The Long Term Investor

At least we have a few hours of PEACE and QUITE before the FED steps up and screws everything up this afternoon.

 

Well TireSmoke.........that is an easy one....."its an investment".

 

Speaking of retirement earlier.

Often Overlooked

https://humbledollar.com/2021/09/often-overlooked/

(BOLD is my opinion OR what I consider important content)

"PERSONAL FINANCE pundits love to debate safe withdrawal rates—the amount a retiree can withdraw each year from a portfolio without depleting it too quickly. I agree this is an important topic. In fact, I’ve addressed it a few times myself in recent months.

In July, I discussed the well-known 4% rule. A few weeks ago, I described an alternative called the bucket strategy. But as you build your retirement plan, withdrawal rates shouldn’t be the only consideration. Below are six additional, often-overlooked topics to consider.

1. Time allocation. How will you spend your time after you retire? This might not seem like a financial question. But the way you allocate your time will have implications for both your income and your expenses.

On the income side, do you envision a traditional retirement—that is, stopping work entirely—or would you like to taper down to part-time, perhaps taking on a new job or starting a small business? I once knew a fellow who worked part-time at a marina pumping gas. It seemed like an odd choice for a high-net-worth retiree. But he loved the water, it was an opportunity to socialize, and it brought in extra income.

This might seem like an idiosyncratic example, but it illustrates a more general reality: that retirement doesn’t need to be a binary decision. Sure, some people shift overnight from the office to the hammock. But it isn’t always that way. I’ve seen just as many people downshift for a period of five to seven years before fully retiring. There’s no one-size-fits-all.

On the expense side, housing is usually the biggest variable. Do you think you’ll remain in your current home, downsize, or maybe buy or rent a vacation home? How do you see this changing over time? Over the summer, I ran into a neighbor who described “outliving” Florida. It turned out that he had bought a place in Florida when he retired in his 60s. For 20 years, he enjoyed spending winters there and summers up north. But over time, his preferences shifted. He grew tired of traveling back and forth, and he also wanted to lower his expenses, so he consolidated back to a single home.

Strategies like the 4% rule assume that a retiree’s portfolio withdrawals will be the same every year, increasing only with inflation. But that’s probably not true for most people, as these examples illustrate. That’s why time allocation is such a key pillar of any financial plan. Everyone’s retirement income and expenses go through different phases. Can you predict in your 50s where you’ll be in your 80s? No. As you build your plan, it’s worth considering a range of possibilities.

2. Income taxes. In retirement, you’ll generally have much more control over your tax bill than during your working years. In the past, I’ve discussed Roth conversions and other strategies to engineer your retirement tax bill. These strategies might or might not work for you.

But something every retiree should consider is the manner in which withdrawals are taken to fund living expenses. Suppose you have some money in a taxable account, some in a tax-deferred account and some in a Roth IRA. In what order should you tap these accounts each year? This should be an important part of your planning process, so your tax bill isn’t left to chance.

3. Debt. Do you have a mortgage or other loans? If at all possible, I recommend arriving in retirement without any significant debt—for two reasons. There’s the peace-of-mind benefit. In addition, the cash flow flexibility gained from being debt-free will make it easier to manage your taxes in the ways noted above. One exception: If you have a home equity line of credit you use for rainy-day purposes, you might want to renew it while you’re still working. It’ll be infinitely easier to get approved while you still have a regular income.

4. Family. If you find yourself in the “sandwich generation,” with both children and parents requiring help, that may impact where you’re able to live. It likely will also impact your time allocation. Making predictions in this area can be difficult. But again, it’s worth thinking through the range of possibilities and how each might affect your finances.

5. Estate planning. When it comes to planning for the next generation, I’ve found that every family is different. Some want to leave every dollar possible to their children, while others don’t mind if their estate ends up writing a check to the government. Other families have more specific considerations, such as a child who’ll require long-term care. Probably because it isn’t such an uplifting topic, many people procrastinate when it comes to estate planning. But it’s worth being intentional about this, for the same reason you want to be intentional about income taxes—to avoid a result that isn’t what you would’ve wanted.

6. Mechanics and mindset. I’ve heard more than one person say that the prospect of retirement makes them uneasy. Even when new retirees know there’s enough money in the bank, it can trigger anxiety to think about drawing down those assets. That’s why it’s worth pondering not just the math of portfolio withdrawals but also the mechanics.

