Conservative Retirement Portfolio Results Through 1st Half 2014

We are very proud of our results.

The Retirement Advisor Aggressive Growth and Income Model Portfolio 1, designed for someone approaching retirement who is interested in a portfolio allocation designed to provide income and capital appreciation while avoiding excessive risk.

The Retirement Advisor Moderate Growth and Income Model Portfolio 2 , designed for someone who has retired and seeks to maintain their current standard of living, even with inflation.

The Retirement Advisor Conservative Capital Preservation Model Portfolio 3 , designed for someone in the later stages of retirement who wants to avoid large losses in their portfolio and who does not need a lot of inflation protection.

More Information:

• About our Portfolios
• About Us

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PenFed CD Rates

Current CD rates and terms at Pentagon Federal Credit Union. You can often get higher than advertised CD rates at your local branch if you do your homework. Print out this "Highest CD Rate Survey" and bring it in with you.  Print out some of the advertisement of rates advertised on your bank's competing web sites so you have proof.

==> PenFed CU Money Market Certificates <==  as of 4/28/14
Rates are lower again at PenFed compared to the past

Term	Dividend Rate	APY
6 Month	0.300%	0.30%
1-Year	0.800%	0.80%
2-Year	0.900%	0.90%
3-Year	1.000%	1.00%
4-Year	1.250%	1.26%
5-Year	1.500%	1.51%
7-Year	1.500%	1.51%

As of today, you can get 0.95% in a Savings Account at CIT Bank for $25,000

March 26, 2014 Rates
Term	Dividend Rate	APY
6 Month	0.300%	0.30%
1-Year	0.800%	0.80%
2-Year	0.900%	0.90%
3-Year	1.250%	1.26%
4-Year	1.500%	1.51%
5-Year	1.750%	1.76%
7-Year	1.750%	1.76%

February 26, 2014 Rates
Term	Dividend Rate	APY
6 Month	0.300%	0.30%**
1-Year	1.150%	1.16%
2-Year	1.250%	1.26%
3-Year	1.500%	1.51%
4-Year	1.750%	1.76%
5-Year	2.000%	2.02%
7-Year	2.250%	2.27%

December 9, 2013 Rates
Term	Dividend Rate	APY
6 Month	0.300%	0.30%
1-Year	0.750%	0.75%
2-Year	1.400%	1.41%
3-Year	2.000%	2.02%
4-Year	2.200%	2.22%
5-Year	3.000%	3.04%
7-Year	3.000%	3.04%

Minimum investment is $1,000.

Is the Bull Market for Stocks Over?

The market is less than 1% below the all-time high it set last week.  The question on everyone's mind "Is the Market Overvalued and Can it go higher?"

More S&P500 Charts & Market Scan

Last week on March 6, 2014, Liz Ann Sonders of Charles Schwab, Inc. posted this video titled "Market Snapshot: Bull Rally - Is It Sustainable?" where she makes many of the same points I've written about in my newsletters (which newsletter is best for you.)  Below are the highlights of the Liz Ann Sonders slides that I think are especially important.

See slide 14 of for this table:

Market Return after a Great (+25%) Up Year

2014 is a "Midterm Election Year."  The average market correction between 1962 and 2010 was 19% but the performance of the market a year after the bottom of the correction was 32% higher. See slide 15 of for this table:

Note how the average "correction" during mid-term election years back to 1962 is 19% but  the market was up 32% from the low just a year later.  I've taken profits and have ammo to buy if we get this pull-back. See slide 17 of for this table showing Rising 10-year Treasury yields are good for stocks.  

