How much to save to reach $1 mill by age 65

This is how much you would need to save each month to accumulate $1 million by age 65 if you began:

At age 20 $189.59 per month (at 8% annual returns)
At age 30 $435.94 per month (at 8% annual returns)
At age 40 $1,051.49 per month (at 8% annual returns)
At age 50 $2,889.85 per month (at 8% annual returns)
At age 60 $13,609.73 per month (at 8% annual returns)

Reasons to have an Estate Plan

1. Get a will. Dying without a will is referred to as "dying intestate," which means you gave up the opportunity to distribute your assets as you would have liked. Instead, the state (through probate court) gets to figure things out for you. It's quite possible all your assets may not pass to your spouse and children as you would have intended.

2. Name a guardian for your minor children. If you have young children, you need to consider who will care for them should something happen to you. Do you really want a judge-appointed stranger to make those decisions?

3. You also need a medical directive and a durable power of attorney. These documents apply if you become disabled and cannot make decisions on your own for basic expenses like your mortgage and other monthly bills. A power of attorney lets a friend or family member do that for you. Your medical directive allows another person of your choice to act on your behalf, honoring your preferences.

4. Think of your heirs. Without proper planning, your heirs will have to deal with probate court. If you own real estate in several states, your heirs will have to deal with probate in each state. The process involves long delays and high legal costs. It is also public information. Fortunately, you can avoid all this with a revocable living trust.

If you haven't done any estate planning, set up an appointment with an estate attorney soon.

How to View Volatility

5/25/2010

Volatility is back. There is no question that the volatility index “the VIX” has risen in the last few weeks much higher than it has been in the past six months. It appears due to the uncertainty on the political, social, and economic agendas worldwide that volatility will be around for a while. Therefore, we must recognize that volatility is back and to brace for it. 

Volatility is not the same thing as market declines. Just because prices are volatile doesn’t necessarily mean that prices are falling. Volatility is a yo-yo. You can’t have volatility unless prices also go up! A bear market is when prices go down. A bull market is when prices go up. A Volatile market is when prices do both. Volatility is a double-edged sword. Just need to recognize the environment we’re in. Brace ourselves and weather the storm.

If you don’t have the stomach for it, consider reducing risk now. Review your asset allocation. Speak to your financial advisor to see if your investments are properly allocated. This is not a recommendation to time the market. It is about knowing who you are, what your goals are, and what your stomach for risk is.

If you need the money in the next few years, you should not be in the stock market at all.

Volatility presents a fabulous opportunity to create long-term wealth. If you’re adding to your investments (or dollar-cost averaging) during periods of volatility, you set the stage for long-term profits. Treat market declines as long-term buying opportunities.

The dominant determinant of lifetime investment outcomes is. . . .

The dominant determinant of lifetime investment outcomes is not investment performance, but investor behavior.

Keep it Simple

Keep it Simple - This applies to your finances and your investments. Don't over-think it.

“Simplicity is the ultimate sophistication.” - Leonardo Da Vinci
"Things should be made as simple as possible, but not simpler." - Albert Einstein
“The spirit's foe in man has not been simplicity, but sophistication.” -  George Santayana