October 2015


World Savings Day, formerly World Thrift Day, was established on 31st October 1924 during the first International Savings Bank Congress held in Milano, Italy.

After the Second World War, World Savings Day reached the peak of its popularity.

World Savings Day celebrations have the following objectives:

  • To promote savings all over the World
  • To attain a higher standard of living
  • To secure the economy

Today World Savings Day is strongly focused on developing countries, where the citizens do not have their own bank accounts. Savings banks and non-governmental organizations promote savings in these countries with a goal of doubling the number of savings accounts owned by the poor.


1. What do you need to know about market corrections? It can take years to accumulate a meaningful gain from investing. The gains could be wiped by a single bear market. Market corrections could happen at any time. A 100% gain would be completely eroded by a 50% loss. It is important we position our money to plan for this expected event, especially if we are not working and need the cash in this account to support our lifestyle.

2. Are you familiar with the term “ALOC”? This is an acronym for the term Accelerated Loss of Capital. This happens when you are in the distribution phase of your life, and your only access to capital are investments that fluctuate in value. You could soon run out of capital if the market drastically turns downward, or remains low for a sustained period of time, and you must rely on that money to maintain your lifestyle. You drain both principal and capital.

3. Boomers are flocking to sign-up for Medicare. 8,000 – 10,000 people each day are turning 65 years old. Buyers Beware! You have two choices. You can sign-up for traditional Medicare that is regulated and administered by Uncle Sam, and purchase a supplement to handle the gaps. The second option is to sign-up for a Medicare Advantage plan that is regulated by the government with policies issued by an insurance company. If you develop a severe medical condition, you may not be able to switch plans. Your initial decision is important. We suggest you learn all you can about both plans.


4. Traditional methods for growing assets usually focus on finding products with high rates of return. Innovative methods for growing assets focus first on avoiding threats, then fulfilling obligations, and finally seizing opportunities. Initially planning to avoid threats and fulfill obligations goes a long way toward insuring your money lasts as long as you do.

5. If you won the lottery today would you put your money into an account that earns zero interest? This is what happens when you accelerate the mortgage payments on your house. Cash inside the house benefits the bank or financial institution that has the mortgage. Cash outside of the house, that is easily accessible, benefits the borrower.

6. Your 401K plan is not a pension. It is a salary-deferred tax postponed savings plan. Your final amount will be determined by several factors, such as how much both you and your employer contributed, how well your account performs, and what your tax bracket is at time of distribution. You won’t know the final amount until Uncle Sam determines your final tax on your account. Your statement doesn’t accurately reflect your portion of the amount in your account because it doesn’t disclose the taxes you will pay.

7. Are you planning on living on less at retirement by design or default? If you are doing it by design and want to play it safe, make plans for spending as much in retirement as you are currently spending in your present lifestyle. Make sure your annual lifestyle budget is adjusted each year for inflation. If you haven’t planned, you will, most likely, have to live on less in retirement by default if you don’t have sufficient resources.

8. Is the government taking Willie Sutton’s advice? Willie Sutton was a prolific bank robber about 70 years ago, and spent half of his adult life in prison paying for his evil deeds. He was once asked why he robbed banks. His response was, “That’s where the money is.” I believe the government will be looking to “where the money is” as it continues to need money to fund prior wars and ever increasing social and entitlement programs. The Capital One slogan “What’s in your wallet?” will largely be determined by how many times Uncle Sam reaches into it.


9. Annuities often times get a bad rap from many alleged financial gurus. Listed is a quote from Retirement Researcher Wade Pfau comparing bonds to income annuities. “Income annuities are ‘actuarial bonds’ that provide longevity protection unavailable with traditional bonds. Trying to meet a spending objective from a bond fund will inevitably lead to portfolio depletion while income annuities provide income for life. Income annuities are like a bond with a maturity date that is unknown in advance, but is calibrated and hedged specifically to cover the amount of spending needed by retirees when they are alive to enjoy it.”

10. Are you thinking about making a capital purchase soon that will create a debt or financial obligation? It is a debt if you don’t have enough cash sitting in a side fund, and your only choice is to finance and pay interest. It is a financial obligation if you have the ability to retire the obligation with a stroke of a pen.

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