Note how the average change for the S&P500 while rates are rising is 17.6% with 100% of the time the markets went up.   On the flip-side, when rates were falling, the average change for the S&P500 was a loss of 1.9% with the market going up only 50% of the time. See slide 19 of for this table showing "Inflation vs PE (Price-to-earnings) ratio":

In March 2014 issue of "Kirk Lindstrom's Investment Letter" (on page 7) I wrote:

The estimates for 2015 earnings are in and they show good growth over 2014. See page 10 for a summary.  Now, based on 2014 PE or PEG, the market does not look over valued.   The 32% gain last year may have correctly anticipated the higher earnings, especially with estimates for 2015 showing similar earnings growth.      We could see PE expansion for further gains as money moves from bond funds to stocks but I do not count on this.  Based on the Fed Model, the market is not “overvalued” based on 2013 or 2014 GAAP earnings estimates and current interest rates.  

• Kirk's Two Newsletters - which is best for you?

From page 10:

2011 GAAP EPS =  $86.95 

2012 GAAP EPS =  $86.51 

2013 GAAP EPS (Top Down Est.) =  $100.78

2014 GAAP EPS (Top Down Est.) =  $120.60 

2015 GAAP EPS (Top Down Est.) =  $147.50 

Some quick calculations of PE times GAAP EPS:

16.3 x $120.60 = $1,966 

16.3 x $147.50 = $2,404  

Note GAAP EPS = Generally Accepted Accounting Principles Earnings Per Share

The Retirement Advisor

NEW!   =>  December 2013 Excerpts   

FREE==> SAMPLE Issue  <== FREE
Kirk's Two Newsletters - which is best for you?

December Retirement Advisor Issue

We just sent the December 2013 issue of The Retirement Advisor to our subscribers.  Click the images to read the first page for free.

From a happy subscriber today:

12/7/2013.........btw, YOU DO A GREAT JOB ON THE NEWSLETTER, AND I LOOK FORWARD TO IT EVERY MONTH. KEEP ON DOING WHAT YOU (ARE) DOING, PRODUCING AN INTERESTING, ORIGINAL THINKING PRODUCT EACH MONTH. SINCERELY, ED ....., NEW CITY, NY

Website for more information and our
annual Performance Data

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Don't Delay Your Financial Health Any Longer! 

For more conservative investors who have no interest in individual stocks, I co-edit "The Retirement Advisor"  where our most aggressive model portfolio is slightly less aggressive then the "core conservative portfolio" in Kirk Lindstrom's Investment Letter."   For more explanation, see  "Kirk's Two Investment Letters - Which is Best for You?"

WHERE TO LIVE IN RETIREMENT

Once you are approaching your retirement years, you start to think of how you are going to implement your retirement and spend your money. Choosing a place to live can have a profound impact on how far your money goes. This is the second half of an article taken from a past Retirement Advisor Newsletter, we discuss some of the tax issues associated with where you decide to live your retirement years.

WHERE TO LIVE IN RETIREMENT

(Part II)

Sales Taxes

Even if your income is not subject to state income tax, or your state has a low income tax rate, it doesn’t matter too much if what you purchase with your money is subject to high sales taxes. After all, in retirement you are now spending the money you previously saved and you want your dollar to go as far as it can. State sales tax rates can range dramatically and The Retirement Advisor expects the trend of sales taxes to increase. There are only five states that have no state sales taxes: Alaska, Delaware, Montana, New Hampshire and Oregon. On average, most states levy a sales tax of around 4-5%. However, at least five states have sales taxes that are 7% or higher, including California, Indiana, Mississippi, New Jersey, Rhode Island and Tennessee. Under California's proposed budget the sales tax will reach a whopping 8.25% before local taxes are added. Even in places where there is low or zero state income tax, if you know you want to live in a major metropolitan area, you should consider what you will pay in taxes to live in that city. For example, Seattle has a 9.5% sales tax, tied with Chicago as the highest among big cities. In the Los Angeles area, five communities have sales taxes of 10%! A few states have exemptions on sales taxes for such items as food, prescription drugs and non-prescription drugs. The following URL will bring you to a web site that shows a state-by-state breakdown of state and local sales tax rats as of January 1, 2012:
http://tinyurl.com/7tscjhu

