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i have been saying for months,its not markets , but bad planning that kills retirements.. looks like i was wrong... its NOOOOO PLANNING not lack of planning.
Wow. Those who provide financial advice have found data that supports the idea that more people should pay for financial advice. What an unexpected finding.
Actually after a number of dealings with financial advisors, I came to the conclusion that most of them belong in jail. Maybe that is not the case if you pay enough to get a truly independent advisor.
I think that one of the great myths that has been shattered by our financial crisis is the myth that the average person is fully capable of planning for his own financial future and looking out for his own best interests.
The sad reality is that a large percentage of people out there have no idea what they're doing financially. They borrow money without understanding the terms, and think that equity they have in their home is 'their' money that they can unlock by borrowing and spend at will. Most have no concept about the real and opportunity cost of not saving any money and living with chronic and growing debt.
Most people have no idea what they're spending, or what it's going to lead to in the future. Some people have this vague idea that social security will finance their retirement, and have little realization that social security is a subsistence level payment, and likely to decline in real terms for generations currently working.
So it comes as no surprise to me that people are not planning for their financial futures. When I read about people who were only a couple of years away from retirement who had all their money in the stock market, I want to scream. What were they thinking? A lot of it is greed -- they thought they'd make more that way, and didn't understand or appreciate the downside risk.
And those are the ones who actually had some money. There are so many others who go through life without a dime to their name. I have friends who are in the 45-50 year old range, don't have a penny saved, and keep cashing out retirement money to pay for daily expenses. I don't know what they're going to do when they really can't work anymore. It's going to be very, very ugly. People don't realize that you can't muddle through your whole life the way you do when you're 20-25. If you're still living like that at 45, there's a big problem.
And with so much of the population operating this way, is it any surprise that our government shares the same predilections? We need to wake up fast, or we're done. Our standard of living is going to take a huge hit.
Wow. Those who provide financial advice have found data that supports the idea that more people should pay for financial advice. What an unexpected finding.
Actually after a number of dealings with financial advisors, I came to the conclusion that most of them belong in jail. Maybe that is not the case if you pay enough to get a truly independent advisor.
You're right in two ways, with a twist.
There are very few good financial advisors out there. Most are just salesmen who are pushing a product. And most have just been taught to recite a certain mantra about buy and hold, asset allocations, and other things that were upended by the recent financial crisis. People who listened to them lost big.
But if you do find a truly good, independent financial advisor, that person is worth paying for. The reality is that we do pay for financial advice that we receive, whether it's overt or hidden. Might as well pay for good advice rather than bad advice.
never forget to most people in the financial world YOU ARE NOT A CLIENT, YOU ARE A CUSTOMER.
until most people stop learning more about the refrigerator and car they want to buy and take more interest in their own financial lives nothing will change.
i have to commend my wife who before she met me had as much a clue about anything financial as the woman on the moon. after being taken advantage of by "salesman in the business" she began to take an interest and started learning. she would read some of the articles and books i did, watch the shows and generally start paying attention.. .
today she learned enough that im confident she can not only handle things on her own but at least evaluate information so called pros may give her.
its like in my business which is in factory automation products which is very technical i tell all our new hirees. you dont need all the answeres, you get paid to know how to evaluate and pick the people and sources you go to for those answeres.
once your active in learning you quickly learn who the correct people are.... you only need learn enough to evaluate if things make sense and see plausible.
i found when recently reading ed slotts book he has a wonderful section on how to identify the right people for your team.
you need different people for different parts of the game.
as ed puts it the first 1/2 of the game is accumulating assets and growing our nest egg. most financial people are in that half of the game... the 2nd half of the game is the spending down and passing on your wealth. very few of the people in the first half of the game are any good in the 2nd 1/2.
the irs is great at all 4 quarters of the game so to beat them you need the right people for the 2nd 1/2
Last edited by mathjak107; 11-15-2009 at 06:13 AM..
I would not consider using the services of a "financial advisor" - most of whom are put in a situation where they have a conflict of interests.
We manage our investments ourselves - yes it does take time and one needs to stay on top of what is going on. The Financial Times is a great source, so is John Maulden, Full Circle - there are many sources out there that are very informative.
