Planning for a Non Retirement

Much of financial planning focuses on retirement. But what if your client isn’t planning to retire?

Trish Wheaton, former global managing partner of one of the world’s largest communications groups, is grateful that she could work 30 years in advertising — an industry notorious for employing youthful “mad men.” She wasn’t surprised when she was told that her time was up at age 65, but she also wasn’t ready for a traditional retirement.

Wheaton mused:

“Sixty-five is the new 45. I had to ask myself ‘what’s next?’ I realized I didn’t have a clue. When I talked to my female peers in the same situation it turned out that they were feeling the same way. We were all used to being successful. People still want to invest in their passion . . . it’s just a question of where do they invest it now.”

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She decided to form a Leaning Out™ salon: a gathering of high-achieving women who discuss finding post-career success and purpose. “With the same energy, goal orientation, and drive that propelled them to lofty career heights,” Wheaton explained, “these female professionals are radically redefining ‘post-career’ and turning it into a time of abundant purpose, goal redefinition, and personal well-being while over-turning some well-entrenched approaches to ‘retirement’ in the process.”

I participated in one Leaning Out session, where we discussed a host of topics, including what motivates women to non-retire. Most successful women truly enjoy working. That message came through during our salon with comments like:

“I hate saying I’m retired.”

“After my job ended, I would go to my computer in the morning and when I looked at my email, I would feel like I don’t exist.”

“I miss the intellectual stimulation from work.”

“I want to do something different now . . . something that will matter to me.”

Opting out of retirement might even be good for longevity. Shigeaki Hinohara, a Japanese physician, worked 18 hours a day, seven days a week until his death at the age of 105. He spoke to Judith Kawaguchi of The Japan Times about the secret to living a long life:

“There is no need to ever retire, but if one must, it should be a lot later than 65. The current retirement age was set at 65 half a century ago when the average life-expectancy in Japan was 68 years. Today, people live longer so they can work longer.”

Five Non-Retirement Scenarios

1. Boards of Directors

Many professional women assume that after they move on from their roles as senior executives, they will immediately be asked to sit on corporate boards. They have heard that women directors are in demand, and they expect to be invited to serve based solely on their experience and gender.

“Be careful. Don’t make the grand assumption that you will be in demand the day after you move out of the executive suite!” says Joanne De Laurentiis, a corporate board member and former president and CEO of The Investment Funds Institute of Canada (IFIC).

“Often people think that the simple fact that they have been an executive qualifies them to sit on a board. But the skill set required can be quite different from their work background. Board members must have a strong combination of skills such as strategic thinking, problem solving, and leadership, but perhaps most importantly . . . they need to have specific expertise related to the business dealings of the organization.”

If you are planning on sitting on a corporate board, you need to have developed the full spectrum of skills required and should be known for your expertise.

The best way to plan for life on boards?

As De Laurentiis explains:

“Start developing your board skill set in the early years of your career. I started volunteering on boards right out of university and I have been on boards throughout my entire working life. When the time came for me to leave my traditional job, I didn’t need to seek out any board positions, I was already well-known as an expert in my field.”

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How Many Greater Fools Does It Take To Make A Bubble – Jason Zweig

Where do market “bubbles” come from? A team of neuroscientists and economists has produced the first scientific evidence for what prudent investors have long believed: Paying attention to what others are doing is the easiest way for traders to get carried away.  This new research can’t prevent the mass contagions that lead to bubbles. But it might help you step back before you get swept up in the next one. Economists have struggled and failed to explain why markets turn into manias. Some have denied bubbles exist; others have argued bubbles must somehow be “rational.” Often, the argument is that bubbles are caused by “uninformed” traders, or “dumb money,” while the “smart money” sits on the sidelines.

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The latest findings suggest, however, that bubbles might be caused not by traders who lack information but by those who have too much. The new research, published this month in the journal Neuron, was conducted by economists, psychologists and neuroscientists from the California Institute of Technology, Royal Holloway University in London and the University of Utah. The study was led by Colin Camerer, an economist at Caltech—who, coincidentally, won a MacArthur “genius award” this past week for his innovative studies of financial behavior. In the experiment, Caltech students had their brains scanned while they viewed a stock being traded in a laboratory game. In that experimental market, the fundamental value of the stock was based on its payments of dividend income and declined almost to zero by the last round.

In half the sessions, the participants viewed trading that hadn’t resulted in a bubble, with prices that quickly converged on fundamental value. In the other half, traders had driven the stock to multiples of two, three and four times fundamental value, creating bubbles that then burst—wiping many of them out. But the participants didn’t just watch the trades of others; several times during each round of the game, they got the chance to trade at the latest market prices. Later, the researchers tested how accurately the participants could infer what is on another person’s mind based on a photograph of his or her eyes.

