Call me stubborn or merely persistent as hell. Your dreams shouldn’t die easily, persistence is critically important. But, you may have the sense that there are so few options available that could bring new life to those dreams. If you walk into your local bank or stock broker you’ll be fed the standard line to expect 6% to 8% along with a shrug of the shoulders. Seriously, why bother with the aggravation of investing when you could just settle for the 3-4% being offered by annuities, is it really worth the headache? If you’re going to take the risk of equities it better be damned worth it, yes?

Personally speaking, I’ve never met an individual who’s significant wealth can be attributed to the ownership of mutual funds whereas I know of many who’s wealth can be attributed to ownership of individual equities.

For example, the Dalbar study measure the results of individual investor performance versus the market indices. While the S&P 500 grew at an 8.2% rate from 1990 to 2009 individual investors only made 2.3% on average.

Why such a large discrepancy between potential investment returns and reality? The truth be told for Socially Responsible Investors and the public at large is primarily due to emotionally based decision making aka “Buy High / Sell Low”, buying when confidence is high and selling when confidence is low.

Investors must keep in mind that mutual funds are first and foremost a business designed to run profitably, well…. so are we for that matter. But the difference is they are subject to group behavior and primarily will only invest in popular growth stocks with very large size like Apple, Exxon, Pfizer, which allows the fund to grow almost indefinitely in size. I’m always amazed at how few Small Cap Value Funds exist. In addition, if you look at portfolio composition you’ll frequently see many of the same holdings, in my opinion this is primarily due to more of a fear of failure than desire to excel.

But is there really a sensible solution that bridges the gap between the mundane and conflicted mutual fund industry and your dreams of a worry free retirement?

Yes there is. What surprised me the most over the last three years of research and development into Quantitative Investing is that there was actually no great revelations in terms of investment technique and philosophy. The correlations between academic research of individual stock performance holds up quite well under scrutiny. Value Investing paired with Small Cap investing remains the titan of performance that it has been for decades.

Based on my three years immersed in Quantitative modeling I realized that stock data is poorly processed and the decision making process had to change. In addition, it was shocking to see how poorly the mutual fund industry was with these discoveries. Quantitative theory and development had been the primary space for the Hedge Fund industry, with good reason as the data forthcoming will show. But nary was there any alignment with SRI, Socially Responsible Investing or the Green Investing universe.

The solutions will likely have to come from smaller entrepreneurial investment firms without entrenched management that insists on existing methods or subjective decision making.

While its impossible to predict exactly how the Quantitative strategies will be reviewed 10 years from now, we do know that a repeat of the last decade is simply unacceptable.

More to come.

Be careful out there,

Brad Pappas

Quantitative Analysis of Investor Behavior

Brad Pappas is President of Rocky Mountain Humane Investing, located near Boulder, Colorado. RMHI’s website is http://www.greeninvestment.com and blog at http://www.greeninvestment.com/blog

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The best early retirement planning assumes you are doing everything you can to stay healthy. The cheapest insurance is exercising and eating right.

This may shock you but eating right, at home with goods from the perimeter of the grocery store, is much cheaper than eating out or consuming fast food that is not good for you.

This is a win win folks…exercise is cheap to free and eating right is much cheaper than eating unhealthy food.

If you are not exercising and eating right, start doing so right now. It will increase your confidence about not needing to spend a lot on doctors when you retire.

Even then you need a catastrophic health insurance policy, just make sure you don’t overpay.

Your health and its costs should be given a high priority, without good health the best early retirement planning will be made unnecessarily difficult. You are smart… you are healthy.

Your age

Every one of us is a day closer to our obituary. Keep this in mind and realize that as you age you will be less and less able to do the things you enjoy.

No one retires and discovers he or she can run faster than they could 5 years ago. No one retires and finds he or she can hit the golf ball further at 60 vs 55…equipment improvements not withstanding.

So retire now while you are physically able to enjoy yourself.

I don’t understand why this is not discussed more often and openly when planning to retire. Getting older is a fact of life…why not take your remaining years into account.

What good does it do you to work until 65, have lots of money, and not be able to enjoy the money because of your age.

