Archive

Posts Tagged ‘etfs’

What Is Money When The System Collapses?

November 17th, 2012

Tax Loss Harvesting – using sector ETFs to continue the exposure

November 28th, 2011
Many financial advisors use low-cost, liquid exchange traded funds in tax-loss harvesting strategies that can offset future gains and cut clients’ tax bills in the Read more…

ETF, Uncategorized

ETFs Turn Exotic – Protect yourself

October 17th, 2011

Investments that do not move in tandem with U.S. stocks present opportunities for diversification and potential performance Read more…

Commodities, ETF, OPTIONS, Real Estate, Uncategorized

European Default Inevitable — Sell Your Gold?

October 7th, 2011

In the prequel to this article (European Default Inevitable — Sell Your Gold?), I discussed the fact that safe-haven-seeking investors could be in for a surprise when they run to buy gold after a Greek default and find huge sellers in Read more…

ETF, Mutual Fund, Uncategorized

Valuations in Free-Fall: S&P 500 Cheapest Since 1957!

October 5th, 2011

The Standard and Poor’s 500 index valuation has hit 25% below the average from the last nine recessions, even as price estimates continue to fall, according to Bloomberg‘s data. These estimates provide a statistically significant outlook on analyst Read more…

Uncategorized

GOP To Fed: Let Economy Fail

September 21st, 2011

The headline above is not what GOP congressional leaders actually said today to Federal Reserve Board Chairman Ben Bernanke, but they might just as well have used that precise language in the letter CNBC reports they sent to the Fed. According to CNBC, the letter instructed Read more…

Uncategorized

Wall Street Is Already Reacting Negatively To Debt Ceiling Fight

June 7th, 2011

SmartStops reminds everyone that you can benefit by sidestepping periods of risk. The low trading costs in today’s environment warrant the ROI for taking action.

Authored by Stan Collender of CapitalGains & Games blog. Posted at: http://capitalgainsandgames.com/blog/stan-collender/2264/wall-street-already-reacting-negatively-debt-ceiling-fight

Contrary to what the GOP has been saying, financial markets not only will react negatively to the debt ceiling fight happening on Capital Hill, but as I explain in my column from today’s Roll Call, that negative reaction has already begun and it’s not at all ambiguous or tepid.
 
 Negative Market Reaction to Debt Ceiling Fight

Three things are wrong with the continuing insistence by the Republican Congressional leadership and a number of potential GOP presidential candidates that the financial markets will not react negatively if the existing federal debt ceiling is not increased by Aug. 2, the date that the U.S. Treasury says the government’s cash situation will become critical.

First, it’s not at all clear that GOP Congressional leaders really believe what they are saying. One of the back stories to last week’s scam of a debate in the House on a “clean” debt ceiling bill was that the leadership apparently went out of its way to let the financial world know in advance that the vote was nothing more than political theater and shouldn’t be taken seriously. That’s the Washington version of the hedging that’s typical on Wall Street. It’s also ample evidence that the leadership was worried enough about a negative reaction from investors that it needed to reassure them in advance about what was happening and what it meant. That’s not a vote of confidence in the hold-the-debt-ceiling-hostage strategy that we keep being told will not have a negative impact on interest rates, market psychology, stock prices or economic growth.

Second, the leadership and the candidates don’t seem to realize or be able to admit that the White House is in control of many of the levers that will affect the markets. Administration officials, not the Congressional leadership, will determine how to deal with a cash shortage, and Wall Street is much more likely to react to the Treasury’s decisions than to political hyperbole, demagoguery and attempted spin. Try to imagine the virtually immediate impact on the stock price of government contractors if the administration announces on Aug. 2 that money owed to those companies will be paid after 120 days instead of 30, and you start to get a sense of how much the White House rather than Congressional Republicans are in control of the situation.

Third, in spite of all the GOP protestations to the contrary, there are actually a number of important signs that capital markets have already begun to react disapprovingly to the debt ceiling impasse and that the economy is starting to feel the negative effects.

It started in mid-April when Standard & Poor’s, one of the top three credit rating agencies, revised its outlook on the rating for U.S. debt to “negative.” Much of the reporting about S&P’s changed outlook was about the size of the deficit, but a closer look shows that S&P expressed little doubt about the United States’ ability to pay its debts. Its main concern was over the government’s “willingness to pay,” or its ability to reach the political consensus needed to make timely payments. The fight over increasing the debt ceiling, which raises questions about the government’s willingness to pay existing obligations, had to weigh heavily on S&P’s analysis, especially because the United States is having no problem borrowing and could easily meet its obligations by doing so.

