Retirement Ready Income Programs

MCIM Methodology Retirement Income Portfolios -Check It Out

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MCIM "Retirement Ready Income" portfolios combine risk minimization, asset allocation, equity trading, investment grade value stock (IGVSI) investing, and "base income" generation in a manner that embraces the cyclical nature of markets, interest rates, and economies.

Little weight is given to the short term movement of indices and averages, or to the notion that the calendar year is a valid time frame to use for performance measurement. Life Cycle portfolios are designed to prepare investors for retirement, financially.

Goals of Market Cycle Investment Management "Retirement Readiness" Portfolios

  • Higher lows during market downturns, i.e., less of a drawdown than the S & P 500 Average
  • Increasing cash positions prior to market corrections as a result of both profit taking and routine income generation from portfolio securities 
  • Steady, even rising, income levels during corrections
  • Timely movement to new all-time portfolio market value levels, fueled by the discipline to purchase securities during the downturn
  • Steady growth in realized base income from the reinvestment of dividend and income cash flow in the "income bucket" of the portfolio
  • 100% realized reasonable profit experience at all times, and with no looking back --- no major disappearing profits, ever

Steps taken to lower portfolio investment risk levels include:

  • Strict focus on Investment Grade Value Stocks and equally high quality level ADRs (These are almost exclusively "Low Beta" Securities.)
  • Conservative diversification rules with regard to individual and sector holdings
  • Some income production from every security owned
  • Zero tolerance for margin debt
  • Disciplined, reasonable, profit taking targets.
  • No Mutual Funds, No IPOs, No NASDAQ = no problems (think how that would have worked for you during the Dot Com Bubble)
  • Actively managed/traded income CEFs 

Keeping The Program Simple

  • Three basic asset allocations: 60-40; 40-60; 20-80 with income positions either 100% in taxable CEFs or 100% in Municipal CEFs.
  • 60-40 asset allocations are generally best for younger investors, or those with at least seven years until retirement;
  • 40-60 allocations are for those who are more risk averse, of very high net worth, or within six or seven years of retirement;
  • 20-80 arrangements are generally for those who are just starting their investment program, or considering retirement within the next five years.

 

Private Retirement Program Suggestions

  • Private "Getting Retirement Ready" portfolios should be funded with at least $150,000 to ease diversification efforts and to assure an adequate equity selection universe ( there are only 350 IGVSs and a handfull of ADRs to choose from). 
  • Withdrawals should be planned for with cash reserves, and replaced as soon as possible by income generated within the portfolio. 
  • As a benchmark, total fees for a direct-contact-with-your-manager (20% Equity) portfolio should start at around 1.55% per year, and move downward with larger portfolio commitments, and/or after the first full year of operation..
  • Also as a benchmark, CEF income production (in September 2015) was above 6% for tax free funds and in the 7.5% area for taxable and tax favored funds...
  • There should be no penalty for terminating the program (some custodians do charge reasonable ternmination fees), but you should expect to continue with it for at least one market cycle, or 36 months --- whichever is longer.
  • You should always have direct contact with the investment manager. 
  • You must receive (and acknowledge receipt of) disclosure documentation from all parties to any management arrangement.

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Retirement Ready Income Programs
2971 Maritime Forest Drive
Johns Island, SC 29455
Phone (800) 245-0494 • Fax (843) 243-8509
Contact Steve directly for additional information: 800-245-0494
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Please read this disclaimer:
Steve Selengut is registered as an investment adviser representative. His assessments and opinions are purely his own. None of the information presented here should be construed as an endorsement of any business entity; the information is only intended to be educational and thought provoking.

Please join the private article mailing list or Call 800-245-0494 for additional information

Risk Management: Income, 401k, and IRA Programs

Take a tour of a professional investment managers' private SEP IRA program during ten years surrounding the financial crisis:

CLICK HERE

In developing the investment plan, personal financial goals, objectives, time frames, and future income requirements should all be considered. A first step would be to assure that small portfolios (under $50,000) are at least 50% income focused.

At the $100,000 level, between 30% and 40% income focused is fine, but above age 50, the income focus allocation needs to be no less than 40%... and it could increase in 10% increments every five years.

The "Income Bucket" of the Asset Allocation is itself a portfolio risk minimization tool, and when combined with an "Equity Bucket" that includes only Investment Grade Value Stocks, it becomes a very powerful risk regulator over the life of the portfolio.

Other Risk Minimizers include: "Working Capital Model" based Asset Allocation, fundamental quality based selection criteria, diversification and income production rules, and profit taking guidelines for all securities,

Dealing with changes in the Investment Environment productively involves a market/interest rate/economic cycle appreciation, as has evolved in the Market Cycle Investment Management (MCIM) methodology. Investors must formulate realistic expectations about investment securities--- by class and by type. This will help them deal more effectively with short term events, disruptions and dislocations.

Over the past twenty years, the market has transitioned into a "passive", more products than ever before, environment on the equity side...  while income purpose investing has actually become much easier in the right vehicles. MCIM relies on income closed end funds to power our programs.

To illustrate just how powerful the combination of highest quality equities plus long term closed end funds has been during this time... we have provided an audio PowerPoint that illustrates the development of a Self Directed IRA portfolio from 2004 through 2014.

Throughout the years surrounding the "Financial Crisis", Annual income nearly tripled from $8,400 to $23,400 and Working Capital grew 80% $198,000 to $356,000.

Total income is 6.5% of capital and more than covers the RMD.

https://www.dropbox.com/s/b4i8b5nnq3hafaq/2015-02-24%2011.30%20Income%20Investing_%20The%206_%20Solution.wmv?dl=0

Managing income purpose securities requires price volatility understanding and disciplined income reinvestment protocals. "Total realized return" (emphasis on the realized) and compound earnings growth are the key elements. All forms of income secuities are liquid when dealt with in Closed End Funds. 



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Please read this disclaimer:
Steve Selengut is registered as an investment advisor representative. His assessments and opinions are purely his own and do not represent the views of any other entity. None of his commentary is or should be considered either investment advice or a solicitation of business. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be or should be construed as an endorsement of any entity or organization. The reader should not assume that any strategies, or investments mentioned are any more than illustrations --- they are never recommendations, and others will most certainly disagree with the thoughts presented in the article.