I usually recommend setting up automated transfers from retirees’ investment accounts to their bank accounts. That helps recreate the feeling of a paycheck, making it easier to budget. Maybe more important, it can alleviate some of the anxiety associated with making withdrawals. To be sure, you’ll want to revisit the amount of your retirement withdrawals periodically. Still, I think it’s best to automate as much as possible. That can help you avoid deliberating and equivocating each time you need to make a withdrawal."

MY COMMENT

YES.....there are many considerations connected with retirement. In general.....you will probably find that you dont have any extra time at all.......you will wonder how you ever had time to work and get anything else done in your OLD LIFE when you worked.

 

So.....here is how we end the day with the FED.

Fed signals possibility of 6 to 7 rate hikes through 2024 as taper talks advance

https://finance.yahoo.com/news/fed-fomc-monetary-policy-decision-september-2021-141145429.html

(BOLD is my opinion OR what I consider important content)
"The Federal Reserve on Wednesday telegraphed it could hike rates six to seven times by the end of 2024, illustrating the central bank’s optimism that the COVID-19 recovery will progress well enough for the Fed to tighten its easy money policies in a few years.

The policy-setting Federal Open Market Committee still held interest rates at near-zero in its updated statement, but said it had advanced talks on paring back its asset purchase program.

Since the depths of the pandemic, the Fed has been absorbing about $120 billion a month in U.S. Treasuries and agency mortgage-backed securities. But Fed officials have said in recent weeks that by the end of the year, the economy will likely make the “substantial further progress” needed for the central bank to begin slowing the pace of those purchases.

“If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” the FOMC statement reads.

The central bank only has two more meetings this year to announce a taper: in early November and in mid-December.

The Fed has insisted that the timing of a taper is not a “direct signal” on the timing of rate liftoff. But “dot plot” projections, which map out each of the 18 FOMC members’ expectations for where rates will be in coming years, suggest that the central bank is pulling forward its forecast for 25 basis point rate hikes.


The FOMC's updated Summary of Economic Projections show the 18-member committee evenly split on whether or not they should start hiking rates next year. Source: Federal Reserve
The updated forecast now has the committee split on rate hikes in 2022, with 9 members seeing the case for no rate hikes next year but the other 9 seeing the case for at least one hike. By the end of 2023, the median dot projects three to four total rate hikes.

Through the end of 2024, the median FOMC member sees six to seven total rate hikes.

In the last round of projections released in June, the median member of the FOMC saw no rate hikes through the end of 2022 but two rate hikes in 2023.

The expectation to raise interest rates earlier coincides with higher expectations on inflation. Although the Fed stood pat on its expectation for rising price pressures to be “transitory,” the median FOMC member raised their forecast on PCE inflation to 4.2% this year (compared to 3.4% in June). The median member expects inflation to then fall to 2.2% in 2022. The Fed’s inflation target is 2%.

The spike in COVID-19 cases from the Delta variant also weighed on forecasters’ expectations for GDP growth. The central bank now expects the U.S. economy to grow by 5.9% this year (compared to 7.0% in June) but revised up growth expectations for 2022 to 3.8% (compared to 3.3% in June).

After a softer August jobs report, the Fed revised its expectation on the unemployment rate by the end of 2021 to 4.8% (compared to 4.5% in June). The central bank is hopeful it can return to the pre-pandemic record low on headline unemployment of 3.5% by the end of 2023.

The next FOMC meeting is scheduled to take place November 2 and 3."

MY COMMENT

Seems reasonable and realistic to me. A tapering announcement by year end is reasonable. Six to seven rate hikes by the end of 2024....also reasonable. Sooner or later we HAVE to get back to a normal rate environment. This is giving the markets PLENTY of advance warning.......two to three years worth. You cant complain about that.....although no doubt....some will as usual.

 

Yeah....I am not into cars....they are simply a commodity to me.......and I know they are not an investment.....but that is what you tell your WIFE.

AND....you never know you might get lucky....not with your wife....with the car.

 

I know a guy...that over the past 10 years......has won TWO high end Corvettes.....from those raffles that the National Corvette Museum does where they sell 1000 or 1500 tickets for $150 or $200 or $250 per ticket. Actually those are way better odds than lottery tickets.

