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Retirement Planning: No Shortage of Tips for 2009 January 5, 2009

Posted by retirementwithaplan in retirement.
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No sooner than the ball dropped on Times Square, did the tips for 2009 begin rolling in. OK, they began towards the end of 2008 but with the simple change of the calendar, the idea of retirement planning seemed to harbor a bit more optimism. Is it the new president? Is it a case of our short-term memory providing us with another anticipation of the next bubble )and our desire to get in at the bottom)? Both in fact and there are some lessons to be learned.
010509-pre_retireplan
And why not do them as a list but in no particular order.

Think long-term.
Even if you are or were planning a retirement for the not-to-distant future, say within the next decade, you should think like this. Beyond that time frame, it would be foolish to think otherwise.

But what is good long-term? Perhaps this will be the decade of green investing. Alternative energy, water, and transportation companies will all have mostly short-term difficulties but over the long-term, they will trump. The oil problem is not going away despite the recent drops in price. Water will be a problem both keeping what we have from increased pollution and finding a way to find more of the drinkable stuff refined from not-so- drinkable supplies. If you can, placing a sizable portion of your retirement investment in these social and green type funds (not more than 30%) will reap excellent long-term returns.

Keep the Faith with mutual funds
Mutual funds, the backbone of a good retirement plan (and at the risk of repeating myself, hold as little of your own company’ stock as possible and no other individual shores, even if the option is open to you in your plan) will offer some unique opportunities to investors. Unlike our memories, we are reminded on down years in mutual funds almost every time we look. Prior to 2008, funds carried the burden of a disastrous 2002 on every “how much the fund returned over five years” report. Dropping that down year made funds more attractive. Now we will be reminded of 2008 for at least five more years.

But on the bright side, many large-cap companies have been beaten down to the point where they are now mid-cap companies. Many mid-caps took it on the chin and are now small-caps. This is very important piece of information due in large part that many of these companies did not deserve the thrashing they received. If you own small-caps or mid-caps, you took it hard and in some case harder than the rest of the market but, if you look back to the day when you first bought the fund, you probably are still up over the long-term. If you haven’t panicked and sold, you will see most of what you lost come back quicker than the rest of the markets.

Bonds for Obama
Another bright spots is municipal bonds. Mr. Obama would use the Treasury to buy these bonds to get the economy rolling on a local level – just as we all optimistically hope he will. Municipal bond funds will do very good over the next ten-years, which unfortunately, is about as long-term an outlook as even the most staunch among us can stomach.

Around the world
Global opportunities are not going away and a small portion of your plan’s holding should be placed on a bet the emerging markets and then the rest of the world, will recover slightly faster than we will on the home turf. Be broad if you can use these funds, looking for underlying investments in businesses that get things from the earth. I know that this runs counterintuitively to what I said earlier about green and social investing, but businesses need things like silver and copper and platinum and these are the medals of a recovery.

Do’s and Don’ts
The couple of items you probably have already done and because of the way the markets and financial tools like retirement plans are, they cannot be undone. If you have sat frozen and have done nothing: didn’t rebalance, didn’t reallocate into a target dated fund with some unknown investment philosophy driving its style, and you didn’t just simply sell altogether and take what you had left to finance a financial problem on a personal level, you will win in the coming months and years. It may take awhile, but most of the best investors really do think long-term and rarely do what they say you should do. Folks like John Bogle don’t rebalance and index gurus like Burton Malkiel investing in actively traded funds and stocks.

Ride it out and keep some money channeled towards that future. Always and under every market circumstance. Even if your employer decides to bail out the match, it would be unwise to lose your confidence in your future as well.

And finally, from Bits and Pieces, a consolidation play for 2009.

The post went something like this:

Watch for these consolidations in 2009:

1.) Hale Business Systems, Mary Kay Cosmetics, Fuller Brush, and W. R. Grace Co. will merge and become: Hale, Mary, Fuller, Grace

2.) PolygramRecords, Warner Bros., and ZestaCrackers join forces and become: Poly, Warner Cracker

3.) 3M will merge with Goodyear and become: MMMGood

4.) ZippoManufacturing, AudiMotors, Dofasco, and Dakota Mining will merge and become: ZipAudiDoDa

5.) FedEx is expected to join its competitor, UPS, and become: FedUP

6.) Fairchild Electronics and Honeywell Computers will become: Fairwell Honeychild

7.) Grey Poupon and Docker Pants are expected to become: PouponPants

8) . Knotts Berry Farm and the National Organization of Women will become: Knott NOW!

And finally….

9.) Victoria ’s Secret and Smith & Wesson will merge under the new name: TittyTittyBangBang

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Comments»

1. Bonni - January 6, 2009

Love #5,7 &9. Seriously though, you are a good writer


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