Category Archives: Retirement Planning

Survey of Over 8000 Individual Investors Next 10 Year Investment Expectations – WRONG! – Natixis 2021 Survey

We recently ran across a very interesting survey. What caught our eye on this survey was the large number surveyed, 8550 individuals in over 24 countries, all with at least $100k of investments in Capital Markets.

The second item that caught our eyes, were some of the jaw dropping expectations of these investors. Thankfully, the survey is also given to professional investors and a neat comparison can easily be made!

Natixis Global Individual Investor Survey

Here in the 2021 Natixis Global Individual Investor Survey, some eye popping results caught our eye. As a side note there is a similar survey done with Institutional Survey as well.

The most recent survey found these collective individual investors expecting 13% returns over the next 10 years, ABOVE inflation….or a 14.5% total 10 year average!

We never make guarantee calls, as there are not any…. but we would find it EXTREMELY unlikely to meet these expectations. Not only that, but as you can see from the chart, the returns follow what we call “Rear View Mirror Forecasting” which is using the most recent past to forecast the future … rather than using true forecasting techniques.

Another concern arising from this information is with this expectation a possible under saving for the future and too low of risk expectations that may be inferred with these results.

Comparing the Individual versus the professional expectation of the next 10 years of returns, comes up with a very large variance.

Professional investors are expecting a much more reasonable 5.3% return. Clearly professionals are not using “Rear View Mirror Forecasting”

Individuals expect 13% over inflation for the next 10 years with Professionals expecting 5.3% – while we wish individuals are correct, it’s very unrealistic … Pro’s are likely much more accurate!

We will code this one Forecast and look back in 10 years to see who was closer! Yep a 10 year lookback….

Let the clock start ticking!

Have a Great “Individual versus Pros Expectation” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

June 2021 Financial Planning and Capital Market Review – By John Kvale

Hello and Welcome to our June 2021 Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

BREAK IN – HOLIDAY PARTY NOVEMBER 20 FROM 3-5 AT DALLAS ATHLETIC CLUB

Hope you enjoy!

June 2021 Video

YouTube

Financial Planning Tip(s)

Why Not to Overfund a Retirement Plan

In this updated post from a few years ago, we remind how easily it is to overfund a 401k plan and why, while it is not the end of the world, it is not a good tax situation….

Should you accidentally over fund your retirement plan … what occurs is a double taxation!

  1. You do not get the deduction for the contribution
  2. You will likely pay taxes on the eventual distribution

Job change is the most likely reason for overfunding!

Pesky Late Arriving Tax Form Reminder – Form 5498

In this mid month post we remind those of an extra late arriving tax form….

Murphy’s law being applied, the form just arrived last week….about two weeks after our post…..

Reason for receipt:

  • Rollover of a 401k or the like to an IRA – Most frequent
  • Contribution to an IRA
  • Contribution to a SEP

One of the most confusing parts of this form is that even though you may have made a qualified contribution for a prior year i.e. 2020, if you made that contribution in 2021, depending on the type of contribution the Form 5498 MAY show your contribution in year 2021.

Capital Market Comments

Inflation or No Inflation

In this part two post, “The Smartest Guys in the Room” post we discussed via interest rate futures graphs the movement after FOMC dot plot adjustments and the interest rate markets….

This is an updated Graph of the 2 year US Treasury, which is holding lower, (higher yield) possibly due to faster expected rate increases!

This is the ultra long 30 Year Treasury, which continues to trend higher (lower Yield) possible pricing less inflation from the above mentioned expected shorter term rate increases!

Ok…that’s a wrap for the June review…. Hello July!

Have a Great Day, Talk to You at the End of July!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Q3 2021 J.K. Financial, Inc. Newsletter … Video Audio Podcast Review ! By John Kvale – New Post Format

Welcome to our Video and Audio Podcast Review of our Q3 2021 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.

Click the Download button below, for a direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page

BREAK IN – Below is a new format for our Newsletter, hoping this pulls through on your Cell Email!