The negative market reaction continued last week when Moody’s, another of the three top rating agencies, warned it was considering a downgrade of the federal government’s credit rating. Moody’s explicitly blamed the debt ceiling fight: The rating agency said the nation’s rating could be lowered if the debt ceiling is not raised “in coming weeks,” and it cited “the heightened polarization over the debt limit” as one of the primary reasons for its thinking.

In other words, and completely contrary to what GOP leaders are saying, two major financial market participants are warning that there will be a Wall Street-related price to pay if the debt ceiling is not raised as needed.

The best indication of all that the market has already started reacting negatively is the current trading of credit default swaps on U.S. debt. As of late May, the number of CDS contracts — essentially insurance policies on the possibility of a default — had risen by 82 percent. Equally as important, the cost of a CDS — the best indication of how much riskier U.S. debt has become — rose by more than 35 percent from April to May. Last week I spoke to a number of people who calculate such things for a living, and they said this change means that the interest rate the U.S. government has to pay has already increased by as much as 40 basis points compared with what it otherwise would be. This means higher federal borrowing costs and deficits, and overall higher interest rates on everything from car loans to mortgages to credit cards.

Except when something unexpected occurs, the initial changes in market psychology and behavior start with just a few investors who act either because they are more or less risk averse, have better information, or are smarter. That means there are usually small signs of change before a market tsunami hits. In this case, there is now clear evidence that the uncertainty over the federal debt ceiling is already having the negative impact on financial markets that the Republican leadership has said will not occur. Just because it may not yet be obvious to everyone doesn’t mean it’s not happening.

Read more here:
Wall Street Is Already Reacting Negatively To Debt Ceiling Fight




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Uncategorized

Wall Street Is Already Reacting Negatively To Debt Ceiling Fight

June 7th, 2011

SmartStops reminds everyone that you can benefit by sidestepping periods of risk. The low trading costs in today’s environment warrant the ROI for taking action.

Authored by Stan Collender of CapitalGains & Games blog. Posted at: http://capitalgainsandgames.com/blog/stan-collender/2264/wall-street-already-reacting-negatively-debt-ceiling-fight

Contrary to what the GOP has been saying, financial markets not only will react negatively to the debt ceiling fight happening on Capital Hill, but as I explain in my column from today’s Roll Call, that negative reaction has already begun and it’s not at all ambiguous or tepid.
 
 Negative Market Reaction to Debt Ceiling Fight

Three things are wrong with the continuing insistence by the Republican Congressional leadership and a number of potential GOP presidential candidates that the financial markets will not react negatively if the existing federal debt ceiling is not increased by Aug. 2, the date that the U.S. Treasury says the government’s cash situation will become critical.

First, it’s not at all clear that GOP Congressional leaders really believe what they are saying. One of the back stories to last week’s scam of a debate in the House on a “clean” debt ceiling bill was that the leadership apparently went out of its way to let the financial world know in advance that the vote was nothing more than political theater and shouldn’t be taken seriously. That’s the Washington version of the hedging that’s typical on Wall Street. It’s also ample evidence that the leadership was worried enough about a negative reaction from investors that it needed to reassure them in advance about what was happening and what it meant. That’s not a vote of confidence in the hold-the-debt-ceiling-hostage strategy that we keep being told will not have a negative impact on interest rates, market psychology, stock prices or economic growth.

Second, the leadership and the candidates don’t seem to realize or be able to admit that the White House is in control of many of the levers that will affect the markets. Administration officials, not the Congressional leadership, will determine how to deal with a cash shortage, and Wall Street is much more likely to react to the Treasury’s decisions than to political hyperbole, demagoguery and attempted spin. Try to imagine the virtually immediate impact on the stock price of government contractors if the administration announces on Aug. 2 that money owed to those companies will be paid after 120 days instead of 30, and you start to get a sense of how much the White House rather than Congressional Republicans are in control of the situation.

Third, in spite of all the GOP protestations to the contrary, there are actually a number of important signs that capital markets have already begun to react disapprovingly to the debt ceiling impasse and that the economy is starting to feel the negative effects.

