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WrapManager's Investment Policy Committee

Is Your Nest Egg Big Enough to Support Your Family?

Posted by WrapManager's Investment Policy Committee

January 31, 2014

For investors who are at or near retirement, we believe two fundamental questions should almost always be asked: “do you have enough money to support your needs for spending in retirement, and, will your family be taken care of if you pass away?”

In a previous post, we wrote about how to check to make sure you have saved enough to meet your retirement income needs. Now the question turns to, “do you have enough saved to support your spouse and family as well?

Start with an Estate Planning Checklist

An estate planning checklist can help you get organized and have a clearer picture of how prepared you are for retirement. Running through an estate planning checklist encourages you to inventory your assets and debts, update your beneficiaries to make sure the assets go to the right places, and formalize everything through legal documentation.

Once you’ve done that, you can get to answering the question posed in this piece: “is your nest egg big enough to support your family?”

Investors should address this in two parts:

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Retirement Planning Investment Planning

Calamos Investments - Year of the Fundamental Investor

January 30, 2014

With their first investment commentary of 2014, money manager Calamos Investments remains cautiously optimistic for the global economy and believes the U.S. is in a secular bull market. From the commentary: "Entering 2014, we expect a good year for global equity and convertible markets overall. The major global economies look positioned to show faster growth, although this positive global synchronization is occurring at varying rates and supported by diverging policies. Historically, the conditions we see today have benefited equities and convertibles, especially cyclical growth opportunities. More importantly, we are encouraged by the emergence of more fundamentally driven markets across asset classes and believe that our active approach is well suited to this environment." Download the Full Calamos Commentary Here Get Free Research Reports on Calamos Investments [+] Read More

Is This the Start of a Stock Market Correction?

January 29, 2014

The stock market felt a sting last week, with the Dow dropping 3.5% and marking its worst week since November 2011. A majority of the decline took place on Friday, when the Dow fell some 320 points, or almost 2%. The S&P 500 slid 2.6% on the week, which was its largest weekly decline since May 2012, and technology stocks followed suit as well with the NASDAQ selling off 1.7% and posting its worst week since last August. The sell-off last week has naturally caused some investors to wonder, is this pullback the start of a stock market correction? Below, we’ll address that question for you and look at past stock market corrections. Corrections Are a Normal Part of Bull Markets That’s not WrapManager making that statement - history makes it for us! As you can see in the chart below, the average intra-year decline for the S&P 500 since 1980 is 14.4%. Put another way: for the last 34 years, the average drop within a given year for the S&P 500 is 14.4%. [+] Read More

What to Do During a Stock Market Correction

January 29, 2014

If you were to ask us to answer that question in short, here’s what we would say: Remain calm, patient, and try not to make decisions based on emotion. As we've written before on stock market corrections, they can be rather unnerving, but at the same time they are a normal part of rising markets, and they’re usually short-lived. It’d be great if the market always went up in a straight line, but unfortunately it does not and there are often pullbacks along the way. So, knowing that corrections will likely occur quite a bit over time, what’s the best investment strategy for handling a stock market correction? We go back to the statement we made at the beginning of this post. Remain Calm Often times when the market starts to decline, you’ll see a lot of news headlines that invoke worry about the state of things. A top headline today on Bloomberg, for instance, read: “US Stocks Retreat Following Worst Week Since 2012.”1 That certainly doesn’t make many people feel warm and fuzzy about the market. [+] Read More

Worried You Might Outlive Your Money? Create an Investment Plan

January 27, 2014

The world’s largest asset manager, Blackrock, conducted an investor survey in 2013, asking 17,600 people in 12 countries how they felt about the markets and their personal financial situations. There are a lot of data points to consider, but one in particular stood out to us: about 50% of respondents are concerned they are going to outlive their savings.1 Many of these respondents could feel concerned simply because they don’t know where they stand. An investment plan can provide a little clarity (and perhaps a wake-up call) to investors wondering if their nest egg is going to last throughout retirement. Think of an investment plan as a manual, there to help you keep track of your progress toward building a successful retirement. What Exactly is an Investment Plan? An investment plan is a comprehensive report that takes a detailed view of an investor’s assets, liabilities, current spending needs, future spending needs, investments, asset allocation, and goals, and uses all of that information to project/estimate how “on-track” an investor is to reaching their objectives. [+] Read More

Where Are International Equity Markets Headed? - Cambiar Investors

January 27, 2014

International money manager Cambiar Investors' fourth quarter investment commentary reviews their outlook for the international equity markets and the performance of their International and Global equity portfolios. From the commentary: "Global equities continued their dramatic ascent into the fourth quarter, with many indices closing 2013 at their high of the year. A diminishing sense of crisis, coupled with growing evidence of improving economic activity, awakened investors’ animal spirits, and global equities were the direct beneficiary of this increased optimism." Download Cambiar Investors' Full Commentary Here Get Free Research Reports on Cambiar Investors [+] Read More

Federated Investors Strategic Value Dividend Commentary Fourth Quarter

January 23, 2014

Dividend money manager Federated Investors is out with their latest investment commentary, which discusses their outlook for the economy and the performance of their Strategic Value Dividend Managed Account Strategy. From the commentary: "December capped a year-long rally in U.S. stocks that saw the major indexes reach record highs.The advance was fueled by a domestic economy that, nearly five years after the recession, finally appeared to be gaining enough traction to allow the Federal Reserve to begin easing off the gas." Download Federated's Full Commentary Here Get Free Research Reports on Federated Investors [+] Read More

Determining Your Retirement Nest Egg’s “Magic Number”? Factor in These 3 Things

January 22, 2014

Before we discuss the three items, we’d like to be clear about something first and foremost—there’s nothing really “magic” about a “magic number.” Many investors place a lot of focus on setting a “magic number” (the amount of assets that, in theory, gives a person the ability to retire while maintaining the same standard of living and meeting all of their needs) and reaching it, but it’s important to understand that reaching that number in and of itself doesn’t solve every retirement income need. An investor has to constantly assess their asset levels relative to their needs throughout retirement. 3 Important Factors to Determining a Retirement Nest Egg Target 1) Be Conservative When Establishing Your Life Expectancy According to the Social Security Administration, a man reaching 65 today can expect to live, on average, until age 84. For a woman, that number is 86. But those are just averages—about one in every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95. [+] Read More

Brookmont Capital Management’s Award-Winning Dividend Equity Strategy

January 17, 2014

For investors seeking income-producing alternatives to fixed income/bond investments, many turn to dividend focused strategies. WrapManager evaluates and conducts research on many dividend focused money managers, though one in particular has stood out in recent years: the Brookmont Dividend Equity Strategy. It could be a solution for an investor looking to allocate a portion of their portfolio to a dividend focused strategy. [+] Read More

Are Households Positioned to Maintain Their Standard of Living in Retirement?

January 16, 2014

During our working years, the amount of income we earn is ultimately what shapes the spending and lifestyle choices we make. Over time, we become accustomed to living a certain way and having certain resources available to us and our families. These parameters are what create a person’s standard of living. Retirement is different, of course, since we derive retirement income in different ways and from different sources. As a person makes the shift from the working world to the retirement world, an important question must be addressed: do you have the resources and assets needed to maintain the same standard of living in retirement as you did during your working years? Is your nest egg big enough? Almost Half of American Households Won’t Have Enough Retirement Income Research suggests that when it comes to maintaining a standard of living during retirement, many investors could be in trouble. [+] Read More