Let’s get going! We hope you enjoy!

Q 3 2021 Newsletter

(YouTube)

We hope you enjoy … talk to you in the Fall !

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

The Smartest Guys in the Room, The Bond Markets and Participants – Part 2 of FOMC Dot Plot Update

Part 2 of our overzealous post started Monday that was a bit too long- Enjoy!

There’s an old saying that the smartest guys in the room are the Bond Market or Bond Market Participants.

Bond market participants have way less to think about than their brotherin equity market participants, Basically bond participants only think of the economy, the credit worthiness and length of their investment.

Using the USA as your proxy and with the United States being the most credit worthy bond in the world, there is one less thing bond market participants have to worry about. Taking a peek at the 10-year US treasury yield which would reflect mostly economic expectation or possibly the future growth, of course there could be outside investors rushing to the US treasury market in search of higher yields boring the matter a bit, but all other things set aside under the surface post speech bond market investors are expecting greater controlled economic growth, sooner (2 year Movement.)

Dramatic Movement in the 2 Year Treasury

In order to get a most up to date chart, we needed to use futures contracts, so bear with us, as the chart goes down the yield is rising… bond guys are pricing higher rates now!

Here is a close up of the latest few days, again on the 2 Year

Not surprisingly a bit of a come back (higher prices lower yield) in the chart after such a large move.

30 Year Movement

Same use of futures contract here…

Higher chart price is lower yield? The initial drop is in the February March 2021 time frame as the Economy began to open, but take note of the move UP – lower yields in the last few weeks!

This may seem counter intuitive, but the eventual increase in rates would thwart inflation and is being expressed by lower long term rates…

We’ve talked at length on inflation versus deflation, so will leave it alone at this time but it might be noted that’s the smartest guys in the room thank future economic growth is at least higher and longer term inflation is not their concern, at least for now!

Have a Great “FOMC – Smartest Guys In the Room Review” Day!

John A Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

FOMC Updated Thoughts From Press Release, Dot Plots and Post Release Interview of Jerome Powell (Part 1 of 2)

As mentioned Friday in our preview post, Jerome Powell chair of the FOMC and the rest of the voting members released their updated public press Economic Review and analysis mid-week last week. This  release also included 30 minutes post Q and A along with a prepared discussion by Powell that lasted about 15 minutes.

Just by chance finding myself on the road for a slightly unusual 90 minute journey that occurred exactly during the time Jerome Powell was speaking, I was able to listen to the entire speech live, while I’m not sure if it was the subject matter, or a minor dental procedure the day before, no matter … I found it extremely difficult to stay awake while driving – digressing here, but if you weren’t on the edge of your seat listening to the speech and reading the press release … you’re likely in good company as we usually find this material extremely interesting – still digressing.

Jerome Powell is most open to reveal something either by accident or on purpose during the Q&A as the prepared press release and the prepared remarks have so many eyes and advisers reviewing he’s certainly to say only what we are supposed to hear.

Wall Street and much of the media outlets took much of his comments to be more Hawkish (less friendly and more likely to raise rates sooner.)  For the record, this is why we enjoy listening to these types of events ourselves, as we did not find anything more than doing what he and the rest of the FOMC had promised to do, all along.

The dot plot which as a quick reminder, is an estimate of all board members including non-voting members timing and amount of where interest rates and where they expect economy to be was also released.

The following… Shows that multiple board members are more eager to raise rates sooner than they had been in recent quarters. In our minds this is good news as we would rather the FOMC not stay too low to long encouraging reckless behavior in the form of leverage and over leverage. Also encouraging for more conservative and cash investment such as our checking accounts an increase in rate will give us collectively some income on those reserves.

The Dot Plot Thickens

6-16-21 Dot Plot

Two Members Now Expecting two increases in 2022 with five members also expecting one move for a total of seven members expecting moves in 2022!

