Stellar Capital Management, LLC
Stephen Taddie is co-founder and Managing Partner of Stellar Capital Management. His primary investment responsibilities involve establishing the firm's economic outlook and forecast and using that research to provide input to the Investment Committee regarding asset allocation, sector, and industry weighting decisions for stocks, and yield curve analysis for bonds.
Stephen has over 30 years of professional experience in the investment field. Beginning his career as a Merrill Lynch Financial Consultant in Arizona, he finished his brokerage industry tenure in branch management with Prudential Securities on the East Coast. In the early 1990's he established a Phoenix, Arizona branch office for a mid-sized investment advisory firm, and in the late 1990's established S.J. Taddie, Inc., Investment Counsel, prior to co-founding Stellar Capital Management in July of 2000. He has worked with a select group of clients ranging from publicly traded corporations, government entities, and Native American Indian Tribes, to high net worth individuals and families across the country. He is frequently asked to speak on economic and investment management trends, has authored numerous articles and has often been quoted on the same subjects.
Stephen is a member of the National Association for Business Economists (NABE), a Panelist for the NABE Outlook (National Forecast) and the NABE Financial Industry Roundtable, the Western Blue Chip Economic Panel, the Arizona Blue Chip Economic Panel, and a member of the Arizona Legislative Finance Advisory Committee. He is a member and Past President of the Arizona Economic Round Table, a member and Past President of the Central Arizona Estate Planning Conference, a member of the CFA Institute and the Phoenix CFA Society, and an Arbitrator for FINRA. He is a past member of the Economic Club of Phoenix, the Western Pension & Benefits Conference, Arizona Town Hall, and the Madison School District Financial Oversight Committee. He has served on the Executive Board of the Desert Botanical Gardens Foundation, the Advisory and Executive Boards of the Foundation for Burns & Trauma, the Executive Boards for the Foothills Foundation, the Phoenix Camelback Rotary Club, and the Finance Committee for the Desert Botanical Gardens. He has also volunteered with Junior Achievement and coached youth sports teams.
Stephen holds a Bachelor of Science degree in Business and Economics from Lehigh University, and a Master of Business Administration from the University of Phoenix. He has earned The Certified Business Economist™ (CBE™), which is the certification in business economics, and data analytics developed and owned by the National Association for Business Economics, and the Certified Financial Manager (CFM), which is the certification in financial management issued by the Merrill Lynch Institute, Donald T. Regan School of Advanced Financial Management.
BS, Economics, Lehigh University
MBA, University of Phoenix
Assets Under Management:
Percent of assets managed
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No, unless there is much more to the story, and you believe that the economic world as we know is going in the tank.
My no answer is based on the assumption that you have a decent fixed rate mortgage (between 3 1/2 and 4% ?) and decent investments in your husband's 401k (earning between 4-7% annually), and that the term downsized refers to his earning less money, but still being employed and earning something.
If the above assumptions are somewhat accurate, there are two specific reasons for my answer: 1. Your expected interest expense is less than your expected earnings, and mortgage interest paid is deductible from gross income, so the "real" cost of the mortgage interest ends up being less than the 3 1/2 -4% assumed above, thereby widening the spread between cost and earnings, 2. The 401k earnings are tax deferred, which means you get the benefit of compounding on the entire amount of earnings, and are only forced to take out an Required Minumum Distribution after he is aged 70 1/2.
This is the basically the same equation used in the banking industry; pay depositers one rate, and lend money out at a higher rate, but in your case, you get to deduct interest paid from gross income, and defer paying taxes on the earnings... It is a pretty good equation, but carrying debt does increase risk should things melt down.
Hope this helps,
About $3 million, assuming that is not in an IRA or 401k, where you would have taxes due on the withdrawal, thereby netting less.
The $3 million assumes a 4% withdrawal rate, a 50/50 portfolio (stocks/bonds), with bonds earning 3% interest, stocks paying 2% dividends and averaging 5% in capital gains per year. Before tax, that would equate to about $150,000/year in total, and after an assumed tax of 20%, you would net about $10,000/month. You can adjust the above assumptions to fit your specific situation, but think you will find the $3 million it to be a decent rough estimate. If you moved the entire invested amount to the stock market, you would be relying on capital gains to support more of the annual spend, and a significant decline in the stock market would put you in a spot where your withdrawal rate would be higher than 4%, possibly risking the longevity of the equation depending on the length and magnitude of the market decline.
You should plan on withdrawing more than $10,000/month in future years if you want to maintain your standard of living, as living costs seem to go up continually, and unplanned for expenses seem to crop up at the worst possible times. If you agree, you may want to move the asset goal a little higher to compensate.
Hope this helps,
Retirement savings can take many forms, retirement accounts are but one of those forms.
Building up a regular investment account in conjunction with your retirement accounts is a good tool. Remember, when you do retire, most of the money coming out of "retirement" accounts will be taxable. You do not have to take money out of these vehicles until after 70 years of age, so if you retire before 70, you will need money to live. If you have a nice balance in your regular investment accounts, you can delay, or at least limit the money you withdraw from your retirement accounts, thereby maximizing the tax free compounding of those assets, and managing your tax liability.
You will also find that investing in stocks, bond, and many mutual funds can be quite inexpensive when compared to annuities and other insurance programs dressed up as retirement tools.
Hope this helps,
There are instances where an advisor may have institutional relationships that a retail investor may not be able to use due to percieved differences in expertice and/or volume of transactions. These relationship are formed to create the opportunity for "best execution", and better overall service to the end use client. Also, advisers may use "Prime Broker" or DVP services where they can use multiple brokers to find best execution outside the custodian, but still settle the transaction through the custodian of record for the account. Typically a retail client must transact all their business through their custodian, and would not be able to use such outside trading services.
Hope that helps.
In my opinion, there are three types of risk involved when dealing with bonds; credit risk, liquidity risk, and interest rate risk.
Are US Treasuries free of credit risk? Most likely, as a US investor, it is the best credit one can get, as if a US Treasury bond cannot make a required interest payment, or pay principal upon redemption, it would be catastrophic for the exchange value of the US dollar, and catastrophic for the US and global economy. Many other things would go horribly wrong in short order should the US default on its debts.
Are US Treasuries free of liquidity risk? Most likely, due to the US currency being a global reserve currency and sheer number of bonds traded during a normal day. Something would have to change with regard to credit (mentioned above), status as a reserve currency, or lack of US Treasury bonds on the market to create liquidity risk.
Are US Treasuries free of interest rate risk? No. As one goes further out in maturity to capture yield, the interest rate risk on any fixed rate bond increases. An investor buys a specific coupon rate for a period of time when they buy a fixed rate, fixed maturity bond. If longer-term interest rates increase, the current value of a longer-term bond decreases, and if longer-term interest rates decline, the current value of a longer-term bond increases. This relationship is based on the relative value of the interest rate the investor bought versus the interest rate that could be bought presently on similar maturity, similar quality bonds in the open market.
In my opinion, interest rate risk is where investors should focus their efforts when dealing with US Treasuries.
A fourth risk would be currency risk, but that would primarily apply to foreign investors, or US investors evaluating portfolio performance via some measure of comparative global purchasing power.