Retirement Planning: Target Dated Funds vs. Passive Index Funds

Posted by Carl Sera on Feb 22, 2016 9:23:22 AM

In addition to Target Dated Funds, many investors buy passive index funds for their 401k, 403b and IRA retirement plans.  They do this systematically out of every paycheck.  They have recently seen the three major indices fall by over 10% and many are asking what they should do during this market correction.  Many are asking questions such as which index will lose the least on the way down should the trend down continue and which ones will rally first if the trend reverses.

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Topics: Retirement Tales

How Can I Spend More Money In Retirement? A Partnership Tale

Posted by Carlos Sera on Oct 21, 2015 8:30:00 AM

Did you know you have a partner?  Let’s see if you can guess his name.  He is a relative.  You know him well.  In fact, every year we celebrate his birthday with fireworks.  You probably know the answer by now but if you don’t, let me introduce you to your Uncle Sam.

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Topics: FINANCIAL TALE, Retirement Tales

A Tale of Doom and Gloom: "One Size Does Not Fit All"

Posted by Carlos Sera on Sep 29, 2015 10:46:00 AM

I recently ran into Kyle who I’ve known since high school and was one of my very first clients. He is a deep thinker, a quick study and has always been a bit irreverent so I wasn’t surprised that the first words out of his mouth were “Hey Carlos, how’s it going in the world of doom and gloom?”    

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Topics: Tales, Retirement Tales

Distribution Rate vs Inflation Rate: A Distributive Tale

Posted by Carlos Sera on Sep 2, 2015 11:44:00 AM

This tale examines the relationship between the inflation rate and the distribution rate.  It is not meant to give you a complete understanding about what other factors should be taken into consideration when planning for the “Distribution” or “In-Retirement” phase of your life.  It is just intended on teaching the relationship between these two factors.  These tales are a building block to knowledge and so the concepts have to be simple, clear and concise.  It will also provide some implications on portfolio construction once you recognize that the rate you withdraw money from your portfolio has a far more dramatic effect than the inflation rate.  This is not a well understood fact so you need to learn it.

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Topics: Tales, Retirement Tales

An AARP Tale: "The Payout Rate vs. The Interest Rate"

Posted by Carlos Sera on Sep 2, 2015 9:04:00 AM

My 85 year old father recently received a solicitation from AARP.  For those that may not know about AARP, it stands for the American Association of Retired Persons.  He showed me the solicitation letter and since we both thought the offer looked tempting, we did exactly what the letter instructed and asked AARP to send us more information.  We were particularly intrigued about how my father could

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Topics: Tales, Retirement Tales

A Beginner’s Tale: "How Does Timing Affect My Retirement?"

Posted by Carlos Sera on Aug 13, 2015 11:32:00 AM

We’ve all heard the phrase “timing is everything.” It is especially important when you reach the stage in your life where your portfolio or assets must provide a stream of income for the rest of your life. This means that when you retire matters. If you retire a year earlier or a year later it can make a difference. There are plenty of phrases that speak to the word beginning. John F Kennedy’s phrase “Let us begin” is embedded in my subconscious as is the phrase “Well started is half finished” which I attribute to the Sisters of St. Joseph. So, when you begin and how you begin your retirement matters.

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Topics: Tales, Retirement Tales

A Tricky Tale: "The American Mutual Fund vs the Fidelity Magellan Fund"

Posted by Carlos Sera on Aug 13, 2015 11:29:00 AM

Do you remember 1969? I remember bits and pieces since I was only 11 years old at the time but most notably I remember the Miracle Mets beating my beloved Baltimore Orioles in just 5 World Series games. I was heartbroken for months. The Orioles had assembled what I still consider one of the finest teams in the history of baseball and yet the underdog Mets had prevailed. This tale is meant for the underdog. It’s meant for people that have a finite amount of money that must last them the rest of their lives. If they make a mistake they’re out. They run out of money. To these people I suggest that they read A Tale of Anarchy as well as A Volatile Tale and that the lessons are ingrained. This tale is a quiz to see if you have learned your lesson and before you answer let me give you a hint. Bet on the underdog.

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Topics: Retirement Tales

A Tale of Anarchy: "How Can I Recover My Investment?"

Posted by Carlos Sera on Aug 13, 2015 11:24:00 AM

I use the word anarchy to describe the mathematics of investment loss recovery. Anarchy refers to political disorder but you can think of it as portfolio disorder. It is imperative that investors understand the mathematics of recovery. If you don’t you run the risk of outliving your assets. So you may wonder how can I recover my investment? The answer is simple. The mathematics of recovery tells us what percentage rate of return we must earn in order to recover our investment after a given percentage investment loss. It’s not as important to those that are still working, saving and investing as it is to those that are retired.

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Topics: Retirement Tales

A Retirement Tale: "How Should I Plan for My Retirement"

Posted by Carlos Sera on Aug 13, 2015 11:21:00 AM
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Topics: Retirement Tales

A Required Rate Tale: "How Much Stock Should Investors Hold?"

Posted by Carlos Sera on Aug 13, 2015 11:17:00 AM

I have spent a disproportionate amount of my life over the two decades looking at financial websites and articles written by trained journalists posing as trained financial experts.  One of my favorites is Yahoo! Finance and today I ran across an article with the heading “How Much Stock Should Older Investors Hold?”  The writer interviews a number of financial planners and guess what they find?  They find that fear is running throughout this “segment” of the population.  I don’t mean to pick on the writer or Yahoo! Finance since an article like this is written on a daily basis in some reputed publication somewhere and has been written for the last 50 years and will be written for the next 50 years.  But it is nonsense.

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Topics: Retirement Tales

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