“In the cold northern wastes there is a mountain a thousand miles long, a thousand miles high. Once each thousand years a small bird flies north. This small bird flies north to sharpen his beak on the cold hard stone of the mountain. When the mountain is thusly worn down, one second of eternity shall have passed.” –Tibetan Poem

In the past 25 years, medical breakthroughs, such as stents, have extended people’s lives without debilitating surgery. Weekly, you see in the media celebrities or the “average person” living well into their 100’s. In fact, the fastest growing segment of Americans are those living past age 100.

So how do you plan financially for this event? You work from age 25 to age 65…a mere 40 years to accumulate enough money to live 35 or 40 years after retirement. Funny, if you save 10% of your gross income in your working years, and, assuming no rate of return (common today in bank accounts) for the 40 years of work…you will have, at 65, four years’ worth of monies after retirement. If you save 25% of your gross, with the same factors, you will have 10 years of living expenses available at retirement. Both scenarios assume no inflation.

The authors of a new study, The Problem With Living Too Long, from the Institutional Retirement Income Council, report half of all females who are aged 65 today will live to almost 88. Thus, if you, as a 65-year-old female, guess you will live to be 88, then, that gives you only a 50/50 chance of not outliving your income. Statistically, a quarter of those women will live five years past age 88 and 10% will live to age 98. So, if you want a 90% certainty of how long you will live…better use age 98.

You are playing with loaded dice if you say, well, I’ll be dead at 85 and so I only need to plan financially until then. How will you pay your bills when you live longer? Are you going to call on your kids to fund your lifestyle? (They probably will be retired themselves.)

The better choice is for people to work longer, save more, or live on less now. This funding requirement should not be a surprise to anyone. You have had your entire lifetime to plan for your retirement.

Sit down with a professional advisor…this week, and have them map out at least a “rough and dirty” template as to the path you are on. I have done scenarios over the years where people have only a projected 5-30% of what they will need in retirement. They are in shock since they never thought about it. (Must be because they are too concerned over who will win on Dancing With the Stars.)

Start now…a small change can produce tremendous results.

The chart below will give you an idea of what you can expect:

THE LIFE EXPECTANCY GAMBLE
10% of all 65-year-olds will live into their 90s

65-year-old males:

50% will live to 85.99 — 25% will live to 90.78 — 10% will live to 94.74

65-year-old females:

50% will live to 87.97 — 25% will live to 93.17 — 10% will live to 97.64

65-year-old joint life expectancy*:

50% will live to 91.07 — 25% will live to 95.07 — 10% will live to 98.80

Source: Actuarial Consultants Inc. Data is based on 2013 mortality rates for people who do not hold annuities using IRS projections based on July 2000 tables from the Society of Actuaries.
*At least one spouse will live to the age indicated.

You can deal with this issue like the “ant or the grasshopper.”

Ah yes…discipline or regret.

Many people that recently bought gold at over $1900 per ounce have told me they just sold it, as I write this today, with prices at $1690 per ounce!!!

You do not buy gold to make money. It is a hedge against a devaluing dollar, a safety net against war and financial crises. As gold went up over the last few years, all your dollar asset values were dropping due to the devaluation of the dollar so you did not make or lose anything. It is a hedge. It is simply an insurance policy.

Will it go higher from here? Here are some notes from some gold experts who see prices rising due to the following:

•China’s gold jewelry consumption has exploded and will continue to do so as their wealth increases and the affluent buy finer things.

•Although the Chinese government did open up the gold market for jewelry sales in the early 1990s (isn’t that nice of the controlling government to do that?). There still was a value added tax of 17% on gold jewelry and a monopoly in sales by the Chinese government.

•In 2003 most of the controls and taxes were removed in China and thus helped push the price up recently. Demand for gold bars has grown even faster due to (1) rapid income growth, (2) lack of investment alternatives, (3) low interest rates on bank deposits, and (4) as a local currency hedge.

•China is the world’s largest gold producer, but, still must import a great deal to meet demand.

•Also, a growing concern in China over rapidly increasing inflation encouraged the purchase of gold as a safe haven.

•Massive worldwide marketing is also creating more demand in all corners of the globe.

So, should you buy gold now? If you look at the government policies that have created the demand for gold, and you think those negative policies will be reversed quickly, then I would not buy. If you see these negative policies staying around, world income levels rising and it taking a while to solve the world’s financial crisis, then I would be a buyer.

How much gold and at what price? See your financial advisor…. Isn’t that why you pay them their hourly fee?

If I had my way, I wish for the price of gold to drop to zero. Then, there would be peace, harmony and love all over the world. People would be holding hands and singing all day long. With that in mind, I have a bridge in Brooklyn to sell you along with swamp land in Florida! And…a very special deal for you…. I can get Bernie Madoff to be your investment advisor from behind bars. Are you laughing yet?

It’s the same for you and me and our goals: once you complete them, make another list. My father lived to be 83 years old. You can’t imagine the goals he had at 83: get his driver’s license renewed. He got it renewed for four years.

• How far into the future should you plan? As far as you can.
• How many books should you read? As many as you can.
• How many friends should you make? As many as you can.
• How much should you earn? As much as you can.
• What should you try to be? All you possibly can.

