Академический Документы
Профессиональный Документы
Культура Документы
Source: Survey by gerontologist Ken Dychtwald, Ph.D., president and CEO of AgeWave, February 2005.
10%
Personal Savings
% Disposable Income
8%
6%
4%
2%
0%
70
72
75
78
81
84
87
90
93
96
99
02
05
19
19
19
19
19
19
19
19
19
19
19
20
20
Source: Bureau of Economic Analysis, U.S. Department of Commerce, 2005
Inflation Risk/Volatility
Health Fees
Age Taxes
Retirement Threat #1
80
70
60
Lifespan in Years
50
10
Source: National Vital Statistics Report, March 18, 2002
0
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
Source: Commonwealth Fund and Kaiser Family Foundation study, Washington Times, August 1, 2002.
$200
National Average Daily Cost
$192
$150 $181
$168 $169
$158
$143
$100
$50
$0
Private SemiPrivate
2002 2003 2004
Source: MetLife Annual Surveys
Source: MetLife Mature Market Institute annual survey of nursing home costs in the U.S., 2004
Spending Down
Your Retirement Assets
90
50 30 years
35 years
40
30
20
10
0
4% 5% 6% 7% 8%
Initial Withdrawal Rate
Retirement Threat #2
Although the CPI inflation has averaged about 4% per year over the past two decades,
this rate does not take into account factors like housing, prescription drugs, travel, etc.
Source: U.S. Department of Labor, Bureau of Labor Statistics, October 2002
Retirement Threat #3
Mutual Funds
Your Home
No more than
10% of your
Age 75+
ASSETS
portfolio should
Income
be at risk (stocks)
None of your
portfolio should
be at risk
AGE
Source: “Why We Need to Fix the 401K”, Jane Bryant Quinn, Newsweek, August 19, 2002
Brokerage Firms
• “The broker is not your friend”
He is more like a doctor who charges patients on how often they change
medicines. He gets paid far more for the stuff the house is promoting than
the stuff that will make you better. (Warren Buffet quote)
Source: How to Sleep as Well as Your Broker, Arthur Levitt, Take on the Street, Vintage Books, 2003, p. 20, 37
Brokerage Firms
• Do you think your mutual fund - the one you
hope will pay for your retirement - is in good
hands?
“When you have strong managers, weak directors, and
passive owners, it’s only a matter of time until the
looting begins.”
Source: Interview with John Bogle, founder of Vanguard - one of the world’s biggest mutual
funds, NOW WITH BILL MOYER, www.pbs.org, October 2003
• Brokerage firms would like you to think that they perform the same functions as investment
advisers. But they’re not the same as independent investment advisers.
• Most brokers do not have a fiduciary duty (a legal obligation) to put your interests above his/her
interests or that of the firm. In any case, an investment adviser’s fiduciary duty is on a higher
plane.
• There are different kinds of investment advisers, depending upon their qualifications and how
they are paid. Most charge fees or commissions.
• Be sure you find an adviser who can offer you a wider array of investments to lessen the chances
of conflict of interests and provide you with more diverse investment choices.
Source: How to Sleep as Well as Your Broker, Arthur Levitt, Take on the Street, Vintage Books, 2003, p. 34-36
Retirement Threat #4
Source: The Great Mutual Fund Trap, Gregory Baer & Gary Gensler, Broadway Books, 2003, p. 108-109
© 2005 - Phillip Roy Financial Services Call us Toll Free: 1-888-225-8161
Fees - Retirement Threat #4
Mutual Funds
Over 55 years ago, John C. Bogle (founder and former Chairman of the
Vanguard Group) sat in Princeton University’s Firestone Library and
contemplated his thesis topic on mutual funds.
• Over a half-century ago, Jack Bogle noted that the mutual fund industry was an
industry in which the idea was to “sell funds that offer the small investor peace
of mind, an industry primarily focused on stewardship”.
• In contrast today, Bogle notes the mutual fund industry is one “focused
primarily on salesmanship”, an industry in which “marketing (determines)
what we sell, and in which short-term performance is the name of the game”.
Source: Remarks before the Harvard Club of Boston, John C. Bogle, January 14, 2003
Source: The Seven Deadly Sins of Mutual Funds, Arthur Levitt, Take on the Street, Vintage Books,
2003, p. 46-47
• Fees can be confusing, but not impossible to figure out if you know what to
look for:
- The fee table at the front of the prospectus lists one-time fees (e.g. front-end and back-end loads)
and recurring charges (e.g. advisory fees and distribution fees that can include advertising).
