ask an Advisor
Financial Tools
Request Consultation
Ask an Advisor
Financial Tools
One Secret To Retiring Sooner

One Secret To Retiring Sooner

As people have really dug into my new book over the last few months, You Can Retire Sooner Than You Think: The Five Money Secrets of the Happiest Retirees, I’ve had a common question come back to me:

“Given the fact that people are already living longer, requiring a longer draw-down period from their nest egg, how do you reconcile people retiring even earlier?”

It reminds me of the quote, “No man on their deathbed says, I wish I had worked more.”

My answer to this may sound a little grim but it’s realistic. While as a whole people in the US are living longer, it doesn’t guarantee that we’ll all live to age 100.

I have known too many wonderful people who spent years planning their retirement, but when they finally reached their “golden years” they sadly passed away unexpectedly just a few short years into their perfectly planned retirement.

Of course none of us knows exactly how long we will be on this earth. If we did know, retirement planning would be much easier. This leaves people with the difficult decision of retiring with the fear of possibly running out of money, or potentially missing out on the ability to enjoy retirement altogether. That’s why I suggest that if you’re looking to retire early, you might want to consider phasing into retirement.

Rather than diving straight into the retirement pool, you can wade in by first moving to part-time work. By continuing to work you may be able to stop saving for the future while also not spending from your savings. Just working part-time will give you more of the free time you’re looking for in retirement, but delays when you have to start using your savings.

Traditional retirement planning is often seen as black and white. Meaning you go from full speed building your nest egg to full speed spending your nest egg. By instead moving to part-time work you’re able to have more freedom with your time while also extending the life of your nest egg.

Think of this phase as your retirement happy hour before the party really starts.

It’s helpful to start planning that move to part-time work a few years out, before actually enacting it. While for many careers it may simply be a matter of reallocating priorities and cutting back, there are careers that do not easily offer part-time work. If that is your position, use the few years beforehand to start thinking through and planning your part-time career move.

Ideally, your part-time work just needs to cover your monthly expenses, so you may be able to switch to a new field. You could even take up a hobby as a part-time gig. If you’re crafty, enjoy woodcarving or have other skills like this, consider opening an online Etsy store. If you love shopping you should consider applying to work at your favorite store. On top of a job you’ll likely get an employee discount. You should be realistic, though. It’s probably pretty tough to get paid to go fishing or to watch college football.

An important happiness pillar from my book’s research stems from retirees participating in many different “core pursuits” also known as hobbies on steroids. If you can find a way to get paid while enjoying your core pursuits, then all the better.

Everyone seems to know someone who died too young to enjoy the money they had diligently socked away for retirement. I’ve personally seen it too many times to ever recommend that anyone stay somewhere they don’t love when they could potentially move to the next phase. Rather than focusing on continuing to build your nest egg, just be sure you’ve reached some of the benchmarks I’ve outlined before, and then get creative with how you ease into retirement.

Remember, it’s five-o’clock somewhere.

Read the original article here.


10 Key Themes That Will Impact Your Investments in 2015

If we look into our economic history books ten or twenty years from now, how might 2014 be remembered?  Maybe as, “the year that oil prices crashed, despite a strong US economy,” or perhaps, “the year when nearly every economist on Wall Street predicted a rise in interest rates that never came.” It could even be (my personal favorite), “the 2014 bull market that nobody loved.”

Whichever way it’s written, the point is that it’s now history. What I’m more interested in is what we can expect from 2015.

The Investment Committee at my company, Capital Investment Advisors, worked together to hone in on what we believe will be the 10 most impactful themes for investors over the next 12 months:

1. The US Economy – The US will slow from the torrid pace that closed out 2014, but not completely fall apart.  Most likely it will be sufficient to keep corporate earnings and profits growing and the unemployment rate headed to below 5.5 percent. However, with Japan in recession and the European Union on the verge of recession, the US can’t completely “decouple” forever.  Look for a solid 2015, but not a runaway train.

2. Stocks over Bonds (again) – The bull market in stocks is now more than five years old, but bull markets don’t end without a major economic event, i.e. a US recession.  Remember that a recession is negative growth for two full quarters. With the 5% surge we ended on in 2014 combined with low energy prices for consumers and companies alike, it’s likely we’ll see stocks continue to rise. On the other side of this coin, as interest rates make a push higher in 2015, bonds (in general) will be presented with a headwind – making a “flat” year for bonds likely.  As rates move higher throughout the year, bonds may look attractive again in late 2015 (with higher interest rates).

3. Interest rates finally climb – This is something that we have been expecting for more than a year now.  With the Federal Reserve’s “taper” over, and Janet Yellen and co. already forecasting a rate rise in mid-2015, it is likely that we will see interest rates in more “normal” territory.  This means rising to the 3.5 percent range for 10 year Treasury bonds.

4. Less Smooth Sailing – Yes, we almost saw a full 10 percent correction during the fall of 2014, but we spent much of the year with relatively low volatility.  As the economy adjusts to higher interest rates in 2015, stock market volatility will likely pick up.

5. Ultra-Low Inflation – With the precipitous drop in US oil prices towards the end of 2014, lower energy input prices will filter through the entire economy.  Manufacturing costs will decline, what consumers pay for gas at the pump will stay low, transportation, shipping, construction, and petroleum based products will all moderate driving the consumer price index closer to a very low historical rate of 1 percent.

6. Sectors to watch – Lower oil prices and a solid US economy should bode well for the consumer discretionary, financial, healthcare, and technology sectors.  These sectors have historically performed well (relative to other sectors) in the year following a large decline in oil/energy prices.

7. Housing stays steady – The Millennial generation is expected to spend $1.6 trillion over the next five years on home purchases. This will continue to support housing prices as Millennials move out of their parent’s basements and start owning homes of their own.

