It’s that time when all the big fund managers roll out the long term stock market charts showing a trending stock market over the last 100 years. It’s a good ploy because over the long term the stock market goes up and “lo and behold” the advice given to you is to buy and hold for the long term. QED.

Well not so fast because you need to ask yourself:

• Are you accumulating your nest egg and so will not need it to live?
• Or are you relying on it to provide some or all of tour retirement income?

These are two totally different strategies. (larger image of DOW below)

What is also important is to distinguish between: Read the rest of this entry »

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Occasionally I stumble on someone who is not tarred with the same “Buy and Hold” brush as most Wealth Mangers are today, sucked in by the believe that a short 25 year bull market is a guarantee the good times will continue.

They tell you past performance is no guarantee of future returns but that you should buy and hold for the long term as markets always go up.

If you are in retirement you cannot afford to chance it. It’s not the up side you should be concerned about, its the down side and the potential for a serious loss to your nest egg. Rule #1 is you need to protect yourself against large losses in retirement.

The other day I came across a site W.E Donoghue & Co Inc who’s slogan is “Managing the Investment Opportunities of your Lifetime.” Unfortunately the site is not Baby Boomer friendly in my view because it doesn’t explain in simple terms what the philosophy is. It is all in financial-speak to me and may be dismissed by Baby Boomers before they take a serious look. It seems to be aimed at financial planners more than investors. But Baby Boomers should definitely take a close look at this site. Read the rest of this entry »

Dynamic Asset Allocation means moving in and out of Assets or Sectors as each becomes stronger or weaker. In order to do that you need a long term market timing strategy.

One Web site I have found that uses this strategy is Confident Investment Strategies

The aim is to avoid large losses but at the same time go for high returns when market conditions are bullish and stand aside when the market is bearish.

The primary benefit is that your capital is virtually still intact at the end of a bear market and is ready to capitalise on the next bull run. Thus the compounding effect of returns is maximised because you have retained most of your capital and do not have to use the bull market just to recover your losses.

I am a great believer in using technical analysis and charts to help determine long term market timing. I have used it myself for several years and profited from it. Read the rest of this entry »

Today for the first time I read an article that is inciting a revolution amongst American Workers with Employer Sponsored 401(k) Retirement Funds to get seriously involved in managing them. Hooray! Hooray! Hooray!

Bill Donoghue is the hero who may start the revolution. He is calling for American Workers to unite to protect their 401(k) savings. Thank you Bill for your article, “Bear-market revolutionaries“. I just hope Baby Boomers in particular read it and take action.

Unless the mainstream financial commentators who know and understand the problems take the initiative and write about it, nothing will happen. Bill please keep this problem front and center.

Read the rest of this entry »

I thought it might be a good idea to summarize where I believe I am at with my own strategy for managing my nest egg in retirement. To me the hardest thing to do is to get your head around what you can do to take control and protect your nest egg in retirement. Unless you are very lucky it is just foolish to believe that a financial planner or adviser will take care of your money as well as you will.

You are the President of your nest egg fund and as such you are responsible for making the final decisions on what you will invest in and how you will manage it. Your financial planner is just one of a number of trusted advisers, and that is all.

As with most things in life you need to use your own common sense and employ people with specialist skills for the investment knowledge you don’t possess yourself. By this I mean if you have a framework for investing your nest egg and managing risk then you can employ people to advise you on what you should invest your nest egg funds in.

As with almost any business technical information is often cheap to buy, but management skills and good judgement are hard to find. So you need to find good sources of technical advise and learn to evaluate it yourself and input it into your overall strategy. Any investment has to meet your investment rules.

I am gradually formulating the rules and strategies I hope to use for managing my nest Egg in retirement.

Rules for Managing Your Nest Egg

• Avoid Large Losses to my Nest Egg
• Minimize Fees and Charges
• Minimize Taxes
• Control the effects of Inflation (this one I still need to research on)
• Separate Risk-Based Assets from Safe Assets and set a balance.
• Risk no more that 10% on any risk-based asset.
• Be prepared to be in Cash for periods at a time.
• Use the Teeter Totter principle to balance Risk-Based Assets with Safe Assets.
• Set up an Income Ladder with at least 5-7 years worth of cash for a pension.
• Use the Otar Retirement Optimizer to monitor my nest egg over time.

Strategy for Managing Your Nest Egg

I have already revised my strategic model on how I think I can manage my retirement nest egg. It is based on using three buckets, the teeter totter and Jim Otar’s Retirement optimizer. That will become my framework for investing. The buckets are empty right now because I am in cash. But over the next few months I will begin to fill the buckets according to my rules.

Tactics for Managing Your Nest Egg

Risk-Based Investments

The tactics are really the investments I will use to fill the buckets. Do I invest in ETFs, Stock Indexes, or other risk-based investments and add them to the risk-based bucket? I don’t have all the answers yet so I have to do more research on what types of investments I can make.

Safe Investments

What sort of income ladder do I want to create for the safe investment bucket and how can I maximise the return from this bucket over the long term? Do I need to consider an annuity for a time?

These are the tactical decisions and once the strategy is in place you can concentrate on them properly.

Summary

The strategy should be a framework to allow you to change tactics as new investment products become available or market or investment conditions change which you may want to take advantage of. The point is if you can create a system that can be used to manage any type of investment and can be adjusted for risk without having to reinvent it, then you can concentrate on the important thing of managing your nest egg in retirement.

What’s more if the model is clear and concise you can define your rules such that your trusted financial planner can help manage it in your absence. Isn’t that the essence of what we want to do? It then frees you to enjoy your retirement but still have your finger on the pulse as it were.

Most articles about risk are the usual ones listing each risk and what it is. Explanations don’t really make the point. What is needed is some clear examples of what risk really is and how Baby Boomers have to be very careful risk-taking with your nest egg if it is all you have to retire on, without having to sell our house, wife and kids just to live.

Everything I talk about on this blog is aimed at Baby Boomers who are about to retire or are in retirement. That’s the important thing here.

My definition of Risk is investing in something where there is a probability I may suffer a serious loss. The size of the loss is more important that the probability of one occurring though.

Read the rest of this entry »

Well I didn’t expect to become a star overnight and maybe I won’t But anytime I can get in front of a camera to push my point about Baby Boomers needing to protect their nest egg it’s a bonus.

Today I got that chance. I did an interview with Channel 10 in Sydney Australia. It goes on air tomorrow at 11:00 am and the evening news. I might get 20 seconds or so. Still it all helps.

I am hoping I manage to strike the right chord, concerned, responsible and objective not alarmist. But after reading the survey by Mercer written about in my post “Government takes control of Baby Boomer Retirement Nest Eggs“, maybe I need to be alarmist.

Baby Boomers have only had 20 years in Australia and a lot less in other countries to prepare for financing their own retirement. To many this will still come as a shock. The pension looms large in their make-up from watching their parents retire.

However we Baby Boomers have been charged with the responsibility of looking after ourselves and even though there is a pension and social security life-line we want more than that. Read the rest of this entry »

The Expo was well attended but many Baby Boomers were there to see the Winnebago campervans and visit the retirement village stands. I attended all the Financial Seminars which were not well attended at all.

The seminars ran all day. Here is a quick run-down of the ones I liked the best along with some comments by me.

Clearview Retirement Solutions

Here the key thing for me was the financial planners are paid a salary. That means no commissions before or after the sale. The presentation was very informative and covered much of the new legislation about retirement, super contributions and taxation and tax free withdrawal after 60.

Read the rest of this entry »