Saturday, May 19, 2012

Could It Be a Dud?

Years ago, when I was a young adolescent, friends and I would delight in setting off fireworks. Anything making noise was fantastic and the louder the better. We usually would undertake our pyrotechnic pursuit along the banks of the river, far from the watchful eyes of our mothers, who would have no doubt ruined our entertainment.

Firecrackers, cherry bombs and ash cans, were our preferences. I don’t even remember how we got hold of them, but we did, and in large quantities. To a twelve year old, this was the greatest excitement our juvenile minds mustered. We were giddy with the thought of the cataclysmic result soon to follow the lighting of each fuse. We never paid much attention to the dangers that might befall us.

Occasionally, we would light a fuse and run with the anticipation of a thunderous boom, only to be met with silence and silence meant one thing…the dreaded DUD!

All boys of my childhood era knew about duds from the WWII movies part and parcel of our TV viewing. Having seen what the full effect of a dud might be, we of course, hesitated in approach. After a few minutes though, one of the group would muster the courage to approach the smoking disappointment to see why the desired effect was not produced. This resulted in a gathering of participants to discuss the problem. We would prod the dud with sticks and throw rocks at it until finally one brave soul would pick the dud up and hurl it into the river, ending the danger forever. He would be complimented on his bravery by all, making the risk well worth it.

With that in mind, I had a similar feeling yesterday when FaceBook began trading. I secretly wanted the new issue to burst out of its IPO and gain ten or fifteen points. Instead, FB struggled to climb 7 points and only closed the day at $38.23, just .23 cents above its IPO price.

So, could FaceBook possibly be a dud?

Hard to say, unfortunately FB came public with the market in an overall pullback. I could make the case for purchasing FB as it should pop when the market begins to reverse. On the other hand, is the market recognizing FB for what it may be, an overhyped social media stock?

Only time will tell, but as I learned many years ago, when approaching a potential dud, be aware that they sometimes explode unexpectedly.

Posted by Jim 9:16 AM Leave a Comment
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Friday, May 18, 2012

Today’s the Day… FaceBook

Over the last few days, I have been ask numerous times what my feelings are regarding the FaceBook (FB) IPO.

Here is my opinion: If you were able to get in at the initial offering price of $38.00 per share, FB may prove worthwhile. I would not consider trying to chase it in the open market once the stock actual begins trading above the IPO price.

Usually, IPO insiders must hold shares for a certain amount time (lock-up period) before selling. In the case of the FaceBook IPO, the holding period has been shortened. This change apparently allows insiders to sell stock holdings this year before the pending 2013 tax changes take effect, savings millions on capital gain taxes for those on the inside.

The potential for mass selling because of this modification may cause repercussions on the stock price come November, when millions of shares can be unloaded on the open market.

I do expect the stock to move up nicely once FB begins trading today, but you may be better served staying on the sideline rather than chasing an over-hyped issue.

With the market currently declining, your primary concern should be preserving capital. Strategic patience is critical. Your retirement savings are not for gambling.

Posted by Jim 7:32 AM Leave a Comment
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Wednesday, May 16, 2012

The Best Advice I Ever Got…

The other day while driving, my mind began wandering. I began thinking about all the twists and turns taking place over my adult life.

As we all come to learn, the road is not straight and some of us end up in places we never imagined in our youth.

I realized something my father instilled in me long ago factored in my past successes.

Like many young adults I was creative. The age of 14 to 24 is a magical time in our lives. We feel pretty good about our emerging independence, confident in both strength and abilities growing stronger with each day. This is the age for experimenting and pushing limits and is a natural part of our growth.

At fourteen I ran cross-country and by fifteen had grown my hair halfway down my back and played guitar in bands. Rock was at its creative peak and I needed to be part of it. I read books at a rapid pace, took up drawing and painting, encouraged, primarily by my father, to push my personal limits.

Whenever I presented an idea to him, he would say…”why don’t you give it a try“. He encouraged and supported me to take on new projects to see where they might lead. His “Give it try” attitude gave me great confidence, allowing me success in small stages, while gradually increasing the size of the task.