It started in mid-April when Standard & Poor’s, one of the top three credit rating agencies, revised its outlook on the rating for U.S. debt to “negative.” Much of the reporting about S&P’s changed outlook was about the size of the deficit, but a closer look shows that S&P expressed little doubt about the United States’ ability to pay its debts. Its main concern was over the government’s “willingness to pay,” or its ability to reach the political consensus needed to make timely payments. The fight over increasing the debt ceiling, which raises questions about the government’s willingness to pay existing obligations, had to weigh heavily on S&P’s analysis, especially because the United States is having no problem borrowing and could easily meet its obligations by doing so.

The negative market reaction continued last week when Moody’s, another of the three top rating agencies, warned it was considering a downgrade of the federal government’s credit rating. Moody’s explicitly blamed the debt ceiling fight: The rating agency said the nation’s rating could be lowered if the debt ceiling is not raised “in coming weeks,” and it cited “the heightened polarization over the debt limit” as one of the primary reasons for its thinking.

In other words, and completely contrary to what GOP leaders are saying, two major financial market participants are warning that there will be a Wall Street-related price to pay if the debt ceiling is not raised as needed.

The best indication of all that the market has already started reacting negatively is the current trading of credit default swaps on U.S. debt. As of late May, the number of CDS contracts — essentially insurance policies on the possibility of a default — had risen by 82 percent. Equally as important, the cost of a CDS — the best indication of how much riskier U.S. debt has become — rose by more than 35 percent from April to May. Last week I spoke to a number of people who calculate such things for a living, and they said this change means that the interest rate the U.S. government has to pay has already increased by as much as 40 basis points compared with what it otherwise would be. This means higher federal borrowing costs and deficits, and overall higher interest rates on everything from car loans to mortgages to credit cards.

Except when something unexpected occurs, the initial changes in market psychology and behavior start with just a few investors who act either because they are more or less risk averse, have better information, or are smarter. That means there are usually small signs of change before a market tsunami hits. In this case, there is now clear evidence that the uncertainty over the federal debt ceiling is already having the negative impact on financial markets that the Republican leadership has said will not occur. Just because it may not yet be obvious to everyone doesn’t mean it’s not happening.

Read more here:
Wall Street Is Already Reacting Negatively To Debt Ceiling Fight




HERE IS YOUR FOOTER

Uncategorized

Volatility with Oil – is it the Next Global Crisis?

June 2nd, 2011

SmartStops wants to remind you that it is important to stay protected in the markets.   There’s alot going on within the underlying infrastructure that you may not realize.

from inside flap of The Vega Factor: Oil Volatility and the Next Global Crisis  by Kent Moors

“There is a sleeping dragon at the heart of the financial system. Soon the beast will awake and rear its terrible head, and we will look back on the days of the subprime disaster with nostalgia. In this riveting book by oil industry expert Kent Moors, you will meet the dragon he refers to as oil vega, and you’ll discover why it poses such a grave threat to world economic and political stability.”

“Those familiar with the options and currency markets will recognize vega as the term traders use to denote the rate of price volatility. Expanding upon that traditional usage, Moors coined the expression oil vega to describe the dramatic increase of price volatility seen in the oil markets over the past several years.  In The Vega Factor, he describes how, contrary to popular belief, the current environment of runaway volatility in the markets is not the work of diminishing reserves, manipulation by oil producing nations, or increased competition among nations. Rather, it is a result of a structural flaw in the trading system itself.

Read more here:
Volatility with Oil – is it the Next Global Crisis?




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OPTIONS, Uncategorized

Volatility with Oil – is it the Next Global Crisis?

June 2nd, 2011

SmartStops wants to remind you that it is important to stay protected in the markets.   There’s alot going on within the underlying infrastructure that you may not realize.

from inside flap of The Vega Factor: Oil Volatility and the Next Global Crisis  by Kent Moors

“There is a sleeping dragon at the heart of the financial system. Soon the beast will awake and rear its terrible head, and we will look back on the days of the subprime disaster with nostalgia. In this riveting book by oil industry expert Kent Moors, you will meet the dragon he refers to as oil vega, and you’ll discover why it poses such a grave threat to world economic and political stability.”

“Those familiar with the options and currency markets will recognize vega as the term traders use to denote the rate of price volatility. Expanding upon that traditional usage, Moors coined the expression oil vega to describe the dramatic increase of price volatility seen in the oil markets over the past several years.  In The Vega Factor, he describes how, contrary to popular belief, the current environment of runaway volatility in the markets is not the work of diminishing reserves, manipulation by oil producing nations, or increased competition among nations. Rather, it is a result of a structural flaw in the trading system itself.

