Up and Coming Weekly is a weekly publication in Fayetteville, NC and Fort Bragg, NC area offering local news, views, arts, entertainment and community event and business information.
Issue link: https://www.epageflip.net/i/578278
36 UCW SEPT. 30 - OCT. 6, 2015 WWW.UPANDCOMINGWEEKLY.COM Here are some amazing numbers that Wall Street doesn't want you to know about or understand. In the last market meltdown, investment portfolios that once had a decent value dwindled down to nearly nothing. Americans from coast to coast were hit pretty hard and, unfortunately, this isn't necessarily an exception to the rule ... There are thousands upon thousands of people in the same situation. The alarming part is what Wall Street doesn't want you to know about a financial and mathematical concept called 'drawdown recovery'. In a nutshell, here's how it works: • If you lose 20 percent of your account value, it takes a 25 percent gain to recover the loss and get back to your breakeven-point. • If you lose 30 percent, it takes 42.85 percent to recover. • If you lose 40 percent, it takes 66.66 percent to recover. • If you lose 50 percent, it takes 100 percent to recover. How many years do you think it will take for some- one's portfolio to recover if it lost 50 percent of its value over the past few years? First, let's take a look at what Fortune magazine had to say. They reported that since 1985, only 4 percent of all fund managers beat the S&P 500 Index. Even the few that did, did it by a small margin. So, if our friend Wall Street could squeeze out 8 percent a year, and that is compounding every year with never a loss, you might break even in 11 to 12 years. Wow, that sounds like a lot of fun! Except, I don't think all those who have lost out big time over the past few years would agree. They are always exposed to risk, and don't forget about the taxes you will be paying. Fortunately for educated individuals, being afraid of the market is a thing of the past. There are financial vehicles such as the LIRP (Life Insurance Retirement Plan) that are no longer bound to these possibilities. But, you need to become educated. The insurance industry has the best IRS approved tax-free retirement system in the country today, the LIRP. Sadly, many financial planners, CPAs and attorneys know nothing about this financial vehicle. If your nest eggs are in the stock market, these numbers should frighten you a little. Can you afford to have another meltdown and still have the lifestyle you want at retirement? Only you can answer that. Something else Wall Street probably doesn't want you to know: You see these commercials on TV spout- ing what is your number? Is it a million? $2 million in a portfolio? What is the amount of money that you need to retire comfortably? You need to understand it is not how much money you have in retirement it is how much money you have after taxes! With a $19 trillion deficit do you think that taxes are going up or down? Do you think that you will need less money in retirement than you need now? Think about this one important factor-health care costs. With the advancement of medicine and increasing longevity, the number one fear of people in retire- ment is running out of money. An individual may be one of the most knowledgeable people in the world today but it is what they don't know that will cost him or her thousands and possibly millions of dollars. Check Out These Numbers by ALAN PORTER When planning for retirement, many people fail to consider the rising costs of healthcare. ALAN PORTER, Strategic Wealth Strategies, Contributing Writer. COMMENTS? Editor@ upandcomingweekly.com. http://www.iflretirement. com/Alan-Porter or call 910.484.6200.