Get FREE Answers To Financial Questions

Sometimes it is the little things in life that really make the difference. That’s especially true then when it comes to dealing with financial matters. Decisions about who to trust, what to invest in, making gifts or the type of insurance to buy all have long-term consequences—and often unintended results. There are many times that a simple answer from a professional would have made all the difference. And now you can get that answer free of charge. I’ve written over 160 articles since Guarding Your Wealth was nationally-syndicated over two years ago. Based on the comments from readers, these articles contain information they find very helpful, allowing them to answer many of life’s financial questions. You can freely explore this wealth of information yourself at www.guardingyourwealth.com.

But sometimes it can be difficult to make the connection from a general news article to your own specific situation. Sure, that reader from Florida needed a Living Trust, but what about me? Those articles about Equity Indexed Annuities are informative, but what do I do about my elderly mother that just sunk all her money into one? It’s obvious that retirement portfolios need to be well diversified, but what do I do with my nest egg?

That’s where my ‘Ask Jeff’ can be of such a benefit. I can take my advice to readers nationwide and personalize it specifically for you. Many times you’ll hear back from me in a couple of hours. Other times it may take a day or so—it all depends on how tied up I am at the time.

How do I make money doing this? (My wife asks me that question all the time!) 99% of the time I don’t. I make a living serving as a personal, private money manager for a small group of clients nationwide. I provide a service they can’t find anywhere else for a fraction of what others charge.

Most of those who ask me questions will never need or use my services. Occasionally someone will and, if they become a client, I receive a fee for managing money on their behalf. But the only payback for nearly all of the questions I answer is the knowledge that I am able to provide unbiased, honest advice that can’t easily be found elsewhere. It’s that I’m doing what’s right.

Turning to the traditional financial services industry for answers to these kinds of questions isn’t easy. If you go to an insurance agent, their answer will involve an insurance product. If the advisor makes money selling stocks or bonds, don’t be surprised if their answer involves investing in them. Remember, if all you have is a hammer, everything begins looking like a nail! And you don’t want to get nailed!

I’m not saying that most advisors are dishonest. They aren’t. They are hard-working professionals with the best of intentions. But they work in an industry that values sales of products over all else. And consumers are typically kept in the dark about the tremendous conflicts of interest coloring their advisor’s recommendations.

For instance, I’ve been researching a product pitched to seniors that has an 80% market share. But if someone were given all the information on this investment, no one would buy it! Of course those selling it are going to give you only the information you need to arrive at the conclusion they desire.

That’s the way it usually works in the financial services industry. And that’s a shame. It does a great disservice to industry professionals who should be highly regarded, and to those the industry is supposed to serve.

Readers find my articles refreshing because they provide straight-forward, tell-it-like-it-is advice. Since I don’t have a financial incentive in the outcome there isn’t a reason for me to mislead you.

Here’s how you can get your financial question answered for FREE. Go to www.guardingyourwealth.com and click on ‘Ask Jeff’, then on ‘submit a question’.

You will be sent an email to verify your email address. It is very frustrating for me to take the time to write a detailed answer to someone’s question only to find out that the answer didn’t reach them.

Remember, today’s financial decisions may have long-term unintended consequences. So take me up on my offer – it won’t cost you a thing.

Nationally-syndicated financial columnist and Certified Financial Planner® Jeffrey Voudrie provides personal, in-depth money management services and advice to select private clients throughout the USA. He’ll answer your financial question – FREE at www.guardingyourwealth.com.

‘Safe’ Bonds May Ruin Your Retirement

Nowadays, you must take control over your own financial destiny. Don’t believe what the financial services industry tells you-in fact, question it. Doing so will have a dramatic impact on your retirement. The message often communicated to investors is that owning stocks is risky while owning bonds is safe. Wall Street promotes this belief every time they talk about shifting a larger portion of a portfolio to bonds in order to ‘reduce risk’. If moving from stocks to bonds decreases risk, it must be because stocks are risky and bonds are safe.

The experience investors had between 2000 and 2002 (when their advisors sat there and did nothing) only confirmed that view. People saw the value of their portfolios drop 30-50%. That drop was caused by the stock portion of their portfolio, not the bond portion. This reinforced the idea in investor’s minds that stocks are risky and bonds are safe.

It’s this perception that stocks are risky that makes it more difficult for people to retire. It’s this message that results in people having to work years longer and to live with less during retirement. It’s this message that results in a smaller financial legacy left to their children and grandchildren.

We’re all familiar with story of The Parable of Talents from the Bible (Mt 25:14-30). The master is going away and gives money to three servants for them to manage while he is gone. Two promptly set to work and eventually double the money. The third is afraid and, instead of putting the money to work, buries it in the ground.

When the master returns after a long absence, he is very pleased with the two that doubled his money—“Well done,” he says. But he is furious with the third, “Throw him out”.

The third servant made the decision of how to invest the money out of fear. Since he was so afraid of losing the money, he just buried it. He didn’t even put it in the bank so it could earn interest—seen as the ‘least’ he could have done.

When it comes to investing, are you like the third servant? Are you so afraid of losing money that you aren’t willing to take any risk? Many people are. And believe it or not, the messages you get from Wall Street only reinforces it!