By the time I graduated college, I did not doubt my abilities and would go on to have many interesting experiences in my life.

For the most part, I have always been willing to give things a try. I never thought twice about taking on projects i.e., designing my home, clearing the land, or starting businesses. Think, plan, execute… I knew all would work out because it was instilled in me. I could accomplish these tasks. I never doubted my ability. I was willing to “Give it a try” letting things travel along a course. The majority of the time, they worked out and when they didn’t, I admitted that the endeavor was not being productive and would bring it to a quick conclusion.

If you are one of the many college graduates this year, remember that multitudes of interesting roads are presented to us all. Do not be afraid to venture down one, you may be surprised to where it may lead. So go ahead… “Give it a try”.

Posted by Jim 9:28 AM Leave a Comment
Monday, May 14, 2012

This Is Not a Valid Option…

Over the weekend, I came across a post in which a participant stated how boomers could expect to inherit large amounts of money from aging parents. This particular person noted he was expecting to inherit $250,000, which will secure his retirement.

This person places himself in extreme peril, anticipating that an inheritance windfall will bailout his lack of adequate planning and saving.

This poster is not alone with this thought. I personally know people who have this same outlook. Every time I hear someone with this philosophy, I cringe.

The reality is the parent(s) stand a very real chance of ending up in an assisted living or nursing home facility. An estate with a value of a few hundred thousand would easily be consumed within a few years, if assisted care becomes necessary. With the population in general living longer, the chances of eldercare being needed are far greater then ever before.

Even more disturbing than basing your retirement on inheritance is the ignorance that $250,000 is enough to be the cornerstone of your retirement savings.

Under no circumstance should you expect inheritance to be the salvation for your own fiscal insecurity.

Posted by Jim 9:29 AM Leave a Comment
Friday, May 11, 2012

An Urgent Warning to Those Under Forty…

Here’s another one; LIMRA (a financial services industry trade association) published this report in April showing 49% (based on a study of 2,697) of Americans are not contributing to retirement savings.

Younger Americans, those in the 18 to 24 year old category show the smallest contribution rate with 56% of this age group not saving sufficiently.

These findings should not be startling to anyone, as the economic problems across the nation are well documented. Those in the younger category, see retirement as something so far in the distance. They cannot make the argument for using their present financial resources for anything other than getting by today.

Those in the older tier are bogged down with various obligations and debt preventing them from making any meaningful contributions to retirement. They are at this point in time in SURVIVAL Mode. Many of this generation are unemployed or underemployed, so money coming in is needed to pay current essentials. There is no extra money to save. Time is not on their side and many will struggle as they move forward in life.

This is a plea for those younger to take the task of saving for their future seriously.
Saving needs to be your top priority! Younger generations will have a greatly reduced Social Security income than their parents, perhaps none at all. Your future welfare is dependent on how you approach the task.

Total self-reliance will be a difficult task for many to achieve. It is much easier to work longer hours and/or additional part time jobs when young than to rely on working these hours as you age. Avoid debt, buy only what you can afford. You need to establish a plan allowing you to save significant amounts when young, so you can establish investments producing compound returns as you age. If you are not on track by the age of forty, you will have a monumental task catching up. Those who fail to save will be setting themselves up for a pathetic future. They will never be able to stop working until the day they drop. This is not something said in jest, as this was the norm for the majority prior to WWII.

Unfortunately, today’s economy is the reality we live with. Become aggressive, focused and determined to build a solid financial base for yourself. Never put yourself in a position where you are dependent on handouts from the government or other individuals.

If there is one takeaway you get from RetirementMuse.com, it is ensuring your personal financial security is the only way you can be free to live your life, the way you want and on your terms.

Posted by Jim 10:32 AM Leave a Comment
Thursday, May 10, 2012

It’s Whipsaw Time

Unfortunately, the Eurozone seems to be causing problems for us again. I am not surprised, as the same problems existing last summer, still exist today. Greece was the epicenter of angst last year and still is, but now Spain, also bubbled to the forefront. Spain presents a much larger problem as it is too big for a bailout and yet cannot be allowed to collapse… a conundrum for sure now spilling over to our market right on cue for summer.