One friend went to what he called a financial advisor (who I think was a Fidelity salesman) who advised him to put his down payment money, which he needed in a year or so, into a balanced stock fund. CLUNK
Another friend thought she was being really wise in going to a financial planner of some sort about the mere $50K her husband had in a 401k. He told them to put it into cash- this in 1998, because Y2K would be the end of the world and all.
I think people can do as well or better by simply reading a few personal finance columns. Either that, or have some way of vetting a "financial planner" as you would any other professional you'd hire.
anyone who just learns some basics can easily put the first 1/2 of the game together.. its so easy to put a bunch of index funds together. a total index fund, a foreign market fund, a reit, commodities and bonds.
odds are you will beat 80% of the pros out there just by rebalancing once a year.
the hard part is the 2nd half of the game. getting the money out and or passing it on to heirs without your partner uncle sam being a pig.
the other hardest part is knowing your risk tolerence so you can decide what and how much to allocate...up to now everyone thought they had a high tolerence for risk,. i love the planners that base this on age, they are sooooo wrong....
what your overall allocations are have to do more with risk tolerance then age.. my own bucket 3 with my equities isnt being used to eat for 30 years from now, what difference does my age make?
but that 30 year old who panicked and sold near the bottom got creamed.. had he not bailed but bought more and rebalanced based for the long term like he should have he would have been maybe even ahead 6 months later.
I've always done my own investments; bought when I liked the looks of something not only in the current market but what I felt the future would hold, sold when I wasn't pleased with the direction the company was headed, studied the business operations, etc. As a professional writer and political person, I know when I'm being scammed by flowery words and phrases, and the bottom line has always been what I'm interested in.
Most folks think that they "don't have time" to do their own investing, but I take every investment personally, so I make time. Our brother in law decided he was an investor, and hit up our in laws for $30,000 - their nest egg - to invest in 'commodities'. He had no idea that commodities is a volatile market, and can be upset by imports, bad weather, etc. He lost not only his shirt but DH's parents' money. Now he sits at home in his trailer, 60 years old, trying to get people to give him more money to invest while his 60 YOA wife works at WalMart to pay the bills. She has started having pin strokes, and he isn't concerned - she can tough it out. That's his retirement plan...
I know a lot of folks who think that because they are making good money NOW they don't need to worry about later; they buy more and better houses, vehicles, treat themselves to trips and eating out several times a week. They think that as long as they have their long-term employment, they will be ok. IF they are let go, or can't work anymore, they won't last three months - because all of their money is tied up in future payments on what they are enjoying today.
Me, I've always downsized, pinched a quarter til it squeaked, carried a single $20 for 3 months or more in my wallet because I hate to spend money. I bought our "retirement" home and paid over 1/2 down, and use it to raise our own food and animals so that we can become almost (not quite) self-sufficient. Our retirement is paid for already, and we don't have to worry about the "what-ifs" or balancing our costs on a sneaky government about to take away our SS cost of living increase this year.
Folks say, "What if you get a devastating and expensive disease?" well, bluntly, I don't believe that people should go on living if they have to be "careful" and not be able to do what they want. At least, I won't. IMHO, too many people think that because medicine has advanced so far that life can be extended almost indefinitely, that they should take advantage of it. Even when reduced to mindless blobs pizzing themselves and having to have someone feed and change them, they think that they need to go on living. Like hiring investors to take my money, giving my money to our brother-in-law, or 'hiring' a board and POA to "protect my home", hiring doctors to spend my money without any gain on my part just seems stupid. But, some folks will fall for anything. More power to 'em. "Bless their hearts".
what most individuals do who dont take the time to learn is speculate, not invest. then they loose, shy away from real investing and are poor forever.
good investing is never having to say im sorry. instead of ruling out uncertainty it plans for it.
investinmng is what you do when you say im willing to take whatever the markets give me that year .... speculating is when you think your smarter then the markets and can beat them... you think you know the next hot asset class, the up coming sector and worse. you buy a handful of individual stocks and think you are going to pick just the right company at just the right time, in just the right sector, in just the right market sentiment... and of course you already know what the competitors are doing...
get my drift?
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