The market was down a bit earlier this morning as worries
surrounding Greece were making the rounds. By the afternoon, U.S.
indices climbed back as talks of potential agreements regarding the
Greece situation were making progress.
Earnings helped do some of the lifting as investors reacted
positively to results from Coca-Cola (
), Yum Brands (
), and Anadarko Petroluem (
). Emerson Electric (
) went in the opposite direction following the company's earnings
report. We have liked Coca-Cola in the past, and it's a name we
still watch closely, but the risk/reward profile for the shares are
still unattractive for us at current levels. Elsewhere, shares of
SL Green Realty (
) and Walgreen Company (
) ended lower following
cautious Wall Street analyst commentary
1 in 3 Americans Receive Federal Aid
This next data point could serve as a reality check for economic
forecasters. According to the analysis of third-quarter 2010 Census
data done by the Mercatus Center at George Mason University, more
than one in three Americans lived in households that received
Medicaid, food stamps or other means-based government assistance.
If you include Social Security, Medicare and unemployment benefits,
the number rises to nearly 1 in 2 Americans. The federal government
sent a record
to individuals in fiscal 2010, up nearly 75% from just 10 years
I'm not sure how this trend can reverse without the private
sector job market stabilizing. Everyone is focused on housing data,
looking for bottoms, when the real cure is to fix the current job
market woes. This past Friday's lower-than-expected jobless numbers
were a good start, but unless we see follow-through with real job
creation, our economy will remain in a stop-and-start pattern. The
jobs data will almost certainly become political ammunition for
candidates as we head toward election season.
From our research, we haven't seen any meaningful hiring plans
from any of the big-name companies that reported earnings this
quarter. The only job growth we've seen came from the retail sector
(i.e. lesser-paying burger-flipping jobs), while most of the other
industries have been silent for the most part. In fact, a good
number of companies have been looking to put in "productivity"
measures to optimize profits and keep margins strong. Job cuts seem
to still be the norm in corporate America, as companies continue to
do more with less.
Get a Foot in the Door - However You Can
With millions of college graduates set to descend upon the
working world each year, the bottleneck of those seeking full-time
employment will likely continue for the foreseeable future. As much
as we all think college diplomas are the fast track to employment,
reality tells a different story. To gain a seat in today's
highly-competitive working world, one needs to acquire as many
skills as possible.
As my kids approach college age, I constantly stress this
message to them. I tell them how important developing communication
skills is, first and foremost. Tomorrow's college grads will need
to be able to network to find a good job.
Part of this process may require initially working for free as
an intern (hopefully students will begin interning while still in
school). Getting to know the main players within the company and
becoming indispensable to the organization are two more very
important factors. Getting a good recommendation from a family
member, friend or acquaintance is also key and should not be looked
at with any sort of embarrassment. Tell your kids or grandkids to
swallow their pride and get the gig! It doesn't matter who or what
helped open the door.
And one final note: it's rare for anyone to first enter the
workforce doing their "dream job." The key, similar to long-term
investing, is just getting your foot in the door and beginning the
Most People Share the Same Retirement Fears
Most retirement worries center around a few key issues.
Near-retirees fear whether their employers will be able to meet
pension obligations. Another common fear is whether Social Security
benefits will eventually run out, as concerns mount around the
potential insolvency of the system. Finally, most retirees worry
they are behind in their retirement savings objectives and if they
can really afford to call it a career.
Delaying social security payments is one of my first thoughts as
to how someone can get the most of the system. Keep in mind that
taking benefits at age 62 locks in payments that are only 75
percent of what they would be at the retirement age of 66. Delaying
benefits at age 66 will raise them by 8 percent a year until age
70, after which benefits do not increase with age. This strategy,
along with staying in the workforce as long as possible, could help
maximize your income.
If you are already retired, you need to use a smart strategy
regarding the money you withdraw from your accounts to cover
everyday living expenses. Many financial advisors tend to use a 4%
annual withdrawal rate when discussing retirement savings
withdrawals. With this approach, investors withdraw 4% of their
retirement balance in the first year of retirement, or let's say
$20,000 from a $500K portfolio. The dollar amount of the withdrawal
could be adjusted each year to keep up with inflation. So whether
you are deriving income from dividend-paying stocks, bonds, bank
CDs, or other sources, you can at least have a starting point (4%
withdrawal rate) to factor from.
Doing the bare minimum (for example, saving a set amount each
month to invest, but never pushing harder to raise the amount you
invest over time) will likely leave many short of an enjoyable
period later in life. Some may think that their current financial
obligations will eventually wind down, and then they'll really
begin to stockpile away money for their golden years. Unfortunately
that is almost never the case. Too many unforeseen events can
happen (divorce, a family death, getting laid off, etc.), and you
can't afford to lollygag when you could be doing more - all the
while still enjoying life's finer moments as well.
Building wealth requires you to aside funds and invest them in
income-producing assets (dividend-paying stocks is our immediate
focus, but it can be investing into growing your business even
more, or buying a property that can be cash-flow positive). If you
are already retired, it may mean coming back in the work force
part-time to ease the amount of money you are withdrawing from your
savings (if you are unable to work because of a disability, there
can be work you do from home possibly) or not being gun-shy when it
comes to staying active as an investor. Regardless, taking charge
of your financial profile is paramount to getting the most out of
your later years.
Income, Income, Income
At Dividend.com, we maintain our focus on the best
income-producing investments the markets have to offer during time
of heightened volatility. We want to make sure we have only the
most pullback-resistant names on our
Best Dividend Stocks List
. Also, if we see the market putting in what looks like a decent
bottom, we will be prepared to scale up the list of stocks we like.
Stay tuned and be sure to look for
member alerts along the way. Don't count on the government or your
employer to set you up for a remarkable retirement. Take control,
do your own research, and achieve your goals yourself!
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