Read more here:
Volatility with Oil – is it the Next Global Crisis?




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OPTIONS, Uncategorized

Preparing for the next Black Swan

June 1st, 2011

Kevin Depew, editor of Minyanville posted an interesting article today at:    http://www.minyanville.com/businessmarkets/articles/collapse-financial-collapse-economic-collapse-depression/6/1/2011/id/34883

And we at SmartStops ask the same question – have people become immune to all the potential downfalls awaiting them?  Is that what causes them to try to ignore the risk around them?  As if they don’t acknowledge it , it doesn’t exist?    How do we get investors to feel that risk management is second nature to them when investing in the stock markets?  So they can invest wisely and with less “fear”.

..” It’s been 11 years since the dot-com crash. Our 2006 gloom no longer feels misplaced; it feels comfortable, safe. Yes, there are times to prepare for the worst.”    He ponders if we shouldn’t thus also have white swan focus, in seeing this Bloomberg ad:

“Preparing for the Next Black Swans”

Bloomberg Money Managers Conference

When 14-Jun-2011 (Tue) 07:45 – 13:00
Where State Room, 60 State St., 33rd Floor
Boston, MA, United States
Entry Fee USD 695.00

“I have to believe that perhaps the notion of a black swan has not been fully explained? Or if it was, then the concept itself not wholly grasped?”

The event description:

“Preparing for the Next Black Swans”: The year 2011 will most certainly be remembered for its Black Swan events, including the spreading unrest in the Middle East and the earthquake in Japan. Money Managers need to be prepared for unexpected events as they position their investments across asset classes. The Bloomberg Money Managers conference will bring together mutual fund, hedge fund and private equity investors to consider events that could rock the markets, portfolio strategies for managing the unforseen and the future of actively-managed investing.”

“Can you see the shift that has occurred? If you have not participated in or observed the financial services and money management industry throughout the 1990s and before, perhaps not. Prior to 2000, the very concept of a black swan — an unexpected event that has an outsized impact and which endures post-impact rationalization as wholly expected (a la dot-com crash, subprime collapse, debt crisis, etc.) — was anathema. The models accounted for all possibilities. Math and science, financial engineering had permanently eliminated tail risk. This is not overstating things. Fast-forward a full decade, black swans are everywhere, their ubiquity serving as a sort of psychic balm. Today, every unpredicted event is black swan-worthy.”

Read more here:
Preparing for the next Black Swan




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Mutual Fund, Uncategorized

How Investors Can Profit From Rising Platinum Prices

May 31st, 2011

by Tony Daltorio, contributing writer

Even after a sharp sell-off on commodities prices, the spot price of platinum remains within reach of a two-year high. That high was hit last month at around $1,870 per ounce.

The consensus in the industry is for higher prices in the coming years. And this is despite the disaster in Japan, whose automotive industry is one of the biggest consumers of the precious metal.

Why so much bullishness?

 The main reason investors, analysts and those in the industry point to is the challenges facing South Africa’s platinum mining companies. South Africa is the world’s biggest producer of the metal. It produced 4.6 million of the 6 million ounces mined in 2010.

 Problems in South Africa

 Some metals have seen a spectacular appreciation in dollar terms. For instance, palladium has quadrupled from its lows in late 2008.

 However, the prices South African miners receive are not keeping pace with costs.

 A basket of platinum, palladium and rhodium weighted for the level of the average South African miner’s production has risen just 4 percent in rand terms in the past 12 months. This is according to Walter de Wet, head of commodities research at Standard Bank.

 That compares with cost rises of 8-9 percent in wages, 25 percent in electricity and 18 percent in fuel.

 Because the mining companies pay costs in a strong currency but take payments in a weak currency, the rand’s strength against the dollar erodes earnings.

 The rapid increase in costs means prices are unlikely to fall far from current levels, most analysts believe.

And let’s imagine the scenario where platinum prices stay steady or even fall. It won’t be a pretty picture. Leon Esterhuizen, mining analyst at RBC Capital Markets, puts it this way: “If we get sideways prices for even a year you will see [mine] shutdowns.” He added that the big platinum producers are “running out of [profit] margin”.

 Supply Constraints

 Johnson Matthey, in its annual report, also stated that platinum prices would not fall far from current levels of $1,765 per ounce.

 Its annual report estimates a net surplus of just 20,000 ounces of platinum at the end of 2010. This is down from a surplus of 635,000 ounces the prior year. The drawdown was due to last year’s recovery in car manufacturing.