Real Estate Taxes

For retirees wanting to build and live in their dream home, real estate taxes might be a deciding factor. According to Kiplinger, the five states with the lowest median real estate taxes are: Alaska, Louisiana, Mississippi, Alabama and West Virginia. Conversely, the five states with the highest median real estate taxes are: New Jersey, New York, Connecticut, Virginia and Illinois. Kiplinger has a web site that has various lists as to which state is most and least friendly for retirees for different categories at this URL:

http://tinyurl.com/6tu8qdu

This week, Forbes published an article entitled, “The 25 Best Places to Retire in 2012” which explores the average price of a home, the cost of living and the tax burden on retirees. The article can be found at this URL:

http://tinyurl.com/6w5n75x

The Intangible

There are reasons other than financial to pick a certain place to retire. CNNMoney published a list of the 25 Best Places to Retire that lists towns that offer tons of amenities at a reasonable cost of living. You can find the list at the following URL:


http://tinyurl.com/5to53af

Read a sample of our Retirement Advisor Newsletter and learn how to subscribe."The Retirement Advisor"

No Social Security Cost of Living Adjustment for 2011

Flat COLA for Social Security recipients for the second straight year.

There will be no fizz in Social Security checks for the new year.  The Social Security Administration announced "There will be no increase in Social Security benefits payable in January 2011, nor will there be an increase in SSI payments."

COLA Computation

• The last year in which a COLA became effective was 2008. Therefore the law requires that we use the average CPI-W for the third quarter of 2008 as the base from which we measure the increase (if any) in the average CPI-W. The base average is 215.495, as shown in the table below.
• Also shown in the table below, the average CPI-W for the third quarter of 2010 is 214.136. Because there is no increase in the CPI-W from the third quarter of 2008 through the third quarter of 2010, there is no COLA for December 2010.

	CPI-W for—
	2008	2010
July	216.304	213.898
August	215.247	214.205
September	214.935	214.306
Third quarter total	646.486	642.409
Average (rounded to the nearest 0.001)	215.495	214.136

Remember that the price of oil peaked during the three months in 2008 when the COLA for 2009 was set at 5.8%. 

Chart showing oil prices vs the S&P500.
click image to see a larger version

With oil prices the past three months about half their peak value, CPI is slowly catching up but still below the 2008 calculation. The good news for seniors is they benefited from a higher SS payment than they would have received if the 2009 COLA was set a few months later after the price of oil crashed to $35 at the end of 2008.

Here is a chart and current quote for crude oil prices.

CPI peaked in July 2008 at 219.964.  This September the CPI recovered to 218.439, still slightly below its 2008 peak. CPI for 2008 was only up 0.1% but Social Security beneficiaries got a 5.8% adjustment because of the spike in oil prices. They were very, very lucky to get a 5.8% raise while the rest of the country got fewer hours or lost jobs during the recession.

 

This table Automatic Social Security Cost-Of-Living Adjustments by Year clearly shows the January 2009 adjustment of 5.8% was the largest since July 1982!

 

Since actual CPI was effectively lower than what Social Security recipients were getting paid for, taxpayers were very generous to retired people at a very good time... during this recession. My guess is the CPI will make a new high in the next few months and COLAs will show up again next year for 2012.

US Treasury Auction Schedule

Below is the tentative US Treasury Auction Schedule for the remainder of October 2010.

Security Type	Auction Date	Settlement Date
13-Week BILL Thursday	October 04	October 07, 2010
26-Week BILL Thursday	October 04	October 07, 2010
4-Week BILL Monday	October 05	October 07, 2010
13-Week BILL Thursday	October 12	October 14, 2010
26-Week BILL Thursday	October 12	October 14, 2010
3-Year NOTE Thursday	October 12	October 15, 2010
10-Year NOTE R Thursday	October 13	October 15, 2010
30-Year BOND R Thursday	October 14	October 15, 2010
Holiday - Monday		,
4-Week BILL Tuesday	October 13	October 14, 2010
13-Week BILL Thursday	October 18	October 21, 2010
26-Week BILL Thursday	October 18	October 21, 2010
52-Week BILL Thursday	October 19	October 21, 2010
4-Week BILL Monday	October 19	October 21, 2010
13-Week BILL Thursday	October 25	October 28, 2010
26-Week BILL Thursday	October 25	October 28, 2010
5-Year TIPS R T Thursday	October 25	October 29, 2010

