FYI: The Five-Year Rally in Stocks Has Bolstered Workers' Nest Eggs. But Consider These Six Issues First.
Regards,
Ted
http://online.wsj.com/articles/can-you-afford-to-retire-early-1406912729#printMode
Are You Saving Enough For Retirement ? Copy & Paste 7/31/14: Walter Updegrave: WSJ
Fueled by surging stock prices, average 401(k) balances have come back from the beating they took in the financial crisis and now stand at or near record highs.
But hold the confetti.
The tailwind of stocks' nearly 18% of annualized gains of the past five years—almost double the stock market's long-term average—clearly isn't sustainable for the long term. Indeed, given today's low interest rates and high stock prices relative to earnings, average annual stock returns over the next decade or so could come in at well below half the pace of recent years.
Which means if you want to accumulate enough savings during your career to sustain you in retirement, you will have to do it the old-fashioned way: by saving diligently.
On that front, the news isn't quite so upbeat. A survey of 144 large 401(k) plans covering some 3.5 million employees released in July by benefits consulting firm Aon Hewitt found that the annual contribution for employees and employer matching funds combined averaged just under 11% of salary last year, down a tad from the year before.
And although the survey also showed that the average employee-plus-employer contribution rises with age—starting at 7.6% of salary for participants in their 20s and climbing to 10.1%, 11%, 12.7% and 13.4% for participants in their 30s, 40s, 50s and 60s, respectively—not a single age group averaged the 15% a year that retirement experts generally recommend if you want to maintain your preretirement lifestyle after calling it a career.
Fortunately, it doesn't take a heroic savings effort to appreciably boost the eventual size of your nest egg and enhance your retirement prospects.
Let's assume you are 25 years old, earn $50,000 a year and receive 2% annual raises, and that you make an "average" effort to fund a retirement account such as your 401(k). That is, throughout your career the total of your contributions plus employer matching funds mirrors the age-group averages in the Aon Hewitt survey.
If you invest your savings in a diversified portfolio of stocks and bonds that earns a reasonable rate of return—say, 6% a year after fees—your 401(k) balance would total roughly $1.1 million at age 65.
That is a tidy sum, to be sure. But it probably isn't enough to replace enough of your income over at least 30 years of retirement.
Generally, advisers say personal savings should generate 50% to 60% of your preretirement income, so that withdrawals from savings plus another 20% to 25% from Social Security and other sources (part-time work, a pension) replace at least 75% to 80% your preretirement income—a level experts generally consider the benchmark for maintaining your preretirement standard of living after you retire.
Increasing the amount you save by even a relatively small amount can significantly improve your chances of reaching that level.
For example, if instead of saving at that average level, reported by Aon Hewitt, you set aside just an extra 1% of salary each year, your 401(k) account's value would climb to just under $1.2 million at age 65. Assuming a 4% initial withdrawal of $48,000, your savings would now be able to replace nearly 45% of pre-retirement income from savings alone. Boost your savings rate another 1% each year, and your account's projected value rises to almost $1.3 million, which allows for a withdrawal of $52,000, bringing you just within reach of replacing 50% of your preretirement income from savings.
And if you manage to stash away the 15% a year that advisers recommend, you would have a nest egg at age 65 valued at almost $1.6 million, providing for an initial withdrawal of $64,000, or about 60% of preretirement income. Throw in an additional 20% to 25% from Social Security and other sources, and your retirement income now meets or exceeds that 75% to 80% benchmark.
Aside from the obvious benefit of a larger nest egg generating more income in retirement, saving at a higher rate during your career also makes your retirement strategy less vulnerable to setbacks from financial shocks.
For example, the hypothetical 25-year-old in the scenarios above saved like a machine each and every year over four decades. In the real world, job losses, health problems, unexpected expenses and all manner of other unanticipated events can prevent even the most diligent saver from sticking to a savings regimen uninterrupted over an entire career. By making the effort to save at a higher rate when things are going well, however, you effectively will build a cushion that will help you better absorb any financial setbacks and get your retirement planning back on track.
Such a cushion can come in especially handy late in your career. For example, if you are on the verge of retiring and the stock market takes a dive, having $1.6 million in savings instead of $1.1 million could mean the difference between scaling back your lifestyle a bit but still going ahead with your retirement plans versus having to postpone your employment exit and spend extra years on the job.
The single best way to maximize your savings effort is to sign up for your company's 401(k) or similar plan. Aside from the benefit that your contributions and investment earnings in a 401(k) account go untaxed until withdrawal, the fact that money is automatically deducted from your paycheck makes it more convenient to save, and more likely you actually will do so.
That said, some features in 401(k) plans that were designed to spur savings can sometimes have the opposite effect. For example, the lure of "free money" in the form of company matching contributions clearly creates an incentive to save. But the Aon Hewitt survey shows that nearly a third of 401(k) participants contribute just enough to get the full company match.
