May 24

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The Secret Ingredients?

Enter your Graduation is tonight. Senay's GPA put her in the top ten of her class at Sarasota High! We are so proud of her. She got most of her brains from her mom. Grammy flew in for the ceremony, so I'm sure we will be playing a lot of cards.

My oldest son, Chris, has really come to love playing the piano. He has two weekly lessons, and we hear him playing all the time. He even writes his own songs, and his passion shines through. When he played at the talent show, some people were crying. He is such a sweet kid.

Please keep your thoughts and prayers with my wife, Dalanee. She has been suffering from migraines for months, and nothing seems to be helping. She was referred to a specialty clinic in Chicago for a one-week in-patient treatment protocol. It's nice to have some hope finally. Headaches are so debilitating. She has been through so much. Her strength is truly inspiring.

Above is the kid's Mother's Day present. 


It’s high time we return to the core of the Retirement Revolution philosophy. While my weekly missives may be interesting, they often don't provide actionable steps that could improve your life. That stops now.

The longer I work in the financial industry, the more conservative and straightforward my views become. For instance, here is something I learned many times over:

Let’s say someone approaches you about a new venture or business—maybe they are building a new indoor pickleball facility. “That’s a great idea. Everyone loves pickleball!” you may say to yourself. “I should invest some of my money. I could make a fortune!”

Don’t do it.

In twenty years, I’ve seen something similar work once. When I say “work,” I mean they got their money back and made a 10% profit. Most of them lost everything. Any investment not in an established publicly traded company is a bad idea.

“I’ve learned about this new and revolutionary insurance product that will give me guaranteed returns and tremendous tax benefits. I can't believe I was one of the few lucky ones to find out about it.”

Don’t do it.

What should you do? I know I beat this drum almost weekly, but- invest in publicly traded stocks and bonds.

Let’s distill the infinite number of retirement investing ideas to all you need to know. Seriously, I have looked at every (and I mean every) retail product available to you.

Make a budget.

Take your Social Security at the appropriate time.

Combine your various retirement accounts into one IRA.

Invest your money in a diversified portfolio of stocks and bonds- with at least half the money in stocks.

Each year, withdraw 5% of the account value. I would divide it into twelve separate payments.

Don’t watch the financial news. If someone sends you an article about the stock market, delete it. If your neighbor wants to talk economics, politely run away. Don’t change your plan.

Feel free to spend the money you bring in each month. Your savings days are over.


That’s it. Of course, I am oversimplifying to a certain degree. Investment management is not quite that simple, but I think you get the general idea. If you have no access to a competent financial advisor- put half your money in stocks and half in bonds, you would be better off than many people out there.

Why do I believe these steps are the way to go?

If you don’t have a budget, you will be stressed. Every time you buy something, you will ask yourself, “Is this ok? Am I being irresponsible? Am I going to bankrupt myself? I don’t know what to do!” A budget allows you to make buying decisions based on reality.

Social Security is the most critical piece of the pie for most people. If you and your spouse each get $2000 a month and live for twenty-five years while retired, you would collect $1,200,000 from the system. I bet you don’t have that much in your 401k. Many people take their benefits too early. If you are married, the person with the larger benefit should try to wait as long as possible to maximize the benefit.

If your investment accounts are spread out everywhere, you will not have a cohesive plan. It will get so complicated that things will get lost in the shuffle, and you will have lower overall returns. Diversify investments, not accounts.

If you put too much money into bonds, you will not make 5% over time. Stocks should return 10% between now and the end of your life. You need to use both, with a majority in stocks.

Historically, taking 5% is very reasonable. It would be unprecedented if your portfolio didn’t return 5% over time. Also, automatic monthly payments are essential. People are used to living on monthly budgets, not annual ones.

There is truly nothing more you need to learn about investing or retirement strategies. It will just confuse and stress you. Trust the plan and live your life.


Nothing is guaranteed in life, but I firmly believe that this is the most practical and responsible approach. If there were a better way, I would let you know (and I would utilize it for my clients, too. I'm not keeping any secrets).

Be Blessed,

Dave

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