For current US Treasury rates, see

• US Treasury Rates at a glance
  
• US Treasury Rate Quotes 

We update the "US Treasury Auction Schedule" each month in the newsletter.  See below for details on how to subscribe or Click to Subscribe now

US Treasury Auction Schedule

Below is the tentative US Treasury Auction Schedule for the remainder of September 2010.

Security Type	Auction Date	Settlement Date
4-Week BILL Tuesday	Sept. 08	Sept. 09, 2010
13-Week BILL Thursday	Sept. 13	Sept. 16, 2010
26-Week BILL Thursday	Sept. 13	Sept. 16, 2010
4-Week BILL Monday	Sept. 14	Sept. 16, 2010
13-Week BILL Thursday	Sept. 20	Sept. 23, 2010
26-Week BILL Thursday	Sept. 20	Sept. 23, 2010
52-Week BILL Thursday	Sept. 21	Sept. 23, 2010
4-Week BILL Monday	Sept. 21	Sept. 23, 2010
13-Week BILL Thursday	Sept. 27	Sept. 30, 2010
26-Week BILL Thursday	Sept. 27	Sept. 30, 2010
2-Year NOTE Thursday	Sept. 27	Sept. 30, 2010
5-Year NOTE Thursday	Sept. 28	Sept. 30, 2010
7-Year NOTE Thursday	Sept. 29	Sept. 30, 2010
4-Week BILL Monday	Sept. 28	Sept. 30, 2010

For current US Treasury rates, see

• US Treasury Rates at a glance
  
• US Treasury Rate Quotes 

We update the "US Treasury Auction Schedule" each month in the newsletter.  See below for details on how to subscribe or Click to Subscribe now

Conservative Retirement Portfolios

Conservative Portfolios for People in or Approaching Retirement

A primary goal of The Retirement Advisor is to help our subscribers achieve their financial or retirement goals in a suitable time frame and reasonable fashion.  Our Retirement Advisor Model Portfolios were constructed with that goal and one other important goal in mind: Simplicity.  Studies have shown that the most effective way to save and invest for retirement is to construct and maintain a diversified portfolio of low-cost index funds matched to one’s retirement needs and risk tolerances.  There is no need (and in fact, this may be detrimental to your financial health) to invest in the hottest technology fund, or buy actively managed mutual funds where annual expenses could be over five times as high as low-cost index funds. 

The Retirement Advisor Portfolios	Dollar Value on 7/31/10	Change
Model Portfolio 1	$219,682	9.8%
Model Portfolio 2	$231,512	15.8%
Model Portfolio 3	$248,518	24.3%
DJIA 12,501.52 on 1/1/2007	$10,466	(16.3%)
S&P500 1,418.30 on 1/1/2007	$1,101.60	(22.3%)

The Retirement Advisor Model Portfolios all began with $200,000 on 1/1/2007
Click to Subscribe Now

Each month, subscribers to The Retirement Advisor will receive updates to three different Model Portfolios.  These updates will include any portfolio changes based on our latest outlook of the economy, interest rates, and inflation, as well as portfolio rebalancing as different asset classes deviate from target weightings.  In addition, the performance of individual funds will also be updated on a monthly basis.

We designed our three different model portfolios for individuals who are in retirement or who are pondering retirement, taking into account 1) their current stage in life, and 2) their risk tolerance (i.e. how much risks they can incur without losing sleep at night).  In presenting our three different model portfolios, we have ordered them starting with the most aggressive portfolio to the most conservative. 

 

We designed our first model portfolio, the Aggressive Growth and Income Model Portfolio 1, for someone approaching retirement who is interested in a “balanced” approach to investing, which combines a mixture of stocks and bonds.  Its 50% stock market weighting gives it the potential to increase your standard of living over time when rebalanced at key time points.  