Those who scored high on this test showed greater “activation,” while they were trading, in a region of the brain associated with imagining what others are feeling—especially during bubble markets. In normal markets, activation in that part of their brain, called the dorsomedial prefrontal cortex, was unrelated to their trading performance. That suggests that traders pay more attention to what others are doing in the midst of a bubble than they do in placid markets.

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Investing By Going Against the Grain – Whitney Tilson

If you were a serious baseball player, would you make it a point to read The Science of Hitting by Ted Williams (the last man to bat .400) and other books by history’s greatest hitters? Of course you would, in the hopes of maximizing your chances of repeating their successes — and avoiding their mistakes. For the same reason, I think all serious investors should read as much by and about the most successful investors of all time. My favorite books in this category are:

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The Intelligent Investor, by Ben Graham. Graham was Warren Buffett’s teacher at Columbia Business School and lifetime mentor. I agree with Buffett that this is the best book ever on investing.

The Essays of Warren Buffett: Lessons for Corporate America, by Lawrence Cunningham. This book organizes Buffett’s brilliant annual letters to shareholders by topic — a far more efficient (albeit slightly more expensive) way to read them (they’re available for free on Berkshire Hathaway’s website).

Common Stocks and Uncommon Profits, by Philip Fisher. Fisher, regarded as one of the pioneers of modern investment theory, may be the most underrated investment thinker of all time. He focuses on identifying growth stocks that can be held for the long run.

The Money Masters, by John Train. Nine chapters — one each on nine of the world’s great investors (Buffett, Fisher, Graham, Templeton, Cabot, T. Rowe Price, Tisch, Kroll, and Wilson).

You Can Be a Stock Market Genius, by Joel Greenblatt. You’ve probably never heard of him or his book, but Greenblatt has compounded money at over 40% annually for the past 17 years, primarily by investing in special situations like spin-offs, restructurings, and rights offerings.

Additional favorites along these lines are: One Up on Wall Street and Beating the Street by Peter Lynch, John Neff on Investing by John Neff, Margin of Safety by Seth Klarman, and Value Investing by Marty Whitman.

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Losing the Losers Game – PFP Wealth Management

“The  first  panacea  for  a  mismanaged  nation  is  inflation  of  the  currency;  the  second  is  war.  Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” – Ernest Hemingway.

“Recovery in sight, says departing Bank of England governor Mervyn King..” – The Daily Telegraph.

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In one of the most powerful and memorable metaphors in finance, Charles Ellis, the founder of Greenwich Associates,cited the work of Simon Ramo in a study of the strategy of one particular sport: ‘Extraordinary tennis for the ordinary tennis player’. Ellis’ essay is titled ‘The loser’s game’, which in his view is what the ‘sport’ of investing had become by the time  he  wrote  it  in  1975. Whereas tennis is ‘won’ by professionals, the practice of investing is ‘lost’ by professionals and amateurs alike. Whereas professional sportspeople win their matches, investors tend to lose the equivalent of theirs through unforced errors. Success in investing, in other words, comes not from over-reaching, in straining to make the shot, but simply through the avoidance of easy errors.

Ellis  was  also  making  the  point  that  as  far  back  as  the  1970s,  investment  managers  were  not beating the market; rather, the market was beating them.
This is a mathematical inevitability given the  crowded  nature  of  the  institutional  fund  management  marketplace  and  the  impact  of management fees on end investor returns. Ben W. Heineman, Jr. and Stephen Davis for the Yale School of Management asked in their report of October 2011, ‘Are institutional investors part of
the problem or part of the solution ?’ By their analysis, in 1987, some 12 years after Ellis’ earlier piece,  institutional  investors  accounted  for  the  ownership  of  46.6%  of  the  top  1000  listed companies  in  the  US.  By  2009  that  figure  had  risen  to  73%.  That  percentageis  itself  likely understated  because  it  takes  no  account  of  the  role  of  hedge  funds. Also  by  2009  the  US institutional landscape contained more than 700,000 pension funds; 8,600 mutual funds (almost all of  whom  were  not  mutual  funds  in  the  strict  sense  of  the  term,  but  rather  for-profit  entities); 7,900  insurance companies; 6,800 hedge funds; and more than 2,000 funds of funds (the horror ! the horror !)

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The 3 investing questions retirees need to ask

Managing your investment portfolio in retirement can be tricky. Investors need to balance income generation with risk and capital preservation. Getting the balance wrong means you could run out of money.

When trying to make your money last in retirement, every penny counts. And you can lose a lot of those pennies in surprising places. That’s why all retired investors should ask themselves three questions to see if they are wasting precious retirement resources

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Five mistakes to avoid when investing in an ELSS fund

With the tax-saving season having begun, a lot of people are looking at investing in equity-linked saving schemes (ELSS), where they can get equity-like returns along with the benefit of tax saving. However, investors also make a number of mistakes when investing in these funds. Here are some of the common ones that they should avoid.

