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Will Obama's Chained CPI Help Keep Inflation from Eating into Your Savings?

This week we examine ways in which inflation nibbles away at your retirement income, especially in light of the President’s proposal for Chained CPI adjustments to Social Security. The formal title is Chain-weighted Consumer Price Index and it’s a variation of how the government figures out what is what we would call "inflation." Either way, with the low rates on offer from CDs and other "safe" investments, investors who don’t take action fall behind every year.

Unfortunately, the numbers show what most people don’t want to face: the days of relying on Social Security plus a few stable bonds and CDs are long over. To earn decent and sustainable returns, investors must search beyond traditional safe havens. [Read more...]

Does the Fed Think Old People Are Really that Stupid?

By Dennis Miller

The Federal Reserve is, of course, a bank. So after it has a meeting, it issues a statement outlining the discussion – a "bank statement." Hmm... Now that I think about it, that must be where the acronym "BS" comes from.

Notwithstanding what we read and hear, when Congress established the Federal Reserve as a central bank 100 years ago, its primary purpose was to protect the banking system. The Federal Reverse shifted risk from the private sector to the public, and through the slow devaluation of the dollar, the cost of this shift fell on the average Joe rather than on banking tycoons. Today, an entire generation is paying for this system with a good portion of their life's savings.

I pride myself on explaining complex financial situations in everyday language. However, when it comes to the Federal Reserve, I readily admit that I am sometimes befuddled. I used to watch Alan Greenspan testify before Congress when he was Chairman of the Fed, and I often ended up asking myself, "What did he just say?" The Fed's code and doublespeak is Greek to me, as it is to most folks. [Read more...]

The Real Inflation Rate and What to Do About It

A little over a month ago we did a quick poll on what our readers thought the real rate of inflation was. The idea for polling our readers came from the disconnect between the official government rate of around 1% and what some had told me they were experiencing first hand.

Thank you to everyone who participated, particularly those who shared frustrating examples of the ever-increasing cost of living. There were close to 100 pages of reader comments, and I read them all... every single word.

This week's column is primarily written by you, our loyal readers. You will recognize the reader comments as they are indented. Here is one example to get us started: [Read more...]

5 Easy Tips for Picking Mutual Funds

In one our recent issues subscriber Jory G. sent us the following question:

“I have a 401(k) with my present employer that has a number of investment options, virtually all of which are mutual funds. Is it possible for Mr. Miller to address in a future letter what we might do to maximize growth or minimize loss in such programs? I realize there are many different 401(k) programs out there, but I just feel overwhelmed when trying to decide which of the funds provide the best growth/protection.”

As all of our readers know, I am neither licensed nor qualified to give personal investment advice. However, I can sure discuss mutual funds in general.

Jory, I would like to back up and start at the beginning. [Read more...]

Cash Alternatives: Making Money Work for You

Just what are "cash" and "cash options?" Some of us take those terms for granted, but after a recent article on sector allocation, one of our subscribers wrote in asking for clarification. Money Forever recommends holding approximately one-third of your portfolio in cash or cash options, but what does that really mean?

To clear up any confusion, "cash options" are not publicly traded options. "Cash alternative" is probably a more appropriate phrase.

I had a pleasant surprise over the holidays, as my own baby-boomer children struck up several kitchen-table discussions. They are wrestling with how to fund their children's college followed by their own sprint to the retirement finish line.

My daughter Dawn said it best: [Read more...]

High Yield Dividend Stocks: What Every Investor Should Look For

It can be mighty hard to earn any interest at all in today’s banking environment. Many in­vestors are looking to riskier investments to find the kind of returns they once got from an FDIC-insured CD or even a savings account.

But don’t despair. There are still a few decent ways to make your cash earn some income without putting it at too great a risk.

My wife takes care of our filing, and during one of her filing sprees some time ago she walked into my office with the brokerage statement for her IRA and asked me why the interest was less than $1. “Interest rates have gone down that much,” I said.

She replied, “That’s terrible,” and turned around, went back into her office, and stuffed the statement into the appropriate file. [Read more...]

Are You A Good Candidate for a Reverse Mortgage?

Two of the top subjects that my Money Forever readers have asked us to cover are annuities, specifically how to pick the right one and covered in the November issue with a companion “how-to” special report (click here for how to get your copy), and reverse mortgages. My guess they’re seeing all those TV ads featuring Henry Winkler and Robert Wagner and wondering if it’s right for them.

Quite simply a reverse mortgage is where you give the bank a mortgage on your home based on your current equity. In return, the mortgage company agrees to pay you a certain amount every month for some period of time: until you die, move out, or celebrate your 100th birthday (the age when they’re generally capped). For a reverse mortgage to be a good investment, you have to outlive your expected mortality and stay in your home. [Read more...]

The 12 Rules to Follow for Buying Dividend Stocks

Many of you have probably filled out one of the "retirement planner" forms available online. Plenty of tax and accounting programs also have "Lifetime Planner" sections for folks to determine if they can afford to retire.

These sorts of programs plug certain assumptions into a formula, such as projected inflation rate, retirement income, anticipated spending levels, and portfolio growth rate. After you add your personal information, it projects how much money you'll be able to produce annually during retirement, and how long it will last.

The first time I ran these numbers, the program said I was good until 116 years of age. At the time, I believed that if we followed the plan as outlined, my wife and I would never have any real money worries. We'd be set for the rest of our lives and could proudly leave some to our children to help with their retirement. How naïve of me! [Read more...]

How Should You Get Started?

How much gold is enough? How much should you allocate to dividend-paying stocks? How much should you hold in cash? How can you sort through the vast number of opportunities out there?

When it comes to building and managing your retirement portfolio, it's common to feel overwhelmed and just want to throw your hands in the air!

One of the biggest surprises since starting Miller's Money Forever is the kind of questions I've received from our readers. The vast majority are about the process behind selecting investments and building a balanced portfolio, and very few are about this or that stock.

Most readers understand that sitting on cash during times of inflation is a bad thing. At the same time, they are reluctant to invest in an uncertain market. [Read more...]

The Five Criteria for Every Investment

A recent reader question is from Alex L, who is a member of my Super Sports Roadster club, a “collaborator-friend,” and big help in getting the Miller’s Money Forever project started:

“Dennis, you started actively managing your portfolio when your CDs got called in and you were sitting on cash. What do you suggest for people who already have a portfolio but might want to rearrange it a bit?”

It’s a good question, and one that I’ve been asked frequently. Let me reinforce one critical point. Do not do what I did and start reading newsletters and buying into investments because they sound like winners. There is a good chance you’ll just compound any problems in your portfolio. (I have an article from my Miller’s Money Weekly service titled “Getting the Most from Your Investment Newsletters” that explains how to use investment research from investment newsletters and make sure it fits into your strategy.)

A major component of my business career was consulting for small businesses. This was usually a three-step endeavor. First, the client recognized they had a problem and usually had a pretty good idea of what they needed to do to solve it. Second, they asked for help because they didn’t know how to implement their solution. And that’s where I stepped in: putting the solution into action. [Read more...]

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