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It May Be Time To Reconsider What Retirement Means to You

Whether you’ve been told you should retire at 62, 65, or some other age, only you can decide what is right for you. In fact, you may want to reconsider retiring at all––at least in the traditional sense.

Many of us don’t like the circumstances we find ourselves in––and look at retirement as the nirvana we’ve been missing. The truth probably lies somewhere between completely dropping out (i.e., piddling around in retirement) and never retiring (i.e., dying with their boots on).

The reason many of us find ourselves in such situations is that we have been sold on an idea about retirement that is flawed: the idea that we should do what we don’t enjoy to accumulate the money we need to someday do what we want. This hope of doing what we really want to do is why the concept of traditional retirement is appealing to so many of us.

Although this may surprise you, many people who have retired and dropped out of the race are not altogether happy with their decision. The truth is that traditional retirement doesn’t work for everyone. Instead, people want freedom to pursue their own goals and interests. They want the autonomy to call their own shots––to do what they want, when they want, and where they want.

There is no question that having money provides options. If you have enough, you can usually do things the way you want. But money is only part of the equation––finding a work/life balance is just as critical.

There are two important steps to take when planning your retirement:

1. Decide the path you want to take: continuing to work, not working at all––or a                             combination. If you have a partner, it’s critical to involve him or her in the process.

2. Put together a plan that will enable you to achieve your goals.

These two steps will help guide you in living a life you love with the money you have––on your terms, not someone else’s. People are still haunted by the old rules and media hype that bemoan their lack of preparedness to reach this artificial goal line of traditional retirement. Many don’t understand that they don’t have to stop working to start retiring.

Life can present all of us with challenges that can radically alter our course: disability, a death in the family, divorce, and so on. We need to plan ahead financially because our minds and circumstances can change over time. For example, what interests you today may bore you ten years from now, or an unexpected disability may prevent you from plans you made for the future. Investment savings are necessary to purchase the freedom to change course when you choose––or need––to change it.

Many of us have already seen enough of our parents’ and forerunners’ retirement lives to know that this is not the life for us. We have already figured out that our lives will be full of challenge, relevance, stimulation, and occupational adventure. We may slow down but we are not leaving the track for the concession stand.

When you ask many retirees how they’re doing, they often reply, “I’m keeping busy.” This is an acknowledgment of the void that retirement has brought. Most people are truly happy when they are busy doing what they love. Conversely, if people are not productive and contributing in some way, they are most likely not very happy.

The goal of investing––including retirement planning––is to have the resources to have the liberty to do what you want when you want. What is the point of using that kind of liberty to do nothing but play golf? It may sound like a great idea when you’re commuting three hours a day, but it gets old quickly.  Redefining retirement is about balancing vacation and vocation. How you define retirement is up to you.

Is It Too Late To Begin Saving For Retirement?

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How is wealth created?

wealth creationAs a Certified Financial Planner™ professional, I’m often asked by women how investments work, and why they should invest outside of a savings account. Without a clear understanding of why you should invest in a company in an attempt to make a profit rather than putting money in a savings vehicle like a CD, it may be easier to take the path of least resistance. Let me explain. The bank or credit union pays you one quarter of a percent (or less) on your deposit, which is in essence a loan to the bank, and they loan money out to others at 4% to 5%. You may get a bit more on a CD, but that, my friend is capitalism. A savings deposit pays one quarter of a percent (.25%) to the loaner (you); and 4.75% to the owner (the bank). In order to accumulate meaningful savings, it is often necessary to take on some investment risk.
So that leads to the question:

How is wealth created?

There are four things required in order for wealth to be created.

1. Financial capital or money. Money is necessary to be invested in order for a company to manufacture a product or provide a service for a profit.
2. Natural resources. Oil, gas, land and gold and other commodities are assets that can be used in creating products.
3. Intellectual capital. A great idea or a new way of delivering a product or service is an example of intellectual capital. Think Apple i-Phone or the Google search engine.
4.Skilled labor

creationsWhen all four of these things come together, wealth is created. If we provide capital to a company through investment of our money, that entitles us to a piece of the wealth created. Investing, in its simplest form, is saving a part of what you earn, having an investment philosophy or discipline and a road-map, and paying attention to the cost of the investment. If you’re not sure how to proceed, engage a Certified Financial Planner and they will help you make a plan. Don’t wait for your husband or your father or some other man in your life to do this for you. You are capable and qualified to do this on your own.
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No Investment is Risk Free

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I’m often asked for the secret formula to successful investing. I think Peter Lynch said it best when posted the question: “How do I make money in the stock market?” His answer was, “The key to making money in stocks is not to get scared out of them.” In addition to not being scared out of the market, you can be rewarded for buying more shares when other investors are selling. Another key to investing is understanding all the different types of investment risks. Even guaranteed investments like CDs that are FDIC insured carry risk. CDs are subject to inflation risk. If you earn 1%, inflation is 2% and you are in the 30% tax bracket. Your CDs have a negative 1.3% rate of return. That’s what we call in the investment business “going broke safely.” The moral of this story is that if you are looking for an investment without any risk, stop looking. You won’t find one.

All investments have risks – just different kinds and degrees. So it’s important to know what the specific risks are and how they can affect your portfolio.**

Market Risk: Stock market ups and downs are unpredictable. So market risk – the possibility that investments will lose value because of a decline in the securities markets – may be the risk you think about first. Choosing an appropriate investment strategy and sticking with it may help your portfolio survive a volatile market.

Interest Rate Risk: You may think you can avoid the uncertainty of the stock market by investing in bonds. But bond investments have their own risks. Changes in interest rates affect bond prices. When rates rise, prices of existing bonds fall because older bonds are paying less interest than newly issued bonds. Holding a variety of bonds having different maturity dates may reduce interest rate risk.

Default Risk: Bonds are subject to another type of risk – the risk that the bond issuer won’t have money to make principal and interest payments to bondholders. Generally, investors who buy lower rated “junk” bonds are more at risk from default than investors who hold investment grade bonds. Check an issuer’s credit rating with a bond-rating agency, such as Moody’s or Standard & Poor’s, to minimize default risk.

Inflation Risk: Over the years, the rising costs of goods and services can reduce the purchasing power of your savings. If you invest the bulk of your money in fixed income investments, you may be at risk of not earning enough to reach your long-term goals. Consider investing a portion of your money in investments, such as stocks, with the potential for earning higher returns to help reduce inflation risk.

Currency Risk: Adding international investments to your portfolio may provide diversification.* But be aware that currency exchange rates, foreign taxation issues, and differences in auditing and financial standards, among other things, can affect the value of foreign investments.

Play a role: You can’t prevent investment risk, but you can take steps to moderate it. By diversifying your portfolio, you improve your chances that gains in one asset class may offset losses in another. And, when you invest for the long term, you’ll have more time to recoup any losses.

*Diversification does not ensure a profit or protect against loss in a declining market.
**Content written by Newkirk, as distributed to Symmetry Partners, LLC.

Securities and Investment Advisory Services offered through NFP Advisor Services, LLC (NFPAS), member FINRA/SIPC. NFPAS is not affiliated with Fish and Associates. NFPAS does not provide tax or legal advice.

September Edition: Advisor Views

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Holding Equities for the Long Term: Time Versus Timing

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Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Thank you. Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Kestra IS and Kestra AS are not affiliated with Fish and Associates. Kestra IS and Kestra AS do not provide tax or legal advice.


This site is published for residents of the United States only. Registered representatives of Kestra IS and Investment Advisor Representatives of Kestra AS may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact the Kestra IS compliance Department at 512-697-6000.


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