Sunday, December 10, 2017

Our Social Security Maximization Strategy

Last week, I had a discussion with a Social Security expert and have revised our strategy for when to take Social Security benefits.   Until this call, I was analyzing option on how to maximize our total benefits received based mainly on when I started taking Social Security benefits.   The analysis showed that it was financially superior for me to start taking benefits at 62..

The expert offered a different strategy: Maximize the higher income benefit first and then maximize total benefits received.   Her point was that the higher income benefit would be the ONLY benefit if one of the couple passed away.  Therefore, it would be important to ensure the higher benefit is as close to the maximum as possible.  From her experience, the surviving spouse (often the woman) was shocked when she learned how low the survivor's benefit was because the retirement benefit was started at 62.

However, while waiting to maximize benefits, my spouse can start her Social Security benefits at 62, and thereby enabling us to collect auxiliary benefits due to minor children.  I had not considered this approach prior to consulting with the expert.

So my new strategy is to wait until 70 before starting my retirement benefits.    This will maximize our retirement benefits when one spouse passes away.  In addition, we will plan to have my spouse start her reduced benefits at 62, which will give us some Social Security income prior to me turning 70.

For more on New Beginnings, check back Sundays for a new segment.

This is not financial, retirement or Social Security advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, December 06, 2017

Not Feeling Brilliant

"Don't confuse brains with a bull market." ~ Humphrey Neill

I'm feeling pretty good this year about the growth in our retirement accounts.   However, I realize the returns are due primarily to a great bull market, and not because I made brilliant stock picks.

So rather than put more money in the market, I've been taking a wait and see approach.  If the market continues to decline, I want to wait until there is at least a 10% correction before adding funds.   If the market resumes it's advance, I will continue to take some profits and keep the value of my holdings constant.

So for now, I will continue to wait.

For more on The Practice of Personal Finance, check back Wednesdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Sunday, December 03, 2017

Retirement Finances May Become Challenging ... Again.

When I retired early in 2007, the stock market made the future look bright.  We were about 80% invested in equities.  I expected our investments to perform extremely well.  Instead, the 08/09 bear market reduced are retirement account by 44%, which was catastrophic.  We spent until late 2013 clawing our savings back to the 2007 levels.  It was a very challenging time.

Fast forward 10 years to 2017.   Again, the stock market is making the future look bright.  However, this time I am much less optimistic and more cautious about our investments.  We can't afford another downturn of 44% in our retirement savings.   I no longer have the wherewithal nor stamina to withstand the decline and make the subsequent recovery.

So, I am consciously not adding any additional funds to equities, and taking profits in specific positions, where possible.   Still, we are not exiting the stock market, but targeting for only 25% exposure to equites.  That way a 50% decline will only result in a 12.5% decline in our retirement savings.

A 12.5% decline, while not desirable, will be challenge that is not insurmountable.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, December 02, 2017

Lions and Tigers and Bears, Oh My!

"If it's too good to be true, it probably is." ~ old adage

Our accounts are at or near all time highs and keep going up.     My investments are making me look brilliant.  Nothing seems to cause the stock market to fall significantly.

It feels like 2007 all over again.    And I still feel the pain of how that ended.

So instead of putting more money into the market, I am still taking profits.   And waiting for the inevitable correction before I put additional funds into the market.

I may be waiting a long time, but I'll be able to sleep at nights in the meantime...

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Tuesday, November 21, 2017

My Lottery Stock Sector Bets

Three sectors interest me as potential big winners, but are beaten down at this time.   I currently own stocks in these sectors.  I don't plan to add significant amounts, but may make some purchases to average down.   Who knows, if the sectors take off, I will enjoy significant gains.

Here are the sectors:
  • Biotech - With the Gilead acquisition of Kite, this sector was boosted by the expectation of more M&A.  
  • Oil -   Humongous dog sector.   If it ever comes back...
  • Gold - With the imminent interest rate increases, gold has been weak.
There is a low probability these sectors will advance significantly in the next six months.  But if they do, I will enjoy the advance in our accounts.


For more on Ideas You Can Use, check back Tuesdays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Sunday, November 19, 2017

Looking to Buy a New Car

Our cars are a little over 14 years old.  They are well maintained and still in good shape, but will likely need to be replaced soon.  Also, our needs have changed since we've had two children since our last car purchases.