3-17-2021

Expectation by three Members of One interest rate increase and one member expecting two moves in 2022

Again, we think higher rates sooner is a return to normal and sets us back on course for continued economic recovery… just keeping to their word!

With continued compliments for keeping my material short and to the point, a late viewing of the US Open Golf Tournament, thanks to a West Coast Venue and a desire to see what the so called Smartest Guys in the Room – Bond Guys do this week, this post is officially Part 1 … Will only be one more Part, Promise!

Have a Great “Dot Plot Analysis” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Why You Do Not Want to Overfund Your 401k or Other Retirement Plan and How it Can Happen !

The most common type of Retirement Plan, the 401k in 2021 has a maximum deferral amount of $19,500 with a catch up provision for those age 50 or greater of $6.500 for a total of $26,000 again in year 2021.

Why You Do Not Want to Overfund Your Retirement Plan

Should you accidentally over fund your retirement plan … what occurs is a double taxation!

  1. You do not get the deduction for the contribution
  2. You will likely pay taxes on the eventual distribution

This is not the end of the world, especially if a very small dollar amount, but you still do not want this to happen…

How Does Overfunding a 401k Occur ? – Job Change

While it may seem puzzling at first, upon second thought the most common reason for overfunding a retirement plan is a job change.

It is impossible for your new employer to know your prior contributions, so an accidental overzealous withholding that throws you over the annual maximum will not be allowed from a IRS tax standpoint.

If you change jobs mid year, be sure to carefully determine your prior withholdings and monitor you new withholdings throughout the year as the burden is on us the employee to keep ourselves in check with the maximum.

For those gainfully employed at the same employer we have not seen an accidental over allowance in a very long time, so most employers have systems set up to automatically stop your contribution once the maximum is achieved. Should your employer merge with another company or change administrators, it is a good idea to make sure they pick up your prior contributions, which can be achieved by checking your paycheck’s ytd retirement plan withholdings after the change.

The good news is there are ways in certain cases to unwind this overpayment, but they are frequently very complicated, may create a tax issue for the IRS to review, and in some cases just not available.

Have a Great “No Overfunded 401k” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

May 2021 Financial Planning and Capital Market Review – By John Kvale

Hello and Welcome to our May 2021 Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

Hope you enjoy!

May 2021 Video

YouTube

Financial Planning Tips

Preparing to Hit the Sky Again

In this Break In Moment Post, an executive of the company Fligence reached out with regards to our fun TSA Posts through the closure of the country.

Their neatly designed website can be a very handy item for determining your possible time needs and delays as well as neatly follow our country to reopening at full speed.

Capital Market Comments

Inflation or No Inflation

In doing writings, I try to approach each article with a clear mind and head, especially if the post is heavy ….

Many times I try to completely forget the article or post from maybe just a week before….

Good News…. the Month of May was a success in clearing my mind as I accidentally pounded everyone over the head with Inflation stuff…..

My apologies, but it coming at us from so many directions made it top of mind….

At the Berkshire Hathaway meeting post, starring Warren Buffett and Charlie Munger, Inflation was all the chatter and a huge concern for them.

Then Here in our Jolts – job opening Post we looked at how there are tons of jobs to be had –

Here in our Favorite Dallas Federal Reserve Chair post, Robert Kaplan – Sooner rather than later, worries inflation may be coming if we stay too low on interest rates…

Lastly in this verbal tug of war post between Jim Bianco and Lacy Hunt, they could not more disagree very emphatically.

Time will tell who is correct in their thinking!

Have a Great Day, Talk to You at the End of June!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

JOLTS – Job Opening Measurement ALL TIME Highs – Great News for Job Seekers, Tough News for Employers

Over the last two weeks during the Mauldin SIC conference (which we are still digesting), multiple speakers mentioned the Jolts Index -Job Openings Labor Turnover – A Bureau of Labor Statistic (BLS) that measures job openings.

Back in August of 2020, here we first took note of the movement in the Index as it made a turn at the bottom of this chart and actually surprised to the upside.

