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3 Things 1-29-24

Thing One


Government Agency or Personal Agency


In 1841, Ralph Waldo Emerson wrote an essay called, “Self Reliance”. The title tells you all you need to know about the author’s take on how individuals should conduct their affairs and live their lives. 


A few years ago, the author of an article called “What 30 Years of 401k Mistakes Teach Us” shared some research that said that less than 42% of Working Americans have ever attempted to estimate how much money they will need to last during the 20-30 years they may live after they turn 65 and stop working full time (commonly referred to as “retirement”).  The question that naturally arises from the above observation is, who is this 42% of Americans expecting to look out for them financially when they reach retirement age? 


Clearly, through social security and other kinds of federal and state-sponsored retirement plans, government agencies will play a role. But Emerson would suggest the larger role should be played by the individual and so would the author of the 401k article mentioned above. 

He had the following advice: 


"Don't waste another weekend without taking the time to calculate what you will need in terms of retirement income during the 20-30 years you will likely live in retirement and compare that estimate with what assets/retirement income you will likely have in retirement and make any necessary lifestyle changes immediately!"


Sounds like good advice.  Let us know if you need help.



Thing Two


Stocks Or Bonds For The Long Term?


That's the question.  Here's some food for thought:


  • The value of bonds will decline as interest rates rise. Experts are currently conflicted over the direction of interest rates in the near term so bond prices could move up or down.


  • On the other hand, owning stocks makes sense in all kinds of 'weather,' rain or shine.  That said, it's best to buy when it's raining. It's less expensive that way.


  • The value of stocks will increase as earnings (or earnings expectations) rise over time. And as earnings rise, dividends will typically be increased as well, increasing the total return.


So, unless a company is going broke, a long term investment in that company's stock will outperform an investment in its bonds every time. 



Thing Three


"If cattle and horses, or lions, had hands, or were able to draw with their feet and produce the works which men do, horses would draw the forms of gods like horses, and cattle like cattle, and they would make the gods' bodies the same shape as their own." - Xenophanes 


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