Will You Be Singing the Retirement Blues?
By Jason Holland Boomers are going to be retiring in droves in the near the future... at least they're hoping to. But the sad truth is that for many who didn't do much in the way of financial planning (and saving), that might not be possible. Add those who lost a bundle in the recent market crash, and millions might have to keep working far longer than they expected. But in his essay today, Steve McDonald, contributing editor at our sister publication Investor's Daily Edge, has some words of wisdom to help boomers who aren't as financially secure as they should be at this point in their lives. And even if you think you're ready to kick back and enjoy retirement... Steve can help erase any financial worries you may still have. -----------------------------------------------------Highly Recommended----------------------------------------------------- What Are You Thinking of Right Now? Are you upset about some perceived slight from a coworker? Annoyed by the e-mail you just got from your mother-in-law? (She's visiting next week. Ugh!) Dreading this afternoon's staff meeting? (You just know you'll get stuck with extra work.) If this sounds familiar... if negative thoughts -- one after another -- fill your day... you're not alone. As success mentor Dr. Srikumar Rao notes, this "mental chatter" fills most people's days. It also prevents them from being happy and reaching their true, full potential. Dr. Rao has perfected a technique to banish this distraction from your mind and allow you to focus on what's important. Find out more here...
"You can be young without money but you can't be old without it." Tennessee Williams The perfect retirement for some people is a round of golf every day and no money worries. The golf part will be easier for most than the money. Generating a comfortable income stream, beating inflation, and sweating bullets about the next interest rate increase are challenges you don't have to face. There is one investment that will deliver long-term stock market returns and give you the peace of mind that will allow you to enjoy your time off. It just happens to be the least understood investment, maybe the most misunderstood is a better way to describe it, and is avoided for that reason by almost all investors. Investment-Grade Corporate Bonds If you're like most people, your understanding of bonds is limited to savings bonds and simple Treasuries. But did you know that a certain portfolio of ultra-short maturity (less than five years), investment-grade corporate bonds, (no junk) had an annual return for closed trades in 2009 of 42 percent per year. That was while you and your friends were going to bed at night wondering if you'd have enough money from your stock accounts to live on in retirement. Sounds crazy, right? Try this one for size. This same portfolio of bonds had only two losses during the same period -- one for 2 percent and the other for about 7 percent. That was out of about 100 recommended bonds. Two losses! This portfolio also generated an income stream of around 6 percent. Your money markets generated less than 1 percent during the same period. Now for the killer. Investment-grade corporate bonds, like those in the portfolio I mentioned above, had a 99.7 percent success ratio over an 80-year period, 1925 to 2005. Moody's did the study. It's on the Internet. The track record for these bonds hasn't changed during the financial crisis of the past few years. In fact, most of these bonds were going up in value while the stock market was crashing in early 2009. These bonds give you reliable income far above what you can get almost anywhere else. They also have an 80-year record of paying exactly as advertised, inflation protection from the ultra-short maturities and virtually instant liquidity if you need your cash out in a hurry. So why aren't you investing your money in these bonds? They could be the best option available for the average person heading to -- or already in -- retirement. Yet, they continue to be the exclusive domain of fund managers and really big money folks... because the average guy knows nothing about bonds. I know what you're thinking: "I don't have enough money to invest in bonds. Bonds are just for really big investors, right?" Wrong! You can buy just one bond if you're really on a tight budget. That'll cost you $1,000 or less. Ideally, Ideally you would want to have a minimum of five different bonds, diversified to add an extra layer of safety. That'll cost you $25,000 or less. If you are over the age of 50 and have less than $25,000, you have more problems than not understanding bonds. The next issue people have with bonds is: "But I can't commit my money for 20 or 30 years." Bonds of the type I have described can be purchased with as short a maturity as six months, and you can sell at any time. You can trade them for capital gains at any time, too. The portfolio I mentioned above traded 37 bonds last year for an annual return of 42 percent. The rest of the portfolio (those bonds that haven't been sold yet) is returning around 10 percent annually. Imagine how much money you'd have right now if 99.7 percent of every investment you ever made returned an average of 10 percent per year. You'd probably already be retired now... or enjoying your retirement a lot more. Long-term, proven, dependable income, capital gains, liquidity, short maturities to protect you from the ravages of inflation, and an 80-year history of paying as promised 99.7 percent of the time. Is it worth the trouble to learn more about bond investing? If you're retired, or ever plan to retire, it may be the best thing you will ever do for yourself. Do the math. The losses the stock market delivers will be the kiss of death for most people's retirement. There is a safe alternative... and it takes only a little effort to master it. Bonds, the new boomer investment. [Ed. Note: For millions of baby boomers, retirement age is rapidly approaching. Whether you're ready to enjoy the rest of your life without working... worrying how you'll pay your bills next month... or somewhere in between... you should check out bond expert and Investor's Daily Edge contributing editor Steve McDonald's upcoming free webinar presentation: "How to Avoid the Retirement Trap and Make Double What the Stock Market Returns Each Year." It runs March 9, and you can sign up here.] -----------------------------------------------------Highly Recommended----------------------------------------------------- If There's One Thing Truly Successful People Know... It's that "dreaming" about success won't get you anywhere. You must take action. That's first. Next, you need somebody who's been there before to guide you. Success mentor Bob Cox has built multimillion-dollar businesses, advised billionaires, and helped people around the world achieve their dreams. Why not let him help you? Find out how ...
"First of all, I was amused by the letter David Cross received. Then David continued with the exact advice everyone can use. So simple and doable. One day, one hour at a time. Just Progress Forward.
"Thank you." Coralaine DeCoe
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Today's Words That Work: Obdurate Obdurate (OB-doo-rit) -- from the Latin for "to harden" -- means stubbornly resistant; unmoved by persuasion, pity, or tender feelings. Example (as used by Judith Thurman in The New Yorker): "Perhaps it was too expressive a face to be pretty -- the obdurate and the yielding at odds in it."
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