JOLTS Index Today

Fast forward to today and noting what the Mauldin speakers featured, this Index is at an ALL TIME high!

Key Takeaways

  • Tons of Jobs Available
  • Job Seekers Market
  • Tough on Employers
  • Could lead to higher wages (Inflation?)

Have a Great “JOLTS Update” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Make it to Year 2030 and You will Likely Live Over Age 100 – From Mauldin SIC Conference

As noted with our excited post last week, we are once again in the throws of the John Mauldin SIC – Strategic Investment Conference.

So far this years most ear catching moment has nothing to do with finance but comes from two Doctors who are repeat speakers from last year to give the group a Covid related update.

Their predictions last year (think at a time where a lot of uncertainty abounded) were spot on and almost unbelievable accuracy. So accurate they hardly needed to update their presentation.

Knowing we teased you with the headline, stay with us please … and take a quick moment to review these two Doctors backgrounds/Credibility! – Pretty Awesome stuff!

These guys are not show boaters!

So maybe not Dr. Culver’s best look … think super smart professor we have all had in our life!

Make it to 2030 and You will Likely Live Over Age 100

My mouth almost dropped when I heard these two stately Doctors utter the words above.

There is a super cool chart that the Doctors had in their slide deck, and of course it is the ONLY slide that had “Not for Reproduction” …. so in honoring their request … here is a recreated slide from their predictions.

Since 1850 average mortality has increase 2.5 years every ten years.

From 2020 to 2030 the Doctors believe we will see an increase age expectancy of 30 years, yep THIRTY!

That is the huge jump in the chart on the very far right upper expected mortality age 112 !

Much of this is due to the expected pull forward of knowledge earned from Covid and the various Vaccines.

The Doctors repeatedly mentioned that they expect a youthful elder years as well, not just extended longevity!

Recommended Life Style and Personal Health Monitoring

Here is a quick Legend for the abbreviations:

  • Blood Pressure
  • Body Mass Index
  • Fasting Blood Sugar
  • Cholesterol
  • No Tobacco
  • Stress Management – VERY INTERESTING! Newly added by the Doctors

For the record, those are not low hurdles using my own situation as an example!

Look for a more detailed review of this in the coming Newsletter!

Have a Great “Make it to 2030, live to over 100” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Musk Hosts SNL … Mauldin SIC Conference … Robert Kaplan Talks Taper

Being probably the least fan of SNL – Saturday Night Live – in our family, it is on the calendar to attempt to stay up this weekend and watch Elon Musk host SNL. Once announced there has been some grumblings among actors, a fiery Musk Tweet and fiery Tweet response that are likely no more than showmanship, but like many I can’t wait to see the show!

Ratings increase? Bet so!

John Maulden SIC conference

Last year the John Mauldin SIC – Strategic Investor Conference – was available virtually … and once again it is this year. This conference lasts for two weeks and started this week … has close to 50 high-powered guests, with complete replays and slide decks … we are excited to present the high points of some of these speakers just as we did earlier this week with the Warren Buffett Berkshire Hathaway annual meeting and our Q 3 2020 Newsletter

Taper Talk – Floating the Balloon ?

Local favorite Dallas Federal Reserve chair Robert Kaplan who is not a voting member of the FOMC but still remains on the board this year was the first to mention the word Taper – Well he didn’t really mention taper but mentioned the slowing of asset purchases.

No more than a few days later Treasury Secretary Janet Yellen also mentioned something with regards to asset prices and the possibility of slowing purchases.

With a rather yawning capital market response, it would not be beyond a reasonable belief that they are floating some of these out to see market responses.

Look for more comments from us on this and a very watchful eye for more speakers slowly adjusting the aircraft carrier.

Friday

Ahhhh… but today is a Friday heading into a wonderful spring weekend and a possibly very entertaining SNL skit tomorrow night!

Enjoy, Talk to you Next week!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents