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Doug Carey, CFA

 
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  • How Higher Tax Rates Can Affect Your Retirement Plan [View article]
    Thanks for the good feedback. Our goal is to have the most comprehensive retirement planner for consumers on the market.

    Healthcare costs- Indeed this is a very big issue and worthy of an article all to itself. I try to keep most of my articles focused so I don't include all potential costs.

    Monte Carlo- This is definitely not a magic bullet and it does not take into account the randomness of serious life events. For this I highly recommend people run what-if scenarios on social security payments, health care costs, etc. Then they can see how these impact their plan and the probability of running out of money in retirement.
    Nov 19 10:40 AM | 1 Like Like |Link to Comment
  • How Higher Tax Rates Can Affect Your Retirement Plan [View article]
    Good point. I did not include that and in fact it would make the results worse.
    Nov 19 10:36 AM | Likes Like |Link to Comment
  • How Higher Tax Rates Can Affect Your Retirement Plan [View article]
    I am a fan of your strategy and I use it myself to a large extent. However, many people out there still invest in the typical equity funds and bond funds. That's why I used them as an example. I have written previously on how people can have a more secure retirement using dividend growth stocks- http://seekingalpha.co...

    But this strategy isn't for everybody. So we need different strokes for different folks as they say.
    Nov 16 05:21 PM | 1 Like Like |Link to Comment
  • How Higher Tax Rates Can Affect Your Retirement Plan [View article]
    I'm not necessarily endorsing Treasuries. In fact, I barely have any myself. This was just an example of a typical couple that happens to have a decent chunk of money in Treasuries. I have written before about how investing in fixed income right now is not the best idea- http://seekingalpha.co...
    Nov 15 09:33 AM | 1 Like Like |Link to Comment
  • Can You Beat Inflation With Dividends? [View article]
    Folks, the proof is in the numbers I laid out. The numbers don't lie. Inflation is a hidden tax and this is a well known phenomenon. It's very easy to replicate this. Simply take the following extreme example: You invest $1000. You receive a $550 dividend. The tax rate is 15%. Inflation is 50%. Put the numbers in a spreadsheet and it's clear that even though the before tax return is slightly higher than inflation (55% vs. 50%) the real return after taxes and inflation is negative. In fact, it's -3.25%.

    As a side note, the same issue applies to bonds. In fact, it's much worse since income tax rates are usually higher than 15%. Try running an example with a bond that pays a 51% coupon while inflation is 50% and the income tax rate applied is 35%.

    As further proof, run two examples in this calculator- http://bit.ly/RKDcQ0?skn=

    Run one example where the nominal return is 2% and inflation is 1%. Then run an example where the nominal return is 11% and inflation is 10%.
    Nov 8 10:43 AM | Likes Like |Link to Comment
  • Can You Beat Inflation With Dividends? [View article]
    Really? OK, time for some history. From 1914 through 1924 the CPI inflation rate averaged over 7%. From 1940-1950 the CPI averaged over 7% as well.

    From 1971 through 1981 the CPI inflation rate averaged over 12% per year!

    Are you convinced that it isn't impossible yet?

    Go here for the data- ftp://ftp.bls.gov/pub/...
    Nov 7 04:07 PM | Likes Like |Link to Comment
  • Can You Beat Inflation With Dividends? [View article]
    " If you beat it by 1% you are getting ahead of the game"

    Yes, if you beat inflation after taxes. I'm a big fan of dividend-growth stocks. But my article does point out some problems involved with using them to beat inflation, especially if inflation moves higher from here. That's why I show the benefit from having them in tax-deferred funds. Also, even though I didn't mention it and I wish I had, the potential increase in dividend tax rates coming up will only make this problem worse.
    Nov 7 01:25 PM | Likes Like |Link to Comment
  • Can You Beat Inflation With Dividends? [View article]
    6% compounded over 10 years is 1.06^10 - 1= 79%
    Nov 7 10:58 AM | Likes Like |Link to Comment
  • Can You Beat Inflation With Dividends? [View article]
    Of course dividends can grow faster than inflation. But my article was simply showing what happens to those dividend payments as inflation rises. Even if dividends are increasing faster than inflation, if the inflation rate skyrockets the tax bite will become worse and worse.
    Nov 7 09:02 AM | Likes Like |Link to Comment
  • Can You Beat Inflation With Dividends? [View article]
    I did not assume dividends stayed the same. I assumed the total return from dividends stayed the same or moved with inflation. Very different. This implies dividends are rising.
    Nov 7 09:00 AM | Likes Like |Link to Comment
  • What Will $1 Million Get You In Retirement? [View article]
    And thanks for the comment. Monte Carlo can be useful if the starting assumptions are reasonable. Some advisors use 10% return assumptions for equities, which in my opinion is ludicrous. Garbage in garbage out. But with conservative starting assumptions I believe Monte Carlo is a great tool, even for dividend paying stocks since dividends can of course be cut.
    Oct 25 06:34 PM | Likes Like |Link to Comment
  • What Will $1 Million Get You In Retirement? [View article]
    Yes, but even if you plan on spending only $25,000 a year you should still find out if you can spend that amount without running out of money.
    Oct 25 01:06 PM | 1 Like Like |Link to Comment
  • What Will $1 Million Get You In Retirement? [View article]
    Hey, that's great that you feel that confident about your retirement! Most people don't though. I suppose you don't read all the articles out there discussing how few people have enough money saved for retirement.
    Oct 25 10:50 AM | Likes Like |Link to Comment
  • What Will $1 Million Get You In Retirement? [View article]
    Ah yes, I get this question a lot. One answer is taxes. It's amazing how much of an impact taxes have on retirement plans. That's why it's vitally important to use an accurate retirement planner that takes into account today's tax code.

    The other reason the probability is not closer to 100% is that the value of their equities could plummet in a market crash type of scenario, which of course Monte Carlo takes into account. So in certain scenarios (the tail-end risk) the value of the equities (and their dividend payments) falls by 50% or more.
    Oct 24 04:41 PM | Likes Like |Link to Comment
  • Inflation, Deflation, Gold And Central Banking [View article]
    For 100 years before the Fed was created the price of gold increased by 0%. How's that for price stability? In other words, we don't need the Fed at all.
    Oct 19 11:48 AM | 4 Likes Like |Link to Comment
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