Beginning late in the year: Many people start investing in ELSS funds only towards the end of the financial year, when the time for showing proof of investment is upon them. This is a poor strategy. One, it could lead to cash flow related problems towards the end of the financial year. The second problem with investing at the end of the year is that it forces investors to invest a lump sum amount. This, in turn, creates the risk of market timing. If the equity markets are up, the investor ends up purchasing the fund’s units at high valuations, which in turn affect his returns.

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The 1 thing Millennials need to know about investing

The oldest Millennials are now starting to enter their formative years in the workforce and the youngest of the group will soon graduate from high school. Millions of Millennials are going to be making decisions about what to do with their finances and how much to spend or save for the future.

As Millennials think about their financial future, there’s one concept over all others that they should understand: compound interest. It’s compound interest that leverages the young age of Millennials and the time that’s on their side in the market. And time is one guaranteed advantage any investor should take.

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Venky's to buy Blackburn Rovers

Blackburn have edged closer to opening up a new frontier in English football by becoming the first Premier League team to have Indian owners.

The club confirmed that talks with the Venky’s conglomerate over a £46million deal are close to conclusion and a takeover should be completed next month. The price includes £25m to buy the club from the family of the late Blackburn benefactor Jack Walker and a further £15m to clear debts.

Venky’s managing director Balaji Venkatesh Rao, whose father founded the company, said: ‘It’s very much confirmed and we will be announcing it formally in the next 10 days.

‘It’s a £46m deal. I wouldn’t say that is cheap or expensive but we will have to pump in some more money later on. The money is up front from our own sources. We are not here to compare with anybody but this is a first for India. It’s a prestigious moment for everybody and one we should cherish.’

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Investing Updates

Been a while since i updated my equity portfolio.  Some of the stocks were already at their highs; and i felt it was appropriate time for me to liquidate them and invest in others.

Bought the following

Sold the following

Hoping for the markets to correct sharply once the much expected double dip recession hits the US economy.  There would be lots of great bargains out there then.

Above stock price history courtesy:  Yahoo Finance

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Nano to launch today

Tata Motors said it will launch its ultra-cheap Nano car in Mumbai on Monday — a vehicle meant to herald a revolution by making it possible for the world’s poor to purchase their first car. But few predict the snub-nosed Nano will be able to turn around the company, which has been beset by flagging sales and high debt, anytime soon.

tata-nanoThe Nano, which is priced starting at about 100,000 rupees ($2,050), is a stripped-down car for stripped-down times: It is 10.2 feet (3.1 meters) long, has one windshield wiper, a 623cc rear engine, and a diminutive trunk, according to the company’s Web site. It does not have air bags or antilock brakes — neither of which is required in India — and if you want air conditioning, a radio, or power steering, you’ll have to pay extra.

Tata Motors has been hard-hit by the global downturn. Commercial vehicle sales, its core business, have been decimated as India’s growth slows, and consumers have had trouble getting affordable car loans. The company declared a loss of 2.63 billion rupees ($54 million) for the October to December quarter, and it has been struggling to refinance the remaining $2 billion of a $3 billion loan it took to buy the Jaguar and Land Rover brands from Ford Motor Co. in June. Even the launch of the Nano has been scaled back.

The car is arriving six months late because of violent protests by farmers and opposition political party leaders over land, which forced Tata to move its Nano factory from West Bengal to the business-friendly state of Gujarat. Company officials have said it will take at least a year to complete the new factory, and until then, Tata will only be able to produce a limited number of Nanos from its other car plants in India.

Tata Motors hasn’t yet given details on production volumes, but most analysts doubt the company will be able to make more than about 50,000 cars in the next year — a far cry from the 250,000 the company had planned to roll out initially. Vaishali Jajoo, auto analyst at Mumbai’s Angel Broking, said even if Tata Motors manages to sell 250,000 Nanos a year, it will only add 3 percent to the company’s total revenues.

“That doesn’t make a significant difference to the top line. And for the bottom line, it will take five to six years to break even,” Jajoo said.

Still, in this new age of global thrift, the Nano sounds appealing to more than just the struggling farmers and petty businessmen across India that Tata initially had in mind for the car. “What do you think the chances are that the Nano will come to America? Personally, I’d love one,” Steven Smith, whose first car was a Volkswagen Dune Buggy, wrote recently on the Nano Facebook page.

Tata Motors unveiled the Tata Nano Europa, a slightly more robust version of the Indian model, at the Geneva Motor Show this month, with a planned launch of 2011. But the company has no plans to bring the Nano to America anytime soon.

Above news source: Associated Press

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