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A Simple Retirement Formula

A Simple Retirement Formula

Most of us get up and work hard every day so that someday we don’t have to. That day is called retirement. Getting to that point requires you to learn how to manage your money week to week and month to month. Retirement is a whole new game; it requires a lifelong perspective. Your early decisions will impact the next 20 or 30 years. Many people don’t give retirement planning the time it deserves until too late in the game.


ETFs Are Growing

Today’s Chart of the Day comes from Morningstar Direct and shows the openings and closings of mutual funds vs. exchange traded funds (ETFs) since 2012.


Be Wary of Non-Traded REITs

Today’s Chart of the Day comes from the Wall Street Journal and highlights why investing in Non-Traded, or illiquid, assets pose additional risk. The additional risk is present because they open the opportunity for some investors to game the system and leave the remaining investors holding the bag. 

As an example, today’s Chart of the Day shows the tremendous increase in the quarterly withdrawals from non-traded REITs (real estate investment trusts) where to sell, you have to ask in advance, can only sell back to the company, are typically only allowed to sell once a quarter, and generally are only allowed up to 5% in redemptions at a time.  

The reason for the large withdrawal rate from non-traded REITs is because investors expect future losses in real estate as the real estate market starts to struggle. Non-traded REITs typically base their valuations on periodic appraisals, which are slow to adjust to the current price. This could keep current valuations artificially high for a time. Investors know this and sell out before the price declines as appraisals catch up to reality. 

As Nori Lietz, Senior Lecturer of Business Administration at Harvard Business School, said in the article, “Appraisals look backwards, and markets look forward, and people are trying to arbitrage and get their money out before the write-down occurs.”

This does not happen to REITs that are publicly traded on the stock exchanges since the price is determined throughout the day, every day.

The pricing inaccuracies of non-traded REITs is one of the reasons we do not use these types of investments.

“Experience is a good school, but the fees are high.” Heinrich Heine (December 13, 1797 – February 17, 1856)


Purchasing a Home with Today’s Prices

To Buy, or Not to Buy, That Is the Question


Year End Comment

What a wild ride. In 2022 we experienced:


Retiring Sooner Causing Inflation

Today’s Chart of the Day comes from the Financial Times and includes an article asking if higher wage demands will increase inflation like in the 1970s. However, this time it is different since the workforce is shrinking as shown by the Participation Rate, the falling orange line in the chart. The participation rate is defined as the percentage of healthy people 16 or older who are actively working or looking to do so.


Dow vs. S&P

Today’s Chart comes from Benedek Voros from S&P Dow Jones Indices. I always like to point out firsts, and this year there have been many.


20 Year Active to Passive

Today’s Chart of the Day comes from and shows that starting in 2015, and each year after, investment funds left actively managed funds, in red, and were reinvested into passive funds, in blue, which have grown each year for the last 22 years. 

The interesting part is the year over year growth is accelerating in 2022 as the downturn in both stock and bond prices provided an opportunity to sell out of many funds and not pay capital gain taxes. Any further downturns in 2023 could accelerate this trend even more.  


Average Can Be Hard to Achieve

Today’s Chart of the Day comes from Compounding Quality, @QCompounding on Twitter, and shows that over the last 20 years, the average investor realized only an annual return of 3.6%. This is less than 4.3% on bonds, and not much higher than inflation of 2.2%, meaning that many just barely broke even after inflation and taxes. This can be compared to a return of 9.5% on the large-cap stock index, or 7.4% for even a conservative generic portfolio of 60% stocks and 40% bonds.


Family Matters

In the desperation of trying to stay relevant and up-to-date within the banking industry, more and more community banks are falling prey to merger mania, albeit losing these banks means losing a part of the community. However, the Crews family