The purpose of this exercise is to stretch you, get you to think, get you to wonder, ponder…. I wonder what would be possible if I could get everything I wanted. What would it be like?

Goals for Personal Accomplishment
Once I reached eight years old, the fires were lit for me and they have never gone out. Since I was eight years old, no one ever said to me, “When are you going to get going? When are you going to get off the couch? When are you going to get off the dime?” I only hear, “When are you going to slow down? You can’t do that many things. You’ll have a heart attack and die.”

It’s easy to get lazy in designing the day, the month, the year, or your life. It’s easy to cross your fingers and hope it all works out. The way to keep this up and not get lazy is to teach it to others; e.g., your family.

The Why Is Important
Pick out the top four goals you want to complete by the end of this year. Then, write a short paragraph:

“Why These Four Goals Are Important to Me.”

When the Why gets big, powerful, and strong…

The How Seems to be So Much Easier
Without a strong enough Why, the How seems too difficult to accomplish. How do you manage your time? If you had strong and powerful goals you would figure out how to manage your time if it was worth it. If it wasn’t worth it, why bother struggling with the art of managing your time if it really doesn’t matter?

We are now approaching the final quarter of this year. How are you doing on the goals you set nine months ago? Take this short quiz to determine your priorities and finish the year strong – even if it means completing only one of your goals.

1. You win $100 million in the lottery. What would you do with the money? What would you change in your life? What would you do differently?
______________________________________________________________________________________________________________________________________________________________________________________________________________________________
2. If you knew you had only five years left to live, what would you change in your life?
______________________________________________________________________________________________________________________________________________________________________________________________________________________________
3. If you found you had only 24 hours left to live, what would you regret not having done; regret not having had; or regret not having been in your life?
______________________________________________________________________________________________________________________________________________________________________________________________________________________________

The Treasury wants to widen the pool of potential purchasers of Treasury debt. This will include impossible mandates (where they can do such things) and huge offering incentives (where they cannot get what they want). The rumblings do NOT look good for common folks like you and me.

One proposal is to require 401(k)s to hold a certain percentage of their assets in Treasuries at a risk of losing their tax free status. Another is encouraging pension plans to increase their portfolios with more Treasuries. Here is another… allowing companies with overseas cash to bring it home under a “tax holiday” as long as the majority goes into Treasury debt.

Under such plans (1) your 401(k) returns would be less over the long term, and (2) pension plans would need to increase their holdings from the present 6% to 16%, which would force companies to contribute more, costing companies more and forcing them to cut other costs (jobs).

Thus, Uncle Sam is trying to create demand for Treasury debt via the carrot and the stick. The good part… (hmmm) the U.S. is borrowing money from its citizens to stimulate the economy, so these same citizens will pay themselves back with higher taxes. This becomes an Abbott and Costello routine or a chicken and egg game.

As stated in this blog countless times, get out of your 401(k)s, or, stop contributing at least. Get into a non-qualified program that will grow tax free (not deferred); you take it out tax free and, when you die, it transfers income tax free.

1. Work hard.

The wealthy work harder –and sleep less – than other people. They are more likely to mix work with their own downtime, sacrificing personal time for professional success. But because they tend to be passionate about what they do, it’s less likely that they see it as a chore.

2. Save habitually.

Wealthy people certainly have the funds to be crazy spenders, but most are not. In fact, some seven out of 10 say that saving more money has been an absolutely essential financial goal as an adult. They typically pay off their full credit card balance each month.

3. Invest soundly and aggressively.

The wealthy are more likely to invest in stocks and mutual funds. They understand the need to take risks in the market in order to make their money work as hard as they do. They are also more likely to invest in real estate (above and beyond owning their own homes).

4. Give back.

The wealthy are grateful, and they show it by giving back to their communities, to organizations they believe in and to people they care about.

In my 40 years of working with individuals in personal finance, I could not agree with these habits more.

“A man is rich according to what he is, not according to what he has.”

Read and study on these areas before making your investments. Here are a couple ofpublications to start your investment research. Asia will be a fine long term trend for your portfolios.

Sydney Morning Herald:
www.smh.com.au

Dig Media :
www.digmediasolutions.com

Franklin Templeton:
www.franklintempleton.com

Financial Times:
www.ft.com/uk/global.economy

South China Morning Post:
www.scmp.com

See Mark Mobius blog:
http://mobius.blog.franklintempleton.com

See Jim Rogers blog:
http://jimrogers-investments.blogspot.com

“He who is waiting for something to turn up might start with his own shirtsleeves.”

Funny, it seems many of the people who did NOT want any part of stocks in 2008, when the Dow was at 7000, 8000, or 9000, are now deciding that Dow 12000 is the correct number to come back in. Many sold at Dow 7000 only to buy at Dow 12000. Ah, yes, emotion over logic. Buy high and sell low. It never changes. The stock market will always go through periods of depression and euphoria.

The unfortunate aspect is that the swings of fear and greed and the timing of downturns and rallies are impossible to predict.