8. Drama in the Middle East and Russia – Dramatically lower oil prices will continue to take a toll on oil reliant economies. Saudi Arabia will continue to produce oil regardless of how low prices go but can only fully fund its suite of rich social programs with oil at $87/barrel.  Likewise the Russian economy needs oil above $100/barrel for a balanced budget.  This means, most likely, both regions will see unrest as their citizens adjust to more economic strife and their government’s increasingly limited ability to “contribute” to keeping the peace.

9. European Recession – With aging demographics and restrictive labor laws continuing to plague many EU nations, a full blown recession overseas is not unlikely in the coming year.

10. Tech like it’s 1999 – Unlike the late 90s, startup tech companies are now actually expected to generate revenue and have the true potential for profit before garnering a sky high valuation. However, with the (still private) ride sharing service Uber boasting a $41 billion valuation, the price tag for other companies like Instacart are beginning to seem astronomical.  Instacart is a wonderful idea and service (which I’ve written about before), but it’s still relatively small footprint seems hardly supportive of a now $2 billion valuation. This tells us that startup-chasing VC firms are beginning to create an environment reminiscent of the late 1990s.  Look for the tech “startup bubble” to continue to inflate in 2015.


Bottom Line 

As always, I’ll continue to keep an eye on the markets for you as we go into 2015, and update you here on any trends we see that spring up. I hope you have a wonderful and profitable 2015!


Disclosure:  This information is provided to you as a resource for informational purposes only.  It is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors.  Past performance is not indicative of future results.  Investing involves risk including the possible loss of principal.  This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.


Read the original article here.


Would You Trust a Robo-Advisor with Your Money?

A few weeks ago I went to Schwab Impact in Denver, which is a conference for investment professionals and money managers. I was fortunate to listen and learn from some of my favorite people in finance like former Fed Chair Ben Bernanke and legendary investor Mario Gabelli. I couldn’t help but notice, though, that the topic that everyone wanted to talk about at the conference was “robo-advisors.”

Robo Advisory firms are a relatively new concept, emerging only a few years ago in the investment industry. A robo-advisory firm attempts to replace a traditional person-to-person interaction with algorithms and digital technology. Instead of sitting down with a financial planner at their office, a robo-advisor facilitates your investment planning primarily through your desktop or mobile device.

The way these programs typically work is that they have you open an account based on a questionnaire, and then based on your answers the algorithm tells you what assets you should be invested in. Typically these are five to ten EFT’s, and you can either take that initial advice and invest in those ETFs yourself, or you can “hire” them to use their automated system to trade, invest and re-balance your portfolio.

These often have a low-cost at somewhere between 0.25% up to 1% of your total invested capital for the year. The difference in cost typically depends on how much human interaction you receive from the company. The lower the cost, the more likely it is that you’ll only be working through your iPad.

I’m a huge believer in technology. It’s made my job easier and more efficient, so why shouldn’t it be passed on to investors? I think there’s a natural progression taking place right now in the financial industry towards offering more technology-forward options, just as there is with almost all other industries. Just think about Uber (remember my post about the Uber Economy)? Who would have guessed five years ago that technology could make finding a ride so easy?

While we’re moving towards more use of technology in the financial industry, though, I don’t think it’s time to completely discount the traditional method of meeting with a real live financial planner.

Imagine removing a “live person” in the following situation: Let’s say there is a wonderfully intelligent video program that acts as and replaces a teacher in a classroom. Effectively removing a “real live” teacher, and replacing them with technology. We now have videos based on the fundamentals of education to teach your child from kindergarten to college graduation.

While in theory this could work, it most likely would not work for everyone. If circumstances were perfect — every student full with a good night’s sleep and eager to learn — then everyone in that classroom could potentially do well.

However, we all know that’s not how life works. What happens when two children get into a fight, or one falls asleep because they stayed up too late? What about the child who has parents fighting at home and can’t focus? These are issues that can’t be addressed and corrected for by a digital video screen that teaches reading and math.

While this might sound unrelated to the investment industry, it’s actually very similar. A financial advisor or planner is there to teach, guide, and coach their clients though the most straightforward and complex times of life.

When the market starts acting up, it’s easy to get distracted, get off track, and make bad investment decisions. For most people, money (especially our life savings) is very much tied to our emotions. So when we become concerned about the world, the stock market, or a particular life event that impacts our financial situation, I believe that humans will need more than just an algorithm to turn to.

That being said, the robo-advisory industry isn’t going away. Going back to my teacher analogy, I’d say that we’ll be learning from interactive videos on a big screen, but we’ll still need a teacher in the classroom.

My company actually launched a program named Wela more than five years ago. In the past two years our team has been building Wela to compete with the newly emerging players from Silicon Valley. We’re not working to raise hundreds of millions of venture capital dollars to promote it, but instead we’re just trying to raise awareness in our local Atlanta market.

I think that everyone should have access to financial advice and information without having to pay high premiums. While Wela is a “digital advisor”, we still believe in a personalized experience. So Wela is trying to bridge the gap between having a personal tutor and being left in a classroom alone with a screen.

I’m sure in the next few years we’ll continue to hear more and more about robo-advisors. I’m glad there’s an entirely new industry based upon this new technology. I think it’s important to remember right now, though, that these newly emerging programs account for just $5 billion out of a multi-trillion dollar investment industry in the US. So right now the robo industry is the size of an ant relative to the elephant that is Wall St. and financial advice business, but this digital ant definitely has some bite.


Disclosure: This information is provided to you as a resource for informational purposes only. It is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.


Read the original article here.


Get Started Today

Request Consultation
Ask an Advisor
Retirement Calculator
Retirement Calculator
Social Security Optimizer