The market has been showing quite a bit of volatility between openings and early afternoon, whipsawing those who react emotionally in between. If you can’t figure out how to trade this market, protect your gains, and stay on the sidelines until things settle down. Capital preservation should be more important than pushing for another percent gain.

The clown car of nominees, finally come to a stop with the emergence of the main contender. No surprise at the outcome, though I wish, we could have been spared the circus sideshow endured for the prior eight months. Hopefully the U.S. Congress and Senate will be too busy trying to get themselves re-elected and will stay preoccupied with their own self-interests, to cause any real problems. Their grandstanding on the budget last summer was a complete embarrassment for the country.

I believe those in power will do all they can to keep the market from tanking… at least until the election is over. After that all bets are off. Next year’s market prospects are concerning, but 2013 is too far removed from the present to take action, other than shuddering with what may unfold.

Make no mistake, a splendid time is guaranteed for all…

Posted by Jim 10:52 AM Leave a Comment
Wednesday, May 9, 2012

An Article Of Interest For College Grads

It’s the time of year when bright-eyed college graduates begin to emerge from their four-year journey through hallowed halls of undergraduate education. With a lot of luck and hard work, they may find employment.

If you or anyone in your family acquired student loan debt, you may find this article from Forbes provides you with a few ideas on coping with the responsibility.

I’ve posted about tuition debt in the past. The article caught my eye as something of possible interest for some retirementmuse.com readers.

Thoughts of retirement may seem far off to an individual graduating college in 2012. The reality is how they handle their student load debt may significantly effect their future retirement nest egg.

Posted by Jim 9:52 AM Leave a Comment
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Monday, May 7, 2012

An Interesting Retirement…

My original idea when I started RetirementMuse.com was to help people I know, get on track, with taking retirement planning seriously. I try to provide a mix of subjects to keep the posts interesting. Some readers are decades away from retirement, while others are quickly approaching theirs. Therefore, the subject matter needs to appeal to various generations.

One of the most interesting topics is what will you do with your life after you retire?

Hopefully, you take the task of planning seriously and will accumulate the nest egg allowing you the freedom to enjoy the fruits of your many years of hard work.
I always am inspired by interesting retirement stories. Today, I thought I would take a break from the more market driven news, to bring you one of these interesting retirement success stories.

I don’t know if any of you ever heard of “Jack the Dog”? He is somewhat of an Internet celebrity and has quite the extraordinary life. Here is his tale…

Jack was born in South Carolina and was adopted from the local shelter by retirees Rita and Frank. At some point, this couple decided they were tired of being homeowners. They sold their home on Hilton Head as well as their belongings and bought an RV camper, which they pull behind their truck. This is not a budget RV, this camper contains most creature comforts of a modern home. For the past few years, Rita, Frank and Jack the dog, have been traveling around the US, searching out interesting places and living a life, most of us only dream of.

Now, I am not saying this retirement concept is right for everyone. A life on the road offers some great advantages, as well as some downside, but you must admit, it beats hanging around the home front watching Wheel of Fortune.

Rita and Frank possess all the right traits (outgoing, flexible and fun loving) to be successful. They move when they want, where they want, and on their own schedule. If you have the longing for adventure, the right personality, and are not stuck in routines, this lifestyle presents a compelling concept.

Advantages may be:

• Freedom from property taxes
• Flexibility of home base for tax advantage
• No home to maintain
• No lawn and garden to take care of
• Freedom to move around at will
• Opportunity to visit never-ending destinations
• Everyday is an adventure

Some disadvantages may be:

• No permanent home base
• Price of gas
• Maintenance of vehicle
• Driving long hours and distances between stops
• Smaller living quarters
• Health related issues could impact practicality

You can follow their exploits at: http://adventureswithjackthedog.blogspot.com/

The blog is written from Jack the dog’s point of view, so Rita and Frank essentially are in the background. The blog will give you the idea of this type of life, where they travel and how they manage the situations along the way.

I applaud them for thinking outside of the norm and wish them many years of health and adventure.