First, while I enjoy testing driving cars, I do not enjoy negotiating and buying cars.   Second, I am always torn between buying a luxury/sport car or a utilitarian vehicle.  Third, I always like to get a good deal on a car.

So buying a car is generally a stressful time.  However, being armed with knowledge can useful and the Internet is very helpful for getting information.

First,  I am learning what the top rated cars in the class and price range we are considering.  Second, I've learned November through December is when the best deals and incentives occur.  Finally, I've learned that the dealer invoice is no long an accurate estimate of the actual dealer cost, i.e. that it generally doesn't include holdbacks and other manufacturer incentives to the dealer.  Nowadays, a good estimated of dealer's actual cost is around 85% of MSRP.

We've done one round of looking primarily by me.  Now we are doing round two with my spouse and kids.   We are examining possibilities, but are narrowing choices.   I give us a 30% chance of making a purchase in the next few months.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Tuesday, November 07, 2017

Delaying Income and Advancing Deductions to Take Advantage of Expected Tax Reform

I think it's a good idea to look at the possible impacts of tax reform on our finances.

In my quick review,  I've concluded that I will lose out on deductions but gain on the increased child tax credit and lower tax rate.   Net, I will be slightly ahead and can manage our income stream better to minimize taxes.  In addition, our tax return will be significantly simpler, requiring far less time to do each year.

So for 2017, we will move forward all deduction, e.g. medical expenses, charitable contributions and property tax.   We will delay income such as IRA withdrawals until next year.    In addition, we will increase the amount of income from dividends, since I expect the 0% capital gains tax rate for those in the lowest tax bracket to be maintained.

Of course, YMMV since each individual's situation will be impacted differently by tax reform.

For more on Ideas You Can Use, check back every Tuesday  for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, November 04, 2017

Still All Clear for a Market Top

Previously, I posted about my three signals for a market top: 1) Bears capitulating; 2) Beaten down stocks reach 52 week highs; 3) Oil reaches $100/barrel.      First oil is still at about $55/barrel, second stocks such are Under Armour, GE,  and JC Penney are hitting new 52 week lows; and third bears are discouraged, but still bearish.

However, I am still a bit cautious and selling some of my winners to take profits.  In addition, I am shifting my equity weights towards REITs (for guaranteed income), and  international (for higher relative returns).  At this point, I don't think there will be a severe correction or crash will occur in U.S. markets.  Rather international markets will outperform the U.S. and so I am shifting my weightings toward those markets.

Disclosure:  At the time of this post, we owned shares of Under Armour, JC Penney, and GE... unfortunately.

For more on  Reflections and Musings, check back Saturdays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Monday, October 30, 2017

Taking Some Profits and Sticking with Winners

For now, I am continuing to take some profits but selling parts or all of my winning positions. In many cases, the stocks have advanced further, which indicates the bull market is still intact.  We are still maintaining our core positions, and thus are still participating in the gains.

Although I'm tempted to buy some underperforming stocks, I am going to resist.  It seems that underperformers continue to underperform, e.g. GE, Under Armour,  and Oil related stocks.  On the other hand, outperformers tend to continue to outperform, e.g. Amazon, Alphabet, Nvidia and Netflix.

If I take any new positions, I will focus on buying stocks that have been outperforming.   My only variance from this strategy is to increase our positions in certain REITs, which mostly have dropped from their recent 52 week highs.   The REITs offer nice dividend payments, which are great for tax deferred retirement accounts, since REIT dividends are taxed as ordinary income.

Disclosure:  At the time of posting, we owned shares of GE, Under Armour, Amazon, Alphabet and Netflix.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, October 28, 2017

More Exuberance but Not Yet Irrational

Amazon, Alphabet (parent of Google), Microsoft, and Intel had outstanding earnings and their stock prices advanced significantly on Friday.   Apple and Facebook, which report this week also advanced nicely.   These tech stocks (excluding Intel) gained $181 Billion in market cap on Friday.

Definitely, more exuberance. (Even I am starting to want to put more funds in these names.) However, it doesn't seem irrational yet.

First, the bears haven't capitulated.

Second, my beaten down stocks are still at or near their 52 week lows.

Third, oil is higher but no where near $100/barrel.

So while I remain cautious, I expect the market indices to continue grinding up and lengthen the most unloved bull market ever.

Disclosure:   At the time of posting, we owned shares of Amazon, Alphabet, Apple, Facebook, Intel and Microsoft.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC