CIGX, LLC, investment counsel, offers financial planning services, including retirement planning, college planning, investment planning, and insurance planning. We take a broad and thorough approach to your financial future. The process begins with data gathering, such as asset...Read More
CIGX, LLC, capital management, offers the global strategies model portfolio series. These model portfolios range from conservative to aggressive and use a macro-economic, a.k.a top-down, fundamental analysis approach to asset management. Emphasis is placed on diversification,...Read More
Long-term Care is a big topic. More and more people are susceptible to spending time in assisted living or a long-term care facility. Stays are getting longer as well. The problem for many people is how to pay for it. Long-term care insurance policies have historically been substandard. They paid too little and for too short of a time. Your combined premium tended to be higher than the benefit you would be able to receive. I have seen some fantastic policies that were affordable and covered 100% of costs. Insurance companies have modified their contracts, and you don’t see good policies being issued today.
One thing insurance companies have done instead is to offer a “long-term care rider” on life insurance policies, giving you a long-term care benefit as a part of your life insurance. Some insurance companies have these riders as standard, meaning they are automatically a part of your life insurance policy and come at no additional cost. This will reduce your life insurance benefit. Making sure your life insurance policy includes a long-term care benefit is a great way to cover this potential expense without having to worry about having “wasted” the money if you end up not needing long-term care.
The benefit triggers when you cannot perform 2 out of 6 Activities of Daily Living (definitions vary, but generally include; bathing, dressing, toileting, transferring, eating, and mobility) or if you have a cognitive impairment.Read More
Speaking to a good friend of mine a couple of weeks ago, he mentioned that he needed to do more for retirement. He had read some statistic, and I remembered it, but I was hazy on the details. How much does the average American investor have saved for retirement? Sometimes it is good to see where we fall on the scale. It can be encouraging or discouraging. A brief online search gave me three sets of statistics. On April 1, 2014, USA Today published an article stating that, in a poll, a third of all workers polled had less than $1,000 saved for retirement. Sixty percent (60%) of those polled stated that they had less than $25,000 saved for retirement. Twenty-two percent (22%) stated that they had more than $100,000 in their retirement accounts (USAToday, 4/1/2014). Statisticbrain.com stated that the average savings of a 50-year old was $44,000 (http://www.statisticbrain.com/retirement-statitistics.com/). Learnvest.com reported a 2012 study in their “how do you compare” series, that workers in the age group of 25-32 had a median $12,000 in their retirement accounts and an average of $37,000. Age group 33-44 had a median of $61,000 and an average of $157,000; and age group 45-54 had a median $101,000 and an average of $219,000 in their retirement accounts. They noted specifically that they had 1300 respondents (http://www.learnvest.com/2012/11/retirement-savings-by-age-how-do-you-compare/). My guess is that none of these polls are scientifically valid. But, they do give you an idea of what individuals say they have saved for retirement in an invalid poll. I would add that many people save for retirement outside of a qualified retirement planning vehicle.
For me, the responses are interesting, but irrelevant. In the end, every individual has to figure out what their lifestyle is and will be in retirement, and how they will prepare for it. These numbers will be different for every single investor. Based on your income, you can plan for a specific savings rate to enhance your retirement. And, as long as you spend less than you make, your retirement will be a successful one. My take-away is simple. It is encouraging for all of us to know that we could all do a little more to prepare for retirement; both in the planning process and the saving/investing process. If we raise our retirement saving/investing rate by just a little bit today, we can have a more secure and joyful retirement in the future.
When we talk asset management, most of my conversations focus on what
to buy, and sometimes when to buy it. These are difficult decisions
to reach. However, We never talk about when to sell an investment.
The sale of a security is at least as important as the purchase, since
the sale completes the transaction and is the only time we know if we
made or lost money. This decision is even more difficult to reach.
The sell decision is mired in complexity. Behavioral finance is
trying to ascertain the reasons for the difficulty in making the sell
decision. The research shows that everyone gets it wrong at least
some of the time. Everyone. Individual and professional investor
alike. In the July 2014 AAII Journal, Jack Schwager addresses the key
elements of investment failure. In essence, our emotions interfere
with our ability to stay objective. For example, most investors hold
on to a losing security for the hopes of recouping those losses, yet
they sell early when they make a winning investment.
At CIGX, we consider a variety of factors in our sell decision. We
consider the status of the overall economy, including trade and
investment, consumer spending, debt and interest rates. We also look
at corporate profits, earnings growth, and dividend programs.
Finally, we do look at minimizing losses and taking gains when
appropriate. We sell a security when the growth prospects are no
longer there. We may sell a security when earnings no longer meet
expectations, or when a dividend is canceled. A change in management
warrants close monitoring.
The are other reasons to sell. A better opportunity has arisen and a
security has to be sold to enable the preferred investment. The
investor’s need for cash is another reason to sell. Cash is an
important asset class and securities may have to be sold to rebalance
the portfolio. Finally, taxes may impact the sell decision. While we
would never not make money to avoid taxes, we could harvest losses to
reduce taxes or sell to avoid moving into the next tax bracket, which
may negate those gains.