- The Expense Ratio is the percent of total fund assets (your money) eaten up by annual fees.
Although it is used to comparison shop among funds, beware that it does not include the loads,
which are charged only once.
Source: High Fees Strangle Returns, Arthur Levitt, Take on the Street, Vintage Books, 2003, p. 50-51
• “For every dollar you know you spend on fund expenses, another 40 cents
is hidden from view,” said Mercer Bullard, a University of Mississippi
assistant professor who acts as an investor advocate at www.fund democracy.com
Source: Constant drip of fees can soak mutual fund owners, Mark Davis, Business Spotlight,
news-press.com, 2004
• Fund A shares charge big upfront commissions, while B shares levy both
higher annual expenses and a back-end sales charge if you sell in the first
six years or so.
• But, regardless of the fund type, the brokerage firm immediately collects a
4% or 5% commission from the fund company. The selling broker then
gets perhaps 40 percent of this 4% or 5% commission.
Source: Brokers’ sales tactics stunt investment growth, Jonathan Clements, Wall Street Journal, 2004
Retirement Threat #5
By moving the extra earnings of about $40,000 (the $84,000 income earned
less $44,000 income used) to a tax-deferred vehicle, they could save about
$15,000 in income taxes.
• Since 2003, the top death tax rate has dropped from 50% by
1% per year (e.g. 45% in 2009)
The IRS is
Your Partner!
However, it will take 14 years for the $2,000,000 to double in a taxable account
at that same 8% annual rate of return (assuming a 33% tax rate).
Hypothetical Example
$500,000 Not representative of any particular product $441,532
$400,000 $355,654
$320,714
$300,000 $258,914
$232,998
$179,084
$200,000 $152,642 $156,940
$133,822
$123,488 $124,352
$100,000
$0
5 Years 10 Years 20 Years 30 Years
Taxable Account Tax-Deferred Account Tax-Deferred Account After Tax
Source: Top 10 Wealth Management Pitfalls, Sue Stevens, Morningstar, May 13, 2004
Source: Top 10 Wealth Management Pitfalls, Sue Stevens, Morningstar, May 13, 2004
6. Mismanaging Debt
- Can you better use cash values of life insurance policies?
- Are you paying too much in fees and interest?
- Could you use a mortgage to better manage debt?
7. Mismanaging Inheritance
- Over the next 10 years, $10 trillion will pass from generation to generation.
- Most heirs don’t know how to integrate that wealth into their own portfolios.
- Another concern is who might actually inherit the estate that you intended to
leave to your children. A Dynasty Trust can be used to insure your bloodline
will inherit your estate regardless of unanticipated events like divorce.
Source: Top 10 Wealth Management Pitfalls, Sue Stevens, Morningstar, May 13, 2004
Stay Minimize
Active Taxes
This document is supplied by PRFS for information only and does not constitute a
solicitation to buy or sell securities. Opinions expressed herein may differ from the opinions
expressed by other businesses and activities of PRFS. Although information and opinions in
this document have been obtained from sources believed to be reliable, we do not warrant
the accuracy or completeness and accept no liability for any direct consequential losses
arising from its use. The information is representative of PRFS viewpoints at the time of
publication. Not all products and services are available at all locations and not all
instruments are suitable for all investors.
• A big part of financial freedom is having your heart and mind free from worry about the what-ifs
of life. (Suze Orman)
• You should invest in a business that even a fool can run, because someday a fool will. (Warren Buffet)
• The list of qualities an investor should have include patience, self-discipline, common sense, a
tolerance for pain, open-mindedness, detachment, persistence, . . ., and the ability to ignore
general panic. (Peter Lynch)
• For some reason people take their cues from price action rather than from values. Price is what
you pay. Value is what you get. (Warren Buffet)
• Insanity: doing the same thing over and over again and expecting different results. (Albert Einstein)
• The indispensable first step to getting the things you want out of life is this: decide what you want.
You can do what you think you can do and you cannot do what you think you cannot. (Ben Stein)
• Winning at money is 80 percent behavior and 20 percent head knowledge. Most of us know what
to do but we just don’t do it. (Dave Ramsey)