 But even if the price of the metal does rise, do not expect the normal supply side response.

 Due to the geological freak of nature, most platinum production will continue to come from South Africa and Zimbabwe. Although it should be mentioned that production is increasing in both Russia and North America.

 With the notorious power shortages in South Africa, the mining companies simply do not have enough reliable electricity to expand production at their mines. This in itself will support platinum prices.

 Platinum Investments

 For investors looking to profit from rising platinum prices, perhaps the best way is through the use of exchange traded funds. One such ETF is backed by actual physical platinum. It is the ETFS Physical Platinum Shares (NYSE: PPLT).

 If one does purchase PPLT, an investor should keep in mind the well-known volatility of precious metals day-to-day prices  If one does purchase PPLT, an investor should keep in mind the well-known volatility of precious metals day-to-day prices. Make sure to properly manage your risk via position sizing.  A free calculator is available at SmartStops.net.. It’s the way all intelligent investors should manage risk in our 21st century markets.  . 

 as posted at:  http://www.minyanville.com/businessmarkets/articles/platinum-commodities-prices-commodity-prices-precious/5/31/2011/id/34862

Commodities, ETF, Uncategorized

Elevating Risk Management

May 28th, 2011

We couldn’t agree with some of the commentary from this article in  Financial Advisor Magazine.  Its why we created SmartStops.   

The broader message is that indexing is moving past the standard beta carve-ups, such as small- vs. large-cap equities and value vs. growth stocks. A new era of factor-based indexing is dawning… Among the catalysts for the new indices is the growing use of factor models, says Rolf Agather, director of index research at Russell. “As investors become more sophisticated, they’re using risk factor models to have a better understanding of their risk exposures.”   Elevating risk management to a high priority, in other words, is the new new thing.   “Many investors are realizing that using a traditional framework built around countries, sectors or styles doesn’t always provide the insights for appropriately managing risk,” he explained in an e-mail. “Investors are looking for new ways to manage their risks more directly.”

Beyond One Beta

A key motivation for targeting multiple risk factors in portfolio design is recognizing the limits of using just one.

The broad market beta does the heavy lifting for explaining the link between risk and return, according to the capital asset pricing model (CAPM). (CAPM is Robert Merton’s invention) .   But if CAPM worked as promised, one beta would suffice for explaining risk and return. More exposure to market beta would bring higher return; less exposure would mean lower return.

CAPM’s embedded message: Don’t waste your time with factors other than market beta. It’s an elegant story, and it simplifies portfolio design and management—if it works.  But it doesn’t, at least not completely

Even if you have the stomach for sitting tight over ten or 20 years, the risk and return story isn’t as simple as CAPM suggests. Decades of empirical research show that there are other risk factors beyond market beta driving performance. In fact, the risk-return story is teeming with factor narratives. The concept of one dominant beta isn’t dead, but it’s no longer alone.

Read more here:
Elevating Risk Management




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Uncategorized

Google: The Bigger They Come, The Harder They Fall

May 27th, 2011

by Paul Harrison, contributing writer

Google’s (GOOG) high point for 2011 so far came back in January, when their stock hit just below $640 a share.  And in terms of being able to sidestep downtrends, nothing like have the SmartStops risk management service notify you  on Jan. 21st at $616 that now may be the time to exit.  And if you didn’t then, their risk alerts just kept firing.  That’s why its important to have your exit or hedge protection methodology in place from the start. As now  we’re sitting at around $518 a share!  And things still aren’t looking good.

According to SmartStops , Google is still in a high risk state  in boththe short term and the long term time horizons.  In fact, Google has dropped over 12% in valuejust since the beginning of April.

Part of that is that Google has just been spending way too much money. Their spending affected their 1Q earnings report, and none of that spending is expected to bring any new money making consumer services to market soon.  That explains their previous drops, but what about the future?  Google Wallet was unveiled yesterday, backedby Citibank (C) and Mastercard (MA), but the digital wallet is a long ways awayfrom replacing people’s standard business card and picture stuffed wallet.

There are some serious drawbacks and limitations to theGoogle Wallet service. First, only the Google Nexus S phone on the Sprint (S)network comes equipped with the necessary NFC technology (which is not apopular phone at all).  Next, the customer has to have a Mastercard branded Citibank debit or credit card.  On top of that, only a handful of retailers nationallyare even technically capable of accepting NFC payments at this point. But thoseare just the issues with the actual service. There’s also expected to be some serious competition around the corner.  Both Research in Motion (RIMM), Nokia (NOK), and Samsung all plan on implementing technology that would enable their phones to make NFC payments, and many people have speculated that Apple’s (AAPL) iPhone 5 will also include NFC technology.

