A Little Bit of Shock Value…

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I just published an article titled “Welcome to 2026.” It showcased my new-found optimism about the future of our economy and our markets. And, admittedly, I was going for a little bit of shock value when, near the end of the article, I declared the Dow Jones could hit 44,000 in ten years. The DJIA is currently around 18,500.

Here’s a link to the article in the local seniors’ paper, The Senior Beacon (article on page 24).

A FEW WARNINGS

After reading some scary articles about the very near-term, I wanted to repeat my warnings. We will absolutely have recessions, bear markets, catastrophes and other bad and volatile events. BUT…those things have never stopped the market in a super-bull cycle.

LOTS OF BAD THINGS

The world’s a total mess: there’s record-high government debt, record-low U.S. interest rates (indicating a weak economy), wars, invasions, bombings, negative global interest rates, worldwide growth slowdowns, Brexit–whoa, gotta wipe the sweat from my brow. Are you optimistic yet?

I’m aware of these major issues. They are important. But they’re not devastating.

WHAT WE’VE TRIUMPHED THROUGH

For example, the U.S. has survived most of those things before, including bigger trials like assassinations, Great Depressions, multiple World Wars, etc. You get the idea. All through this, the markets have reached new highs, generating new wealth.

I believe we’re on the cusp of another super-bull market. We had the latest in the ’80’s and ’90’s. Then we had the worst decade in the stock market. Ever. The worst ever. Even worse than the decade that includes the Depression.

That was the major down cycle. Now I think it’s time for the markets to move even higher up. Get ready for Dow 44,000…

Here’s a link to the article again. Check it out on page twenty-four.

If you’d like a free report that took 17 years to build, highlighting the ten most-repeated mistakes I’ve seen dozens of investors make, just email the word “ten” in the subject line to RonPhillipsAdvisor@gmail.com

This report can help you minimize risk, save you $1,000’s in unnecessary fees, protect you and your loved ones from financial devastation, and minimize or even eliminate your taxes on investments. Pull up your email program, put “ten” in the subject line, send to RonPhillipsAdvisor@gmail.com and sit back and wait for the most important free report you’ll ever read on your investments.

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Market Volatility: Are You a Victim or a Victor?

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Market volatility is very scary. It (temporarily) destroys our wealth, makes us hate watching the news and just freaks us out emotionally. But…volatility can be our friend. Or, at the very least, our frenemy.

How do we manage volatility?

The Number One way is to manage our emotions. The markets really are simply driven by fear or greed. It can be that basic. It’s such a predictable thing that there are quotes about it. Warren Buffett famously said to “be fearful when others are greedy and greedy when others are fearful.” Simple. Basic. But emotionally hard to do at times.

How did this strategy play out in the past? Well, in 1999 everyone was euphoric (greedy) over tech stocks. If you were fearful then you would have avoided arguably the largest stock bubble, and bust, in one hundred years. If you were greedy when others were fearful, in March 2009, the market would have roughly tripled your investment.

It seems like this approach might have some merit….

STRATEGY NUMBER TWO

Dollar-cost average into the markets: purchase investments on a regular basis with a regular dollar amount. If you’re young you can do this fairly easily through your paycheck. Even if you’re older, or retired, you can still do this. You may have a portfolio. That portfolio should be producing a large income, in percentage terms. So take that monthly and quarterly income and reinvest, if possible.

You can visit RetireIQ.com and request my free report “Producing Large Portfolio Income” to get an idea on how to generate 5-7% annual portfolio income.

STRATEGY NUMBER THREE

This multi-pronged idea is definitely for the “advanced students.” You can manage risk by using short mutual funds when the market is dropping; tactical allocation and cash for macro-events like dropping GDP; and options writing or buying for relatively steady income and hedges, respectively.

Again, these are more complex ways and you may want to get some professional advice before starting in this direction.

If you have any questions or comments you can always reach me at RonPhillipsAdvisor@gmail.com

 

 

You Can’t Get a Loan for Retirement

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Well, I guess that’s not really true. You can get a reverse-mortgage. If you own a house with enough equity. Or you can pull equity out of other real estate you might own. Or borrow from relatives.

What I should say is you don’t want to get a loan for retirement. It sort of goofs up the low-stress time we’re trying to create for our golden years, having to worry about paying back a loan or destroying equity.

LET YOUR KIDS OR GRAND-KIDS PAY FOR THEIR EDUCATION

I know, I know. It sounds heartless but it’s true. You offspring can, and should, get a loan for their education. It’s a great investment. Probably the very best one they’ll make their whole lives. If you haven’t already seen this famous chart form the Bureau of Labor Statistics, here’s the summary:

Median Weekly Income (annual):

High School Grad: $668 ($34,735)

College Grad: $1101 ($57,252)

Advanced Degree: $1386 ($72,072)

It’s real easy to multiply these numbers over a 40-year career. The basic bachelor’s degree earner gets $900,000 more over their working life than a high school-only grad. The advanced degree person gets $1.49 million more!

Can the kids afford it or what?! According to The College Board, the average cost, per year, of state college for a resident is about $8,900. Over four years that’s $35,600. Remember, that person will average an extra $900k in lifetime income. Return? Subtracting the college cost: $864,400 or 2,428 percent! That’s a huge return on investment.

(Here’s the link to the BLS data.)

Plus, there are many ways to make this great investment into education:

  • loans
  • work studies and other jobs
  • grants
  • scholarships
  • accounts like Education IRAs and 529 plans (funded from gifts)
  • service agreements (e.g. Peace Corp, ROTC, military)
  • local community college then transfer to a university
  • tax credits and probably more ways

Now, back to retirement, can we get grants and scholarships to pay for it? Of course not. So, if we have to make a choice, the higher priority is our retirement. Not that we don’t want to pay for the kids but we may not have the resources. And they’ll be just fine with that extra million or million-and-a-half.

This advice comes with a big caveat: If you have several million already for your retirement you can probably spring for education costs. Some folks do and that’s wonderful. Pay up. Your grand/kids will always remember it and be grateful. And probably earn a lot more lifetime income from your generosity.