So if you are doing your early retirement planning and not taking into account the state of your health and your increasing age…do so and retire while you can enjoy your retirement to the fullest.

Gary Pierce is the webmaster of http://www.frugal-retirement-living.com he retired early at 49, he is still retired at 63. He has experience in lifestyles that are both fulfilling and frugal. cheap health insurance. It is 2009 and folks are wondering if they can ever retire. Don’t give up until you check out this website. Enjoy.

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Your retirement planning should be done as early as possible as this will allow you to invest in a wider range of investments. When you are starting your career you can take more risks with your investments and you will have the opportunities to gain higher earnings. On the other hand if you are a bit older you will be looking for more security instead.

Your investment portfolio should be as balanced as possible. Do not place your eggs in one basket. As far as possible you should try to commit in diverse investments such as IRAs and mutual funds. Doing so will get you more flexible against any unfavorable economic conditions.

Those that wish to discover more on this subject can check out this article on most accurate retirement calculator and financial investment as it holds some interesting information.

Sometime a financial adviser can be also very helpful when it comes to investments decision. The person may help us in choosing the most appropriate portfolio according to our age and income range. There are also some banks that offer investment opportunities and this can be a great way for you to gain some advices on this subject.

Retirement planning is a very important component of our life. This will ensure that we have a constant source of income even in our old days. In order to make the most of it there are various investments opportunities that exist and it will be important that we choose the best one.

Published by Janett Brown for RetirementStory.com

Do you want to learn more on the different investment opportunities that exist for retirement planning? Visit our site to learn more on 401k garnishment and financial planning that exist.

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As a Retirement Counselor, I have to sit back, take a deep breath, and then start to outline the events and circumstances that “could” result in a shortfall of money during your retirement. In this article, I will explain a few of these, along with some ‘traps’ and ‘potholes’ to look out for on the road to (and in) retirement.

First off, “running out of money in retirement” needs a proper definition. Do you mean running your investments and savings plans to zero? Or do you mean running out of INCOME that those investments can produce? Or is the better question still, “will my current lifestyle be reduced in future years by my choice of investments today”, or “how can my current plan to live in retirement be re-worked so I increase my odds of not running out of money” You have to be specific with your question to allow your advisor to give you a more specific answer based on the rules and historical outcomes.

Once your question is framed in an accurate manner, next you must consider what you are comfortable with doing. What is your experience, temperament and willing risk level? Follow me here. If you’re a saver and like bonds and CD’s, and think stocks are risky, then say that. If your retirement plan owned mutual funds and they worked out, then you can stomach some risk of owning stock-based investments . Where I find most investors get side-tracked is when they do things that are really against their nature or experience, and they allow emotions to color their thinking. Also, they don’t think things through money-wise or they think too much and change their strategy too often so that no undertaking has a chance at success. Let’s look at some numbers and options that could help you with your retirement planning.

Consider a retirement portfolio (IRA, brokerage account, etc.) that contains $50,000 in bonds and $50,000 in stocks. The stocks are high quality and pay dividends equal to 2% per year. The bond portion pays 5% in interest income. So that’s $1,000 from stock dividends plus $2,500 in bond dividends totaling $3,500 income per year. Not bad; that’s close to $300/month in income. If the bonds and stocks continue to pay, then it’s fairly safe that your income will stay level, or even rise over time as the stock companies increase their dividends if business does well.

Appreciation vs. Income: I think where investors go awry is when they confuse ‘appreciation’ with ‘income’. Appreciation is the rise in value of a stock, bond or mutual fund. Income is the earning of dividends or interest from a stock or bond or mutual fund. From my example, what could happen to de-rail your efforts and lead you to running out of money prematurely? Answer: Spending more than you earn.

