Happy spring!  The weather has been unbelievably pleasant during this run up to summer – hope the wheel doesn’t fall off with a last freeze or two!

The Market

The market has recovered nicely after a bad start at the beginning of the year.  Most indices are up during the first quarter, with the exception of international stocks which declined 1.8%[i]

Of course, we are investing for the long haul (and if we are not, we should not be exposed to the market anyway).  Over the last 10 years the overall US stock market has gone up 96% or a respectable 7.0%/year[ii].  Remember, this was before the peak in 2007, preceding the Great Recession.  For pre-retirees who have been adding to their nest egg, the numbers should be more impressive.

The Price of Something is Actually Going Down!

On April 10, the US Postal Service is dropping the 4.3% surcharge imposed after the recession.  Before you go out and put deposits on matching Rolls-Royce Phantoms, remember the cost of a first class stamp goes down from 49c to 47c.  Not sure the service will improve with the rate drop?

Why Retirement Planning is Harder than you Think

Terry Savage published an interesting article which in summary concluded that retirement planning should not be bet on average returns.  Here are some of the pertinent points she makes:

  • Formulas: The “4% Withdrawal Rule”, which assumes you withdraw 4% of your portfolio increased by inflation every year, does not take into account the prolonged period of low interest rates.  To circumvent low interest rates, retirees tend to take on more risk, and this could be devastating if the market has a series of down years early in retirement.  Clients are familiar with the use of “Bad Timing” to illustrate retirement projections.
  • Use Monte Carlo Simulation: This is a sophisticated method of modelling potential portfolio outcomes based on historical interactions of various variables to come up with a chance of success (not run out of money in retirement).
  • Social Security Deferral: Terry is an advocate of deferring claiming Social Security benefits till you are 70.
  • Immediate Annuities: Investing some of your retirement funds to purchase an immediate annuity, a monthly check you won’t outlive.  But if inflation returns, the monthly annuity income will become worth less and less as inflation eats into the annuity income.  Also, historically low interest rates are not currently resulting in very attractive immediate annuity payout options.
  • Longevity Annuity: Even with careful planning, you may be forced to dip into principal along the way, possibly causing you to run out of money in retirement.  A longevity annuity is giving an insurance company a lump sum now, and you agree to wait till say age 75 or 80 to start getting lifetime payments.  Due to the delay, payments are significantly larger when they eventually do start.  If you pass away before the start of payments, obviously you and your beneficiaries do not get any of the money.


You are working on your computer and you get a message like this, “Unfortunately, the files on this computer have been encrypted. You have 96 hours to submit payment to receive the encryption key, otherwise your files will be permanently destroyed.”  You have been hit by a scary form of computer malware called ransomeware.  Even if you pay up, there is no guarantee you will get back your priceless photographs, vital records, financial information or any other critical information that you have stored on your computer.  There are a few types of ransomeware out there:

  1. Scareware: This is the least scary variant.  You might receive a pop-up message claiming that a boatload of malware was discovered on your computer and the only way to get rid of it is to pay up.  Don’t pay up, but scan your computer with your security software to clear out this malware.  Remember legitimate antivirus or anti-malware programs would not solicit customers in this way.
  2. Screen Lockers: When lock-screen ransomware gets on your computer, it means you’re frozen out of your PC entirely.  Upon starting up your computer, a full-size window will appear, often accompanied by an official-looking FBI or U.S. Department of Justice seal saying illegal activity has been detected on your computer and you must pay a fine. In order to reclaim control of your PC, get professional help immediately, if you are not a computer guru.  The FBI would not freeze you out of your computer or demand payment for illegal activity. If they suspected you of any crime, they would go through the appropriate legal channels.
  3. Encrypting Ransomware: This is the truly nasty stuff. These are the guys who snatch up your files and encrypt them, demanding payment in order to decrypt and redeliver. The reason why this type of ransomware is so dangerous is because once cybercriminals get hold of your files, no security software or “system restore” can return them to you. Unless you pay the ransom—they’re gone. And even if you do pay, there’s no guarantee you can get those files back.  Cybersecurity professionals advise against paying up. Complying with ransomware criminals just opens the door up for future attacks.

Ransomeware Protection

  • Make sure your computer is protected with antivirus and anti-malware programs and possibly even an anti-ransomware program.
  • Create secure backups of your data on a regular basis. You can purchase USBs or an external hard drive where you can save new or updated files—just be sure to physically disconnect the devices from your computer after backing up, otherwise they can become infected with ransomware, too. Or use a secure encrypted Cloud backup service like MozyHome which costs $5.99/month with 50GB of storage.  Mozy automatically backs up your data, and keeps 30 days of data, just in case your current files are compromised.

Personal Notes

In January we got away for some ocean-time in the Bahamas again – this time to the island of Eleuthera.  The pink sand beaches, cottage and snorkeling were wonderful.  Even saw Barry-the-Barracuda and some sea turtles!  Luckily we did not meet the resident shark while snorkeling!

We signed up with the Oxygen Morons running group again to help us get in shape for a 10K run – TBA!


Contact me for a review meeting if needed.  Please plan early for setting up an appointment.  Feel free to pass this newsletter on to whoever may be interested.  They can also sign up directly, on the website.


[i] Vanguard Total International Stock ETF (VXUS) as of 4/6/2016, Yahoo Finance

[ii] Vanguard Total Stock Market ETF (VTI), Yahoo Finance