Posted by Jim 10:02 AM Leave a Comment
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Saturday, May 5, 2012

Saturday Night Musings: Will Your Generation Be Left Holding The Bag?

We all know a hugh problem (one of many) that lurks in our country. It’s been spotlighted for quite sometime.  Yet collectively, we do nothing other than talk incessantly about the problem, while never actually doing anything, other than giving it lip service.

This morning in my usual Saturday review of topics of interest, I came across this article in The American Spectator, written by David Bass.

The article expresses the plight of the Millennial Generation (those born between 1980 and 1995) and presents their views on retirement and Social Security.

Their feelings are more than valid. Let there be no mistaking, generational theft is occurring on a grand scale.

My son was born in 1982 and I am quite aware how his generation is experiencing a tough time. I do not need to labor on this generations feeling as the article did a good job pointing out their collective angst. I do worry about them.

I worry about my mother (88) and mother-in-law (90) who are both affected by the Federal Reserve’s near 0% interest rate policy. The senior population is being deprived of a decent return on their savings, making them ever more dependent on Social Security.

I also worry about my friends and those in my generation. Many in the boomer generation are now struggling with the economic regression experienced over the past five years. Quite a few have been affected in some way with the loss of a job, a reduced home value or depletion of savings… perhaps even all three. Many of these problems may be self-inflected but never the less, their difficulties will only grow into a larger dilemma for the entire nation, with each passing year. I shudder to think what the future will look like for some of these people soon to be elderly.

I guess you could say I am tired of worrying.

The solution is always gentlest when the necessary adjustments are made early on when the problem is first identified. Small changes over the years would have altered Social Security without the need for drastic measures when our backs are against the wall. Unfortunately, for some reason, our nation avoids making decisions until like a cancer, the problem has grown into such a malignant mass, that easy resolution is no longer an option.

Today, this is where we stand, after decades of failure by politicians to address the problem, we find ourselves with a rapidly aging population and a decaying Social Security System. I won’t even entertain bringing up Medicare today. I’ll save that for a future post.

Like in the child’s game of musical chairs, someone will be left holding the bag, when the music stops. The question is which generation(s)?

Posted by Jim 4:07 PM Leave a Comment
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Friday, May 4, 2012

Is Your Childhood Getting In the Way of Your Retirement Goals?

In the case of many, the home we were brought up in may impact how successful we may be, in obtaining retirement goals.

For starters, many have grown up in dysfunctional financial environments.
Having parents or siblings lacking in monetary discipline provided you poor examples, establishing habits that are part and parcel to your adult life.

This excuse is only good for so long, eventually you need to recognize it for what is and leave it behind. This is easier said than done, as bad habits die hard. Over a lifetime, bad fiscal habits can be responsible for diverting hundreds of thousands of dollars, away from potential savings.

Depending on your age you may be able to get yourself back on course easily. The first step is recognizing a problem exists. You need to be honest with yourself and analyze what’s preventing you from achieving your retirement savings goals.

Start digging yourself out from under a lifetime of bad habits. Below are a few things you can do to get yourself on track.

1. Make savings your priority

2. Learn to live without; you probably purchase many items you really do not need. Stop spending money on frivolous, unnecessary purchases and save this money instead.

3. Get out of Debt. Only use credit cards, if you can and do pay balances in full each month. The interest you will not be paying monthly to the banks, should be saved. This applies to both physical items, as well as, things vacations and cruises. If you can’t afford to pay for a vacation in cash when the bill comes due, you can’t afford to take a vacation!

4. Enroll in any tax advantage plans that are option for you, I.e…. 401k’s, ROTH IRA’s, Health Saving Plans, etc. Not only will you be paying less in taxes, your bottom line will be steadily increasing.

5. STOP SMOKING… While I love the growth and dividends I receive from Philip Morris and Altria, I would much prefer to see people give up smoking. By eliminating smoking from your life, you will be able to save thousands of dollars over the course of your new healthier life.

Resolving these five problems may seem obvious; but you would be amazed how many fail because of combinations of them.

Leave bad habits learned in childhood behind. Stop blaming your past for financial failures in the present.

Posted by Jim 10:55 AM Leave a Comment
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