“Common Sense Investing for Intelligent Investors” is a tag line we have used in our business for many years. Our common sense includes ideas such as, “if it sounds too good to be true, it probably is”, or “there is no such thing as a free lunch”. Well these common sense ideas were challenged last week when I received an invitation that not only offered me a free lunch, but also offered me an investment that was so good “I would never need another investment in my life”. And of course, the tickets for this event were in high demand and would only be available to a limited number of individuals who recently retired or would be retiring this year.
This exclusive investment will not expose me to the risk of the stock market, will be fully guaranteed, will bypass probate, receive special tax treatment, and best of all will provide a monthly check that I could never outlive. Many of you have received invitations just like this and probably have enough “common sense” to know that there is no such thing as a “perfect investment”. Yet we may easily fall for the idea that there is a perfect investment, sold by the perfect salesman, because of the emotional state of mind we may happen to be in.
After working for twenty, thirty or forty years, the retirement process comes full of emotions, from excitement to outright fear. We know that retirement will be a life changing evolution and naturally we tend to become more conservative. Our greatest fear is running out of money. Just the thought of investing in the stock market and the up and down nature of prices scares us. Bonds and CD’s pay an interest check, but they are just so low it would be impossible to survive without spending principal. Of course a guaranteed income sounds good, but we also know that costs continue to go up, and by locking in a fixed payment for life, our only guarantee is that we will have to lower our standard of living.
So what are we to do? Here a just a few suggestions:
Sit down and determine exactly how much cash you will need from your portfolio. It may surprise you, but with social security and pension income it may be less than you expect.
Consider how long your money needs to last. The average retiree can expect to live for twenty to thirty years. If you are married, then twenty to thirty years may actually turn into forty years or more.
Consider rising prices. The cost of every-day items like food, energy and health care could demand a greater portion of your income than you plan for. And don’t forget taxes; they could be considerably higher in future years.
If you have accumulated a portfolio that exceeds your current needs, then you must consider what you plan to do with any funds left after your death. If you are leaving your wealth to your children or a charity, then your investment strategy may be very similar to your pre-retirement years.
Retirement is certainly a new period in your life. It is a time when your emotions may influence your decision making processes. Try to recognize this and with the help of your portfolio manager, you can build a portfolio that meets your financial needs for today and tomorrow.
Anderson Griggs & Company, Inc., doing business as Anderson Griggs Portfolio Management is a registered investment adviser with the US Securities & Exchange Commission. Pursuant to laws and regulations Anderson Griggs also maintains notice filing with several individuals state regulators including North and South Carolina. Anderson Griggs only conducts business in states and locations where it is properly registered or meets state requirements for advisors. This commentary is for information purposes only and is not an offer of investment advice. We will only render advice after we deliver our Form ADV Part II to a client in an authorized jurisdiction and receive a properly executed investment Management Agreement. Any reference to performance is historical in nature and no assumption about future performance should be made based on the past performance of any Anderson Griggs Investment Objective, individual account, or index. The authors of publication are expressing general opinions and commentary. They are not attempting to provide legal, accounting, or specific advice to any individual concerning their personal situation. Anderson Griggs Portfolio Management's office is located at 113 E. Main St., Suite 310, Rock Hill, SC 29730. The local phone number is 803-324-5044 and nationally can be reached via its toll-free number 800-254-0874.