Suppose your stocks go up in value 25%, to $62,500, and the bonds stay at $50,000. Now you have $112,500 total, right? You may think – OK, now I’ll take $1,000 more from my account each year since I’ve made some money in my stocks – you now take $4,500, or $375 a month. Whoa there big spender! Where are you getting the extra $1,000? You have to sell some stock(s) or bond(s) to get it. You are now spending your principal, since your dividends and interest are still $3,500 per year. Spending beyond what your portfolio earns is spending your principal. For every $1,000 in stock you sell, you are reducing your future income by $20/year (2% of $1,000, and $50/yr. for every $1,000 in bonds sold). It’s emotionally warm to think that way in a bull market, but how ’bout when the 25% bear
market hits, (we just had one) and your account is now down to $87,500 ($50,000 bonds + $37,500 stocks). De-rail your retirement pothole #1: you will never run out of principal if you don’t spend any. Rule: 1a: If you decide to spend principal in the good times, be prepared to stop spending principal in the bad times. Remember: income from dividends and interest is fairly stable. Appreciation from stocks and bonds is not stable, and cannot be relied upon year to year. Better idea: when stocks rise, move some of that appreciation (gain) to the bonds; now you will earn more income – 5% from the bonds vs. 2% for the stocks.

Taxes and Inflation: The second area of real importance ignored by most investors and the investment companies is the effects of inflation and taxes on your retirement money. It’s what you keep that counts. We all hate taxes and the darn tax code is changed so often by Congress that hardly anyone can keep up with it. Inflation is a bit easier to figure out. To keep the example easy, say you are earning 5% on your combined stock and bond portfolio. Taking 15% in taxes away, you now earn 4.25%. Now subtract 3% inflation, and you’re left with 1.25% – not much of a gain now, is it? De-rail your retirement pothole #2: be aware of the inflation and tax hits that will occur when you design your retirement income plan.

Maximum withdrawal rates. Multiple studies on this topic have been penned in the last 25 years, and the consensus is a 4% to 4.5% rate of withdrawal would prevent running out of money during a 30 year retirement time frame using 50% stocks/50% bonds. This plan does not consider principal vs. income like above. You take your starting account value and withdraw 4 -4.50% year after year. Another plan I have seen put forth is to withdraw your portfolio’s total return (appreciation + income) after subtracting the inflation rate. For instance, your portfolio gains 10% for the year (8% appreciation + 2% income); you can withdraw 7% that year. Why? Because if you earn 10% and inflation is 3%, then you are leaving that 3% gain in the portfolio to offset inflation in the portfolio that you will need next year. That would take some mental math on your part, because you would adjust your income each year depending on your portfolio value and the cost of living (inflation) from the prior year. Where this plan could backfire is when your portfolio loses money, such as last year, so that no withdrawals would be taken. Can you put your retirement income on hold and await better times-probably not. De-rail your retirement pothole #3: Be flexible; work out more than one plan for your retirement income, using more than one portfolio or investment.

Finally, remember – I’ve used one example of a 50%-50% portfolio mix today. You may own other investments that guarantee your income, such as a pension, social security or an income annuity. The safer the guarantee, the more choices you will generally have with your remaining investments.

For a free retirement calculator, send me an e-mail at barry@stetsonwealthmanagement.com and I’ll send your paper retirement planning calculator by mail or .pdf file.

I hope you’ve gleaned some useful information today.

Barry Unterbrink has held positions in the financial services industry since 1982. His experience includes work as a portfolio manager for institutional pension funds totaling $80 million, investment advisory president, and financial newsletter publisher (Consensus of Insiders). A finance graduate of Stetson University, he currently operates as a fee-based retirement planning counselor. He has resided in Fort Lauderdale since 1968. He can be reached at (954) 719-1151 or at http://www.stetsonwealthmanagement.com.

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If it means the difference between staying retired and having to go back to work, you will find a way to stay retired and spend much less than when you worked.

Why am I so sure of this…it is because of the money you waste keeping up with the neighbors and co-workers. Think about it, at work how much money you spend on clothes and cars to keep up appearances. You need to recognize this for the best early retirement planning for you.

The scenario goes like this…well Sally and I both make the same money. She is shopping at Macy’s. I’ll show her, I’ll get that dress I’ve wanted at Nordstrom’s. Has a nerve been hit? I did the same thing… now I did not wear dresses just substitute a tailored suit and Bill for Sally. Whew…

If this sound familiar…it will stop when you retire.