Investment decisions should not be based on fear. Many advisors will prey on your fear to get you to buy their ‘safe’ insurance products. Don’t fall for it. You shouldn’t trust any advisor who manipulates you with fear.

And believe me, that’s exactly what they are doing. Advisors are specifically trained to do it. They are taught that the two ways to get you to act is to play on either your fear or your greed.

There are two things that you must understand in order to properly evaluate which investments to use. These two core principles should be the foundation from which you construct a portfolio.

First, all investments have risk. Each is susceptible to different risks. Stocks seem risky and bonds seem safe because there isn’t the loss of principal risk in a bond that’s held till maturity.

So a bond protects you from that risk, but exposes you to the risk of rising prices. Bonds aren’t intended to increase the amount of food, clothing and shelter you can buy. With a ten-year bond, you’re lucky if you can buy as much when it matures as when you bought it.

It’s more appropriate to say that bonds are stable. Just because something doesn’t fluctuate in value, that doesn’t mean it will help you achieve your dreams sooner.

Second, the root of the problem has to do with an advisor’s ability to manage risk. The financial services industry doesn’t train the advisor to manage money---that’s not their job. It also encourages the advisor to follow a buy and hold strategy. In those situations, the only way to manage risk is to reduce stocks and increase bonds.

I don’t play by their rules. Neither should you. Don’t accept their arguments as fact because they aren’t. There are other ways to manage risk, but you won’t find it with the typical advisor. I’ll share more about that next week.

I’ll personally respond to your questions, free of charge. Go to http://www.guardingyourwealth.com and click on ‘Ask Jeff’.

In addition to being a nationally syndicated columnist and Certified Financial Planning Practitioner, Mr. Voudrie provides personal, private money management services to clients nationwide.

Retirement Investing: Forget 4%

Do you want to reduce your standard of living when you retire? Of course not. But if you follow conventional financial planning ‘wisdom’ concerning retirement investing, that’s exactly what you may have to do! Whether you are currently retired or wanting to in the next 5 to 10 years, you must take action now to protect your lifestyle dreams. It’s your retirement. And if you rely on the retirement investing advice you get from the vast majority of brokers, insurance agents and advisors you can kiss your dreams good-bye. You must take responsibility and control of your situation. Rest assured, though, the solution is common sense.

When it comes to retirement investing, the financial services industry says two things. First, that the most effective strategy is to take no more than 4% out of your nest egg each year. So to avoid tapping into your principal and to protect yourself from inflation you have to earn 6-7% a year.

Second, their wisdom says that in order to reduce your risk of loss you must shift an increasing percentage of your portfolio out of stocks and into bonds as you near retirement. Of course, that’s the only way they have of reducing risk…but more on that later.

Several factors make their strategy doomed for failure. Retirees are living longer and better than ever before. Retirees in their 70’s are still very active and on the go. More are living into their 90’s and even 100’s. This is good news for seniors, but it places a much greater burden on their financial assets.

These increased life spans and active lifestyles also correspond with a reduced savings rate. Put bluntly, today’s retirees are entering their golden years with smaller nest eggs than their parents had. This is due in part to the end of an era when you could spend decades working for one company and retire with a comfortable pension. Today’s retirees are more dependent on their own contributions into and management of their 401(k).

A quick look at the numbers shows how much times have changed. A couple of decades ago, $40,000 a year would allow a retiree to live comfortably. With a life expectancy in the mid-70’s, one would only need about $550,000 to provide that.

Even if you were able to live on that same $40,000 today (good luck!), almost $800,000 will be needed to sustain you into your 90’s. And the percentage of people living into their 90’s is quickly growing. That’s a 45% increase in the size of the next egg needed.

Moreover, that assumes you use all your principal—leaving no cushion for emergencies or inheritance for your children. And it doesn’t take into account inflation. Realistically, you need your income to increase each year. If you want to maintain $40,000 worth of purchasing power and not touch the principal, you would have to have $1,000,000 AND increase your rate-of-return to 6.5%.

I bring all this up to show that it is imperative that you earn a higher return on your money both leading up to retirement and throughout retirement. Increasing your return during retirement to just 8% a year drops the amount needed in your nest egg from $1,000,000 to around $615,000. In other words, the ability to average 8% a year will allow you to retire many, many years earlier.

The conventional wisdom of shifting your portfolio into bonds is equally dangerous. If you have 50% of your portfolio in safe government bonds earning 4.75% you must earn 11.25% on the rest of the portfolio to average 8% a year. In other words, the more you reduce your risk by investing in ‘safe’ bonds, the greater the strain you put on the rest of your portfolio.

I don’t know about you, but I don’t want to base my ability to live comfortably during retirement on the ability to earn over 11% a year on stocks. But if you listen to the financial services industry that is the gamble you are taking.

It doesn’t have to be that way. In the next article, I will reveal the strategies and techniques that break with conventional wisdom, but that may allow you to live a more comfortable retirement.

Are you in need of some financial advice? I’ll personally respond to your questions, free of charge. Go to http://www.guardingyourwealth.com and click on ‘Ask Jeff’.

In addition to being a nationally syndicated columnist and Certified Financial Planning Practitioner, Mr. Voudrie provides personal, private money management services to clients nationwide.