Retirement Certainty Scorecard™

 
  DISAGREE AGREE
Indicate the degree to which you agree or disagree with the statements below.
1

I have a clear, written and actionable retirement plan that shows my current financial position (Point A) and my ultimate future (Point B) and sets a path to get from A to B.

2

I review my written retirement plan each and every year and adjust it for changes in my life. I stress test my plan's viability by changing variables for the worst case scenario.

3

I know exactly what my personal required rate of return (PRROR) is that will allow me to achieve all of my retirement goals. I plan my investment strategy around and work toward that PRROR.

4

I have an investment plan which focuses an equal amount of time on making money as it does on not losing it, simultaneously advancing and protecting my assets.

5

I know that I am utilizing independent advice and strategies which specifically fit my individual situation.

6

I review all of my investments each and every year based on how the market and economy are responding and make adjustments and/or rebalances at least annually or as needed.

7

I am confident with all of my insurances knowing that the way they are positioned and funded will protect me and my family for any unforeseen negative events.

8

I am confident that my estate planning documents and beneficiary designations are all set up to maximize the benefits that my family receives.

9

I am well qualified or utilizing professionals that are well qualified to give the best possible advice for my retirement, investment, estate and tax planning.

10

My retirement planning is set up (by me or my advisor) in a way that requires little daily, weekly or monthly attention so that I can enjoy life to its fullest.

As I consider everything that will allow me to live most comfortably during my retirement, the thing that keeps me up at night is:

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MARKET COMMENTARY

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December 22, 2014 / The Markets

Weekly Market Commentary

Geopolitics and monetary policy and deflation! Oh my!

It was a wild, wild week. First, the Russian central bank announced a massive rate hike and the country’s main deposit rate rose from 10.5 percent to 17 percent. The move was the largest single increase in Russian rates “since 1998, when Russian rates soared past 100 percent and the government defaulted on debt,” according to Bloomberg.com.

The central bank was desperately trying to shore up the ruble which was suffering from lower oil prices and Western sanctions imposed after Russian annexed Crimea. The rate hike wasn’t immediately effective and the ruble sank to a record low. The currency has lost 52 percent of its value during 2014 to date, and the outlook for the future of the country’s economy isn’t bright. If oil averages $60 a barrel, Russia’s gross domestic product – the value of all goods and services produced in the country – might fall by 4.5 percent to 4.7 percent in 2015.

Events in Russia put investors in a selling mood, and stock markets around the world moved lower early in the week. Barron’s commented, “From all appearances, investors were selling stocks while they were doing their holiday shopping.”

The investor stampede was headed off by a bit of whooping and hollering from the Federal Reserve. After the Federal Open Market Committee meeting, the Fed announced its policies remained unchanged:

“…Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy. The Committee sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program in October, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.”

The Fed’s decision was enough to calm markets, many of which showed attractive gains by week’s end.

 

Data as of 12/19/14 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 3.4% 12.0% 14.4% 19.8% 13.2% 5.7%
10-year Treasury Note (Yield Only) 2.2 NA 2.9 1.8 3.7 4.2
Gold (per ounce) -1.8 -0.5 0.0 -9.2 1.6 10.5
Bloomberg Commodity Index -2.0 -13.7 -14.4 -7.5 -4.3 -3.1
DJ Equity All REIT Total Return Index 1.5 28.0 29.2 18.2 16.8 8.4

S&P 500, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

 

As people get richer, do investment returns get better?No, they don’t. Research shows there is a negative correlation between gross domestic product (GDP) per capita – a measure of how wealthy people in a country are becoming – and investment returns.

In other words, the countries with the fastest growing economies don’t always produce the highest investment returns and vice versa. For example, between 1900 and 2013, South Africa rewarded investors with long-term stock market returns of about 7.4 percent while its per capita GDP growth was 1.1 percent. At the opposite end of the spectrum was Ireland, where markets returned 2.8 percent while per capita GDP growth was 4.1 percent. The Economist described the research findings:

“The quintile of countries with the highest growth rate over the previous five years produced average returns over the following year of 6 percent; those in the slowest-growing quintile produced returns of 12 percent… Why might this be? One likely explanation is that growth countries are like growth stocks; their potential is recognized and the price of their equities is bid up to stratospheric levels. The second is that a stock market does not precisely represent a country’s economy – it excludes unquoted companies and includes the foreign subsidiaries of domestic businesses. The third factor may be that growth is siphoned off by insiders – executives and the like – at the expense of shareholders.”

Here is another interesting economic tidbit. While past economic growth does not predict future equity market performance, changes in stock prices do correlate to future economic growth. That’s because expectations play an important role in markets. The expectation of poor future economic performance may cause a country’s share values to fall, and vice versa. A research report from Schroders said, “If expectations are key, a poor economic outlook will already be priced in, and investors’ returns will depend instead upon whether market expectations are overly optimistic or pessimistic with regards to future GDP growth.”

Weekly Focus – Think About It

“Not everything that can be counted counts, and not everything that counts can be counted.”

–Albert Einstein, Theoretical physicist

Best regards,

Kelly P. Campbell, CFP®, CMFC®, ChFC®, AIF®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Campbell Wealth Management Inc. is a Registered Investment Advisor.

* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.

*Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

* Stock investing involves risk including loss of principal.

* To unsubscribe from the Weekly Market Commentary please click here, or write us at kclarke@campbellwealth.com.

* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with    “Unsubscribe” in the subject line, or write us at kclarke@campbellwealth.com.

Sources:

http://www.bloomberg.com/news/2014-12-15/russia-increases-key-interest-rate-to-17-to-stem-ruble-decline.html

http://www.bloomberg.com/news/2014-12-16/ruble-snaps-six-day-loss-on-surprise-rate-increase-to-17-percent.html

http://www.bloomberg.com/news/2014-12-16/russia-stocks-sink-most-in-world-as-ruble-crisis-pummels-banks.html

http://online.barrons.com/articles/barrons-up-down-wall-street-the-oily-slope-1419046381?mod=BOL_hp_we_columns (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/12-22-14_Barrons-The_Oily_Slope-Footnote_4.pdf)

http://www.federalreserve.gov/newsevents/press/monetary/20141217a.htm

http://www.businessinsider.com/equity-returns-and-gdp-per-capita-2014-2

http://www.economist.com/blogs/buttonwood/2009/08/the_growth_illusion (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/12-22-14_TheEconomist_The_Growth_Illusion-Footnote_7.pdf)

http://www.schroders.com/staticfiles/Schroders/Sites/Americas/US%20Institutional%202011/pdfs/Equity-Returns-and-GDP.pdf

http://www.brainyquote.com/quotes/quotes/a/alberteins100201.html

 

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