Your old clothes fit just fine…besides you need money for fuel to take the RV to Montana…now that’s the way to think and prioritize for early retirement planning

Think of the times you have bought new cars that you didn’t really need. And I am not saying I haven’t done the same thing….but I learned and our current car is 11 years old with 153,000 miles on the odometer. Runs and looks good thank you.

Clothes and cars are the tip of the iceberg. If you are at rung 4 of the corporate ladder a country club membership, a certain type of country club, may be expected of you. Folks, I have not had my shoes shined in 14 years, open toed sandals don’t need polish. You can do this too.

It is not in the financial planner’s playbook to even think about you spending less money, a lot less money, when you retire. It is so easy to say, “well this is what you are doing now and you won’t be happy spending less.”

Really? Compared to commuting and working with people you may not care for is all the motivation you will need to retire early.

You will spend a lot less in retirement if you are motivated to retire. Early retirement planning rarely takes this fact into account. Don’t let it happen to you. Enjoy.

Gary Pierce is the webmaster of http://www.frugal-retirement-living.com he retired early at 49, he is still retired at 63. He has experience in lifestyles that are both fulfilling and frugal. It is 2009 and many are wondering if they can ever retire. Don’t give up until you check out this website. Enjoy.

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Furthermore, the amount of companies contributing to final salary schemes have halved under the labour government. On top of this, they decided not to pass an amendment which would have given 8 million women with a partial pension entitlement the chance to make up the shortfall in their National Insurance contributions by making lump sum payments into their national insurance contributions. In fact, pressure is growing for Gordon Brown to step down as James Purnell has become the third cabinet minister to resign according to BBC news, June 5th. In fact, according to their ICM survey, only 29% of the 1,005 adults surveyed thought that Gordon Brown was in touch with ordinary people.

In the latest budget, Gordon Brown has increased the highest rate of income tax to 50% as well as reducing personal allowance to nil at the higher rate of tax. Double whammy. In a Treasury paper published in April 2003, the Inland Revenue reported to have 16,000 expats on its database declaring a total income of £800 million. Some estimates put it at more than £5 billion. But, you compare this to the £25 billion that RBS moved offshore and it’s put into perspective, especially when you consider £20 billion of taxpayers’ money went into their bailout.

One things for sure, with an ever increasing ageing population, there are not enough young people paying into the state scheme to take care of pensioners. The likely result is a crack down on pension schemes in the future and an increase in taxes (as we have witnessed already). Luckily, for UK citizens, they can transfer their UK private pensions offshore to mitigate tax. The Qualifying Recognized Overseas Pension Scheme (QROPS) allows most types of UK private pensions to be transferred offshore. QROPS was designed with the intention of giving UK expats who aren’t returning to the UK the option of moving their penion to a ‘white list’ country offshore such as Guernsey or the Isle of Man. Not only do you mitigate income tax, capital gains tax and inheritance tax, but you don’t need to purchase an annuity. This means that your whole pension fund is left to your spouse upon death and then onto your kids should your spouse pass away.

Furthermore, you don’t need to report to the HMRC (UK tax office) after 5 years. If you’ve been abroad for 5 years already, you don’t need to report to them at all. You may even be able to access 25% of your fund immediately after transfer provided you are over 50 (55 from 2010) and you can include your property within the QROPS, so your kids don’t have to pay inheritance tax on your house(s). Obviously there are fees upon transfer. Gordon Brown is knocking at the door and it is a mystery how long the Treasury will allow these offshore transfers. But, once they are offshore they will not be held in the UK so the government won’t be able to retract your funds retrospectively. Not all UK pensions benefit from a QROPS though. There are some excellent final salary schemes which provide certain guarantees that may be better off in the UK. The best thing to do is talk to a local qualified financial advisor.

Richard Malpass
Financial Planner
Global Wealth Management
Bangkok, Thailand

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To retire early it is obvious that you will need to have a passive income or a huge amount of savings (which in turn can be used to create a passive income). The obvious question is ‘how do I find a residual income opportunity’ or how can I create a passive income. There are many ways to achieve this, some more passive than others.