Here is their site.....I AM NOT condoning gambling.

https://raffle.corvettemuseum.org/

 

Well a GREAT day today for the markets.....and for......me, me, me. Well actually pretty good....not great. I was GREEN across the board. PLUS got a good solid beat on the SP500 by 0.30%.

Lets take this momentum and finish out the last couple of the days this week in STYLE. We ALL need a new CORVETTE.

 

I am posting this as an EXAMPLE of a RIDICULOUS ARTICLE......talk about reaching for it......and....total FEAR MONGERING.


US default would wipe out nearly 6 million jobs, Moody's says

https://www.cnn.com/2021/09/22/business/us-default-job-loss-prediction/index.html

(BOLD is........what I consider.........RIDICULOUS........content)

"New York (CNN Business) A US default would be a "catastrophic blow" to America's economic recovery from Covid-19, setting off a downturn that would rival the Great Recession, Moody's Analytics warned in a new report.

If the US defaults on its debt payments and the impasse drags on, the ensuing recession would wipe out nearly 6 million jobs and lift the nation's unemployment rate to nearly 9%, Moody's projected in a report published Tuesday.

The market meltdown would slash stock prices by one-third, erasing about $15 trillion in household wealth, the report found.
"This economic scenario is cataclysmic," wrote Mark Zandi, chief economist at Moody's Analytics.

The US Treasury Department estimates it will run out of cash at some point in October unless Congress raises the debt ceiling. Despite the specter of a default, Republicans have refused to back an increase in the debt limit due in part to concerns about the Biden administration's vast spending plans.

Moody's notes that financial markets are not freaking out about the debt ceiling showdown, suggesting there is widespread belief that Congress will eventually act. The impact on Wall Street has been far smaller so far than during standoffs in 2011 and 2013.
"Ironically, because investors seem so sanguine about how this drama will play out, policymakers may believe they have nothing to worry about and fail to resolve the debt limit in time," Zandi wrote. "This would be an egregious error."

'TARP moment'?

Even a close call could cost the economy and taxpayers.

Fears of a US default in 2013 lifted Treasury yields, costing taxpayers an estimated half a billion dollars in added interest costs as well as making it more expensive for families and businesses to borrow, Moody's found.

If Congress fails to lift the debt ceiling and the Treasury begins paying bills late and defaults, markets would react very negatively.
"There would likely be a TARP moment," Zandi wrote, referring to the 2008 market plunge after Congress initially failed to approve the Wall Street bailout — and then quickly reversed.

The worst-case scenario, Moody's found, would be if Congress still didn't act to lift the debt ceiling and the impasse wears on.
That would force the federal government to delay about $80 billion in payments due November 1, including to Social Security recipients, veterans and active-duty military, Moody's said. Further drastic spending cuts would need to be imposed if the crisis lasted through November.

Beyond the immediate hit to the US economy, a default would likely cast a shadow over the United States for a long time to come.
"Americans would pay for this default for generations," Zandi wrote, "as global investors would rightly believe that the federal government's finances have been politicized and that a time may come when they would not be paid what they are owed when owed it.""

MY COMMENT

SHAME, SHAME, SHAME on CNN for publishing and producing this TRASH.

 

Oldmanram.....you need to......secretly....... make some changes to your wife's account.

 

You are doing better than I am in terms of recovering.......all time high.....oldmanram and TomB16.

After today I am STILL down by about 3.3% from my all time high. No doubt due to my TECH heavy.......and very specific...... portfolio. I am STILL nicely ahead of the SP500 which is at......year to date.....+17.03%. I am as of today at.......+19.41%.

 

I have a couple of companies that are going to report earnings. COSTCO reports tomorrow. I also believe that NIKE will report tomorrow. I had them down for Monday....but what I am seeing now says Thursday. I am EXPECTING BIG earnings from both. BUT.....the forward looking statements and discounting the current earnings as pandemic related may.....as usual.....knock both of them back in price after they report.

These two are out of SYNC with my other holdings regarding reporting......it screws me up. It does not matter....but these earnings will be Q1for FY 2022 for Nike and Q4 for FY 2021 for Costco.

WHATEVER.....just show me the money.