We designed our second model portfolio, the Moderate Growth and Income Model Portfolio 2, for individuals in retirement who believe sleeping better at night with less stock market volatility is worth giving up some of the potential for gains in standard of living to get lower volatility.

We designed our third model portfolio, the Conservative Capital Preservation Model Portfolio 3, for investors who invest solely in fixed income securities without any stock market exposure.

 

Portfolio Performance By Year Through July 31, 2010
Model Portfolio	2010 YTD	2009	2008	2007	2007 to Now
#1: Aggressive	2.4%	19.7%	(18.2%)	9.5%	9.8%
#2: Moderate Risk	3.3%	13.2%	(8.7%)	8.5%	15.8%
#3: Conservative	4.8%	5.5%	3.7%	8.3%	24.3%

Start Sleeping Well Tonight!

Click to Subscribe Now

Website for More Information about us 

.

Hindenburg Omen - Definition and History

There is a lot of talk on TV and in the press about the Hindenburg Omen.

From Hindenburg Omen The Hindenburg Omen is a technical analysis pattern that is said to portend a stock market crash. It is named after the Hindenburg disaster of May 6, 1937, during which the German zeppelin Hindenburg was destroyed.

In order for the Hindenburg Omen to be reached, all of the following must occur:

1. The daily number of NYSE new 52-week highs and the daily number of new 52-week lows are both greater than or equal to 2.8% of NYSE issues trading that day.

2. The NYSE’s 10-day moving average is rising, or the index has moved higher during the past 50 trading days.

3. The McClellan Oscillator is negative on the same day. This is the the difference between the advancing and declining equities on the NYSE.

4. New 52-week highs cannot be more than twice the new 52- week lows (though new 52-week lows may be more than double new highs).

The traditional definition requires each condition to occur on the same day. Once the signal has occurred, it is valid for 30 days, and any additional signals given during the 30-day period should be ignored. During the 30 days, the signal is activated whenever the McClellan Oscillator is negative, but deactivated whenever it is positive.

This is important:

The Hindenburg Omen has predicted every stock crash since 1987, BUT it also has a ton of false positives. Only about 25% of the time does it actually foretell a crash. 

The criteria above for the omen has actually been met twice this month, once on August 12th, and another time last Friday the 20th. 

The model portfolios in the Retirement Advisor already account for market events like these so we have made no changes.

 

The Retirement Advisor Portfolios	Dollar Value       on 7/31/2010	Change
Model Portfolio 1	$219,682	9.8%
Model Portfolio 2	$231,512	15.8%
Model Portfolio 3	$248,518	24.3%
DJIA 12,501.52 on 1/1/2007	$10,466	(16.3%)
S&P500 1,418.30 on 1/1/2007	$1,101.60	(22.3%)

The Retirement Advisor Model Portfolios all began with $200,000 on 1/1/2007.

Start Sleeping Well Tonight!

Click to Subscribe Now

Website for More Information about us 

Health Care Reform

Regardless of your politics and where you stand on the new health insurance legislation, since it has passed here is how health insurance reform will expand coverage this year:

1. Children with pre-existing conditions can no longer be denied health insurance coverage.

2. Health care plans will allow young people to remain on their parents' insurance policy up until their 26th birthday.

3. Insurance companies will be banned from dropping people from coverage when they get sick, and they will be banned from implementing lifetime caps on coverage.

4. Restrictive annual limits on coverage will be banned for certain plans.

5. Adults who are uninsured because of pre-existing conditions will have access to affordable insurance through a temporary subsidized high-risk pool.

We will be covering how the new health plan impacts individuals approaching or in retirement in coming newsletters. We invite you to see how well The Retirement Advisor's Model Portfolios have done by examining our newsletter. Visit our web site where you can download a free issue with instructions on how to subscribe. Subscribers are able to obtain all of our back issues at no extra cost.