First of all let’s look at how we can get our ‘money to work for us instead of working for money’.

If you want to know how to retire early you simply must become an investor. Whilst rich people do work for money they get their money to work much harder than they do. Anybody that has owned their own home will be able to tell you that it has probably been the best investment of their life. The capital gains an average persons house contributes a huge amount to their eventual retirement. If this is the case why don’t more people buy 2 or 3 or 4 houses to help fund their retirement? Well many people do but the reason why most don’t is because they don’t understand how money works. This means that most people will never be able to learn how to retire early.

What about if you work from home, for many that would be considered a form of retirement. In many ways a home business income opportunity could be the best option for an early retirement. As long as you are doing something you love then you will still be having fun and you will be also making money. Many people who want to learn how to retire young are starting to create their own work at home internet business. This is an incredible way of creating wealth and is a business that has numerous income opportunities

So if you really want to answer the question ‘How to Retire Early’ I think you need to do two things. Learn how to get your money working for you and start creating an income from something you love doing. The answers to both of these questions are available on the internet as you can literally find information of anything. So work hard and stop dreaming about retiring early – Simply start to learn how to retire early and make it happen!

If you want to learn How To Retire Early then you simply need to become an Investor.

Would you like a FREE DVD that shows you the Secret Investment Strategies that Financial Advisers don’t want you to learn?

Everyday people are currently using just one of these strategies to earn $35,000 Tax Free, per year.

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Typically, this can happen naturally if you change jobs and your new job has a different pension scheme, but you can also choose to do it voluntarily. Some of the reasons for doing it yourself might be if your own pension plan charges large administrative costs that you want to avoid by transferring to a pension plan with lower fees or if you want to add a personal pension plan to a work-based pension plan to take advantage of any employer contributions. Or it could simply be because your current pension provider are no longer offering the service.

Whatever the reason, pension transfers can be advantageous, but you should always make sure that you are doing it for the right reasons, and that you will be better off with your new scheme. This is a big decision, and it is always worth seeking financial advice before you make your choice.

A financial advisor will be able to tell you the benefits, and drawbacks, of transferring your pension plan, how it works, and point you in the right direction.

They will also be able to talk you through your current pension plan, pointing out anything you don’t understand, before suggesting alternatives which may benefit you more in the long run. You may also decide that you want to start paying more, or less, into your pension plan in terms of your monthly contribution, depending on any changes in circumstances you may have had since you first starting paying into your scheme.

Once you make your pension transfer, your monthly payments will stop going into your old plan, and start going into your new pension provider. One common reason for transferring your pension is if you want to transfer from your employers’ final salary pension scheme to a personal plan.

Many employers are now offering cash incentives to their employees to persuade them to do just that, as a final salary pension can prove to be expensive for them. If you want to transfer from your employers’ final salary pension scheme to a personal plan, you will need to get a ‘Statement of Entitlement’ from the administrators of your pension to find out the value of your plan.

You can do this by making a written request to the administrators and within three months, they should then send you a transfer value, which will typically be valid for another three months. This figure is not the total amount which you have paid into the pension scheme during the time in which you have had it, but rather the amount of money which would need to be paid in for the company to provide your pension entitlement under the final salary scheme.

Once you have this transfer value, you can decide whether or not to go ahead with the pension transfer – and if you do, make sure it is before the guarantee date on your Statement of Entitlement – and your pension scheme administrator will then be required to make the transfer complete inside of six months from when you lodged your request.

Pension transfers can therefore often be a way of saving money and getting a deal which in the long run can be far more suitable when it comes to planning for your future.

David White is a Director of KMS Finance (http://www.kmsfinance.co.uk) who are financial planning consultants providing advice on pension transfers.

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According to the 2006 Social Security Administration’s Trustee Report, with no changes to the program, Social Security will be able to pay 100% of benefits until 2040. At that point, the revenues collected would still allow for benefits to be paid at a rate of 74%, again with no changes to the program. Further, the program would additionally be able to afford payment of 70% of benefits through 2080. In reality, the picture is not quite as bleak as is often painted.