But the competition for turning our smartphones into payment methods doesn’t stop there.  Visa (V)recently invested in the disruptive mobile payment start-up Square (founded byJack Dorsey of Twitter), and is concurrently developing their own mobile wallet service.

Even without all this competition staring Google and their digital wallet in the face, the service may be unlikely to catch on immediately. First, payments are limited to $100, unless you go through extra steps to confirm the transaction.  But one of the biggest things that could keep people from using it is the fact that it doesn’t completely replace wallets for people. Certain things like your ID, bus pass, employee ID, health insurancecard, etc., still need a home, and that home is likely to be the same walletthey live in now for at least the next few years. If you’re holding Google, Istrongly recommend using a service like SmartStops.net to monitor the situation.

If you’re looking to invest in the smartphone industry, butaren’t sure which team you’re rooting for, the First Trust NASDAQ CEA SmartphoneIndex Fund (FONE) is a great ETF that holds anything and everything that issmartphone related.

Read more here:
Google: The Bigger They Come, The Harder They Fall




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ETF, Uncategorized

Top 4 Risks for Baby Boomer Retirement

May 25th, 2011

‘Many Baby Boomers and Gen Xers face a significant retirement income shortfall,’ writes Alicia Munnell , director of the Center for Retirement Research at Boston College  

As retirees live longer, finances will be stretched thinner. 

 
Alicia Munnell wrote a piece for on Monday that zeroed in on the reasons retirement will be so much riskier for Baby Boomers than their parents and grandparents.

According to Munnell, the current crop of retirees are living in a “golden age” that will fade as Baby Boomers and Generation Xers reach traditional retirement ages in the coming decades.

“Many Baby Boomers and Gen Xers face a significant retirement income shortfall,” she writes. “Even before the financial crisis, almost 45% of working households were projected to be ‘at risk’ [of being unable to maintain their pre-retirement standard of living in retirement]; after the crisis, this level increased to 51%.

Moreover, Munnel adds, the percent “at risk” increases with each cohort. Late Boomers show more households “at risk” than early Boomers, and Generation Xers have even larger numbers “at risk.” This gloomy forecast is due to the changing retirement income landscape. 

She then lists the four reasons why today’s workers will be retiring in a substantially different environment than their parents:

1. They’re living longer – The length of retirement is increasing, as the average retirement age hovers at 64 for men and 63 for women while life expectancy continues to rise. This longer retirement means retirees will likely need more savings than their parents’ did.

2. Replacement rates are falling – Replacement rates – retirement benefits as a percent of pre-retirement earnings – are falling for a number of reasons. First, Munnell notes, at any given retirement age, Social Security benefits will replace a smaller fraction of pre-retirement earnings as the full retirement age rises from 65 to 67. Second, while the share of the work force covered by a pension has not changed over the last quarter of a century, the type of coverage has shifted from defined-benefit plans, where workers receive a life annuity based on years of service and final salary, to 401(k) plans, where individuals are responsible for their own saving. In theory, 401(k) plans could provide adequate retirement income, but individuals make mistakes at every step along the way and the median balance for household heads approaching retirement is only $78,000. Third, most of the working-age population saves virtually nothing outside of their employer-sponsored pension plan.

3. Out-of-pocket health costs are rising – Out-of-pocket health costs are projected to consume an ever greater proportion of retirement income.

4. Returns have declined – Asset returns in general, and bond yields in particular, have declined over the past two decades so a given accumulation of retirement assets will yield less income.

She concludes that it is important to note her research is based on conservative assumptions. 

“Everyone is assumed to retire at 65; they don’t, they retire earlier,” she writes.  “Everyone is assumed to tap the equity in their home through a reverse mortgage; only a fraction of those eligible elects this option. All financial assets are assumed to be annutized so that retirees gain the maximum income from their assets; in fact, annuitization is rare; in short, [we] probably understate the challenges ahead.”

originally published at:  Advisor One | May 25, 2011 | By John Sullivan, AdvisorOne

 What do you think?  Should SmartStops cover mutual funds so 401ks should be protected?  Let us know. 

Read more here:
Top 4 Risks for Baby Boomer Retirement




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Mutual Fund, Uncategorized

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