On March 16th, 2009, Business Week’s cover story asked…”When will the bull be back? ”. The story explained that most signs point to more stock market pain. The S&P 500 hit bottom a week earlier at 667 on March 9th, 2009. Almost 2 years to the day the S&P 500 has doubled to 1350.

In the Business Week article, it said the Dow, which was at 7000, would bounce around over the next 2 years and it would be 6 years after that (a total of 8 years, 2017) before it reached 14000. The Dow almost reached 14000 within 2 years.

My point is that I have always been a contrarian my whole life and it has done wonders for me and my clients. When the “media” are promoting doom and gloom or this train will never stop…be sensible. Take a step back; evaluate the facts, not the emotion. See the herd instinct in action and stay away from the herd. Over time, equities beat out every investment class. Believe in the great companies of America and the ingenuity of Americans.

You know, when I was in college, (yes, there were colleges way back then), we did a study, over a 30 year period of “Time Magazine” cover stories and how it related to investment returns. If you did the complete opposite of what “Time” covers stated or implied you would have been wealthier beyond your wildest dreams. “Time” and other non financial publications look backward and always get it wrong. So, do not follow the crowd. The crowd left the stock market in 2008 and 2009, selling at huge losses at the bottom. Now, the crowd is buying back in at the top, before the next correction.

Another strong reason for the growth is that their stock buying population is growing faster. A great article in Barron’s on November 22nd, 2010, by Kopin Tan cited the following:

“Over the long run, certain emerging markets might be winners simply because their stock-buying population is swelling faster. A key metric to watch is a country’s proportion of people in their 40s to those in their 20s, which Ajay Kapur, Deutsche Bank’s Hong Kong-based strategist, dubs the Demi-Ashton ratio-after the 2005 pairing of the forty-something actress to her then-27-year-old sitcom star husband.

Think about it: In our 20s, we spend what little money we have on necessities like rent, tuition loans, bourbon and Eames chairs. Only when we grow older, wiser and wealthier-hopefully by the time we hit 40-do we allocate serious money to stocks and plan for retirement. No surprise then that as baby boomers came of age, the Demi-Ashton ratio in the U.S. shrank from 102% to 56% between 1960 and 1980-a nifty time for rock ‘n roll but drab decades for the stock market. By 2000, however, this ratio would rebound to 109% in a heady ascent that paralleled stocks’ boom.

While our Demi-Ashton ratio is projected to shrink slightly over the next two decades, the 40s-20s horde will surge to many emerging economies-to 84%, from 63%, in India; to 105%, from 73%, in Brazil; to 166%, from 78%, in Poland, and to 125%, from 99%, in China. Of course, things like valuations, financial crises, reforms and busts matter, too, and will create variations from this theme, Kapur notes “but there is no escaping the power of demographics.” He reckons the Demi-Ashton ratio will rise the most over the next five to 10 years in Indonesia, India and the Philippines within Asia; and in Brazil, Mexico, Poland and Turkey elsewhere.”

Just remember back to Hula Hoop, Transitor radios, Mustang, personal computers, cell phones, etc. You have an opportunity of a lifetime. The old adage was watch the baby boomers as they set buying trends. Don’t you wish you could have been the first investor in all the above trends? Well, you can… The emerging markets are going to do a replay of what we experienced.

Ah…discipline or regret!

As I have instructed all my students, over the past 35 years, the markets go up and down daily, but, the long-term trend is always up. In fact, the stock market looks like a yo-yo going up and down in the hands of a man walking up steps. Hopefully, you learned from my teachings, and your own research, that equities will always beat out every other asset class over time. You, personally, can remember the Dow hitting 11,700+ in 2000. Then, the tech-wreck and 9/11 caused it to drop to 7,400. If you sold out at the bottom, you probably lost money. If you held on…then, no money was lost. You have experienced and learned a valuable lesson. Buy and hold will always win out (unless there is a worldwide thermo nuclear holocaust – if so, the world is over and who cares). Over these past years, the “drive-by media” simply dumps bad news on you. Even with “all” the bad news in the world, the markets keep going up. (You know, it has been the same bad news reported for the past 200 years.

You know, it is funny, the Investment Company Institute, that tracks individual investor behavior, noted the following: In 1982, when the Dow was at 762, money was flowing out of the stock market. In 1987, at 2,100-2,200, money was flowing in. When the Dow dropped to 1,700, money flowed out. In 1997-2000 money poured into the market during the tech bubble on the way up to 11,700. When the bubble burst and the Dow dropped to 7,400, guess what, money poured out.

From 2004-2007, money again poured into the market as it rose. In the 2008 stock market drop, trillions moved out of the market and into cash. March 9, 2009, the market hit the low point. One year later, the market was up over 65%. Now that the market is back to a level prior to the drop, money is coming back in…just about the time when a mild correction will take place. So, looking back at the recent drop, people poured money in at the top, took a 40-60% drop, sold out at a loss and, now after a huge gain, these same people are investing again near a top. I thought the rule was “buy low, sell high.” The masses are all doing the opposite of buying high and selling low.

Watch…once the “drive by media” notes a new record on the Dow, money will pour in. Enjoy the ride, stay on the course.