Will Social Security provide you with a healthy income to afford a new car each year and two vacations in retirement? No. Accepting the reality of Social Security means that you DO need to be concerned about your retirement. But you don’t need to fear it. Most likely you will survive, but not in a way that comes close to matching your pre-retirement lifestyle. That’s what the Network Marketing industry ought to be stressing…the very real need for most to plan for supplemental retirement income and the development of second or additional income streams.

Also, what this says to me, in regard to my business and our industry, is it indicates that many of my fellow business builders making these statements are “swallow it whole” kinds of people. Imagine a person who eats whatever is placed in front of them, without thinking about it or examining it. They simply choose to swallow it whole, whatever it is. In a similar way, some people accept things they are told as absolute truths, then repeat them to others, without considering the basis for the statement or requiring any confirmation that the information is accurate. These are often people who do not want to examine things and make decisions for themselves. After all, sometimes it is easier to just believe. So the question you should ask yourself is, “Would working with that kind of person suit me and my goals?” The people who bring you this blog take a more direct and sincere approach. We, admittedly, swallow nothing whole just because it is offered to us. We examine everything, to determine if it’s a fit for us, if it makes sense to us, and if we can determine it to be accurate information. If you think working with those kinds of people would be a healthy environment for you, then maybe I have something to talk about. If you have some questions, or comments, I welcome an open and honest discussion from all perspectives.

I believe that building a second income business can be done in a genuine authentic way without hype or exaggeration. A business that is built around the values, talents, interests and goals of an individual is a business that can be sustained. If you like the way I think, email me at clemg@powerontheweb.biz.

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Furthermore, the amount of companies contributing to final salary schemes have halved under the labour government. On top of this, they decided not to pass an amendment which would have given 8 million women with a partial pension entitlement the chance to make up the shortfall in their National Insurance contributions by making lump sum payments into their national insurance contributions. In fact, pressure is growing for Gordon Brown to step down as James Purnell has become the third cabinet minister to resign according to BBC news, June 5th. In fact, according to their ICM survey, only 29% of the 1,005 adults surveyed thought that Gordon Brown was in touch with ordinary people.

In the latest budget, Gordon Brown has increased the highest rate of income tax to 50% as well as reducing personal allowance to nil at the higher rate of tax. Double whammy. In a Treasury paper published in April 2003, the Inland Revenue reported to have 16,000 expats on its database declaring a total income of £800 million. Some estimates put it at more than £5 billion. But, you compare this to the £25 billion that RBS moved offshore and it’s put into perspective, especially when you consider £20 billion of taxpayers’ money went into their bailout.

One things for sure, with an ever increasing ageing population, there are not enough young people paying into the state scheme to take care of pensioners. The likely result is a crack down on pension schemes in the future and an increase in taxes (as we have witnessed already). Luckily, for UK citizens, they can transfer their UK private pensions offshore to mitigate tax. The Qualifying Recognized Overseas Pension Scheme (QROPS) allows most types of UK private pensions to be transferred offshore. QROPS was designed with the intention of giving UK expats who aren’t returning to the UK the option of moving their penion to a ‘white list’ country offshore such as Guernsey or the Isle of Man. Not only do you mitigate income tax, capital gains tax and inheritance tax, but you don’t need to purchase an annuity. This means that your whole pension fund is left to your spouse upon death and then onto your kids should your spouse pass away.

Furthermore, you don’t need to report to the HMRC (UK tax office) after 5 years. If you’ve been abroad for 5 years already, you don’t need to report to them at all. You may even be able to access 25% of your fund immediately after transfer provided you are over 50 (55 from 2010) and you can include your property within the QROPS, so your kids don’t have to pay inheritance tax on your house(s). Obviously there are fees upon transfer. Gordon Brown is knocking at the door and it is a mystery how long the Treasury will allow these offshore transfers. But, once they are offshore they will not be held in the UK so the government won’t be able to retract your funds retrospectively. Not all UK pensions benefit from a QROPS though. There are some excellent final salary schemes which provide certain guarantees that may be better off in the UK. The best thing to do is talk to a local qualified financial advisor.

Richard Malpass
Financial Planner
Global Wealth Management
Bangkok, Thailand

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