Click to Subscribe Now

Don't Delay Your Financial Health Any Longer!

Conservative Retirement Investment Portfolio

Many investors are looking for a conservative retirement portfolio, whether for themselves, or perhaps a parent or relative.

A primary goal of The Retirement Advisor is to help our subscribers achieve their financial or retirement goals in a suitable timeframe and reasonable fashion. Our Retirement Advisor Model Portfolios were constructed with that goal and one other important goal in mind: Simplicity. Studies have shown that the most effective way to save and invest for retirement is to construct and maintain a diversified portfolio of low-cost index funds matched to one’s retirement needs and risk tolerances. There is no need (and in fact, this may be detrimental to your financial health) to invest in the hottest technology fund, or buy actively managed mutual funds where annual expenses could be over five times as high as low-cost index funds.

We designed our three different model portfolios for individuals who are in retirement or who are pondering retirement, taking into account 1) their current stage in life, and 2) their risk tolerance (i.e. how much risks they can incur without losing sleep at night). In presenting our three different model portfolios, we have ordered them starting with the most aggressive portfolio to the most conservative.

We designed our first model portfolio, the Aggressive Growth and Income Model Portfolio 1, for someone approaching retirement who is interested in a “balanced” approach to investing, which combines a mixture of stocks and bonds. Its 50% stock market weighting gives it the potential to increase your standard of living over time when rebalanced at key time points.

We designed our second model portfolio, the Moderate Growth and Income Model Portfolio 2, for individuals in retirement who believe sleeping better at night with less stock market volatility is worth giving up some of the potential for gains in standard of living to get lower volatility.

We designed our third model portfolio, the Conservative Capital Preservation Model Portfolio 3, for investors who invest solely in fixed income securities without any stock market exposure.

We invite you to see just how well The Retirement Advisor has done by examining the newsletter. Visit our web site where you can download a free issue with instructions on how to subscribe. Subscribers are able to obtain all of our back issues at no extra cost.

Click to Subscribe Now

Don't Delay Your Financial Health Any Longer!

California General Obligation Bond New Offerings List

The public offering of $2,000,000,000 (two BILLION Dollars) CALIFORNIA STATE VARIOUS PURPOSE GENERAL OBLIGATION BONDS has been priced and the retail order period has begun. To be eligible for an allocation of bonds, you must place an order at your broker by 8PM EST tonight!

All GOs listed below are call protected California General Obligation Bond New Offerings with Moody's and S&P ratings of BAA1 and A-, respectively.

Expected Order Period: TUES., 3/9 TIL 8:00 P.M., E.S.T; 3/10

Settlement Date: 03/18/2010

Expected Coupon	Maturity Date	Rating		Expected Yield	Call Protected	Est Taxable Equivalent Yield*
		Moody's	S&P
2.000	03/01/2012	BAA1	A-	1.200	Yes	1.846
5.000	03/01/2012	BAA1	A-	1.200	Yes	1.846
3.000	03/01/2014	BAA1	A-	2.080	Yes	3.200
5.000	03/01/2014	BAA1	A-	2.080	Yes	3.200
3.000	03/01/2015	BAA1	A-	2.600	Yes	4.000
5.000	03/01/2015	BAA1	A-	2.600	Yes	4.000
3.500	03/01/2016	BAA1	A-	3.180	Yes	4.892
5.000	03/01/2016	BAA1	A-	3.180	Yes	4.892
3.500	03/01/2017	BAA1	A-	3.600	Yes	5.538
5.000	03/01/2017	BAA1	A-	3.600	Yes	5.538
3.875	03/01/2018	BAA1	A-	3.960	Yes	6.092
5.000	03/01/2018	BAA1	A-	3.960	Yes	6.092
4.125	03/01/2019	BAA1	A-	4.240	Yes	6.523
5.000	03/01/2019	BAA1	A-	4.240	Yes	6.523

*Assumes investor is subject to the maximum federal tax rate of 35%. Yield is based on offering price. Yield is subject to change based on market conditions.