Many Baby Boomers may be falling into the Equity Indexed Annuity Web and may well live to regret it. They are being heavily promoted to Baby Boomers and Seniors often due to the very high commissions being paid to the sellers.

It has taken some time but now it seems the problem with Index Annuities are getting the attention of the SEC. In an article on MarketWatch SEC Weighs Overhaul of ‘Index’ Annuities, it states equity indexed annuities are sold on the idea that;

“Investors benefit from gains in the stock market without any direct risk of losing money when stocks fall.

Last year, investors put $25 billion into indexed annuities. And during the bear market in stocks, it’s been an especially seductive notion.”

The SEC is getting involved because all is not what it seems with these annuities. High fees and commissions, complex ways of calculating returns, and pre-set caps to limit returns are some of the concerns. Read the rest of this entry »

I’m truly amazed that I have not read much about a class action by US Home Owners, especially Baby Boomers, who have seen their house values drop by up to 40% in some places in the USA.

This blog is all about protecting your nest egg in retirement. Your home is an asset and is part of your nest egg. It has taken a significant loss in the last year, so this post is on topic.

I’m talking about Baby Boomers who have done everything right to manage their mortgage, only to see their home value drop through the floor whilst investment bankers pocket millions of dollars after resigning from their corporations in disgrace.

This loss was not due to a “normal market cycle” but to the highly irresponsible and highly leveraged activities of investment banks and others creating CDO’s stuffed with bad mortgages taken out by people who could not afford them in the first place. Read the rest of this entry »

It’s that time when all the big fund managers roll out the long term stock market charts showing a trending stock market over the last 100 years. It’s a good ploy because over the long term the stock market goes up and “lo and behold” the advice given to you is to buy and hold for the long term. QED.

Well not so fast because you need to ask yourself:

• Are you accumulating your nest egg and so will not need it to live?
• Or are you relying on it to provide some or all of tour retirement income?

These are two totally different strategies. (larger image of DOW below)

What is also important is to distinguish between: Read the rest of this entry »

Occasionally I stumble on someone who is not tarred with the same “Buy and Hold” brush as most Wealth Mangers are today, sucked in by the believe that a short 25 year bull market is a guarantee the good times will continue.

They tell you past performance is no guarantee of future returns but that you should buy and hold for the long term as markets always go up.

If you are in retirement you cannot afford to chance it. It’s not the up side you should be concerned about, its the down side and the potential for a serious loss to your nest egg. Rule #1 is you need to protect yourself against large losses in retirement.

The other day I came across a site W.E Donoghue & Co Inc who’s slogan is “Managing the Investment Opportunities of your Lifetime.” Unfortunately the site is not Baby Boomer friendly in my view because it doesn’t explain in simple terms what the philosophy is. It is all in financial-speak to me and may be dismissed by Baby Boomers before they take a serious look. It seems to be aimed at financial planners more than investors. But Baby Boomers should definitely take a close look at this site. Read the rest of this entry »

I just read a column in the Australian newspaper where it says the Government is considering increasing the compulsory superannuation contribution to 12% or even 15%.

Nick Sherry Minister the “Super Minister” is not sold on the idea fully yet but I think he has it under consideration.

There are major problems with the current compulsory super system not least of which is the stated annual $860 Million paid to the wealth industry in fees just for taking 9% of our money by government decree. This in itself is criminal and makes a large dent in the end retirement amount over 40 or so years.

If the wealth managers lobbying hard in the corridors of Parliament House Canberra get their way and the compulsory contribution is increased to 15% that will increase their “take” of our kids annual contribution to $1.433 Billion. That is effectively a 40% pay rise for doing no more work. Does that seem fair to you?

Read the rest of this entry »

Dynamic Asset Allocation means moving in and out of Assets or Sectors as each becomes stronger or weaker. In order to do that you need a long term market timing strategy.

One Web site I have found that uses this strategy is Confident Investment Strategies

The aim is to avoid large losses but at the same time go for high returns when market conditions are bullish and stand aside when the market is bearish.

The primary benefit is that your capital is virtually still intact at the end of a bear market and is ready to capitalise on the next bull run. Thus the compounding effect of returns is maximised because you have retained most of your capital and do not have to use the bull market just to recover your losses.

I am a great believer in using technical analysis and charts to help determine long term market timing. I have used it myself for several years and profited from it. Read the rest of this entry »