While doing that may seem smart, in that you get the largest company match while you shell out as little as possible, it also can leave you short of the savings rate required to assure a secure retirement.
Keep in mind, though, that while 15% is generally a reasonable goal, the actual amount you should be setting aside can vary considerably depending on your salary, how much you already have stashed away and the number of years until you retire.
There are many online retirement planning tools that can help you home in on the right annual savings target for you. Whether you use a basic calculator or a more comprehensive one that allows you to vary such assumptions as how you invest your savings and your planned retirement date, you will want to reassess every year or so to see whether your current savings rate is adequate.
As exciting as it may be to watch the value of your nest egg swell as stock prices soar, over the long run it is how much you save that will determine how well you can live in retirement.

In retirement I do only active now, although fewer by the year. For (a little) dip protection.

Hi Guys,
A few days ago I was shocked by the number of mutual funds owned by a wise and loyal MFO member. I didn’t examine the incremental diversification benefits accrued by the overall funds or their individual investment philosophies; I simply counted.
I’m sure the owner had excellent reasons and logic when these funds were originally added to his portfolio. I’m equally sure that the styles and the strategies deployed by such a competitive group tend to cancel each other out and neutralize a potential high excess returns.
Diversification is a cardinal investment rule; it is the stuff of successful investing. Well maybe, but more likely it must be exercised prudently; it has its own set of limits. Safety in numbers is a residual human characteristic from our hunter-gatherer days.
J. Paul Getty opined that “Money is like manure. You have to spread it around to make things grow”. Warren Buffett proffered the other viewpoint with “Buy two of everything in sight and you end up with a zoo instead of a portfolio”. Economist and financial advisor Mark Skousen summarized both sides with this wealth-linked compromise: “To make it concentrate, to keep it diversify”.
Assembling a huge number of actively managed mutual funds in multiple categories is almost a 100% guarantee of underperformance relative to any reasonable benchmark. That failure guarantee is mostly tied to active fund management fees. It is true that some superior fund managers do overcome the fees hurdles, but these are few in number and even this minority subset is further eroded by persistency problems over time.
A recent study that illuminates this issue was released by Rick Ferri a year or so ago. It is a Monte Carlo-based parametric study that has been referenced on MFO earlier. Here is a Link to it:
http://www.rickferri.com/WhitePaper.pdf
You can use these study results to estimate your likelihood of selecting a group of active fund managers that potentially might outdistance a passive portfolio, and importantly, by how much.
The overarching findings from this extensive analysis is that the odds are not especially satisfying, and that the likely excess returns are negative. Notwithstanding these unhealthy findings, they do not completely close the door for active portfolio elements. However, these results do put a hard edge on the low probabilities and the negative expectations.
To illustrate, assume that an investor has somehow increased his likelihood of choosing a positive Alpha fund manager to 70 percent by applying an undefined meaningful fund manager selection process. That’s actually quite high given the poor historical record of individual investors. Using Ferri’s numbers for a 3-component portfolio (40% US equity, 20% International equity, 40% Investment grade bonds), the likely outperformance median return is 0.52% while the underperformance median is -1.25%. That asymmetry reflects cost and fee drags.
The prospective excess returns coupled to a 70% chance of selecting a superior active manager is (0.7 X 0.52) + (0.3 X -1.25) = -0.011. So, an investor needs to have a higher than 70% active fund manager selection probability before he can anticipate a net positive excess return for his efforts. That’s a tough task.
The situation deteriorates rapidly as more active managers are added to the mix within each investment category. In the sample scenario, the likelihood of hiring two successful active fund managers is simply 0.7 X 0.7 = 0.49 without impacting the median expected excess return numbers.
The probabilities of generating excess rewards from active management falls from neutral to bad to worse very rapidly. The bottom-line is that hiring a ton of active fund managers adds to investment risk without substantially enhancing the rewards side of the equation. Charles Ellis might well characterize this as a Losers game.
Twenty years ago the investment game was a lot easier to play. Market efficiency has improved over time and has reduced the opportunities for excess profits just like improvements in baseball pitching staff depth has improved to lower overall batting averages.
At that time, it was investor against investor on trades; today the trades are much more commonly executed on an institution against institution basis. And these institutions are populated by well educated, smart professionals who are supported by extensive research staff and super computers for numbers crunching. The chances for an individual investor to outplay these titans has dimmed over the decades.
I don’t mean to say that it can’t happen because it does happen. But it’s not an easy chore. Institutional agencies have their own set of hobgoblins to battle. Since retirement, I have been benchmarking my private portfolio against an Index benchmark that I vary as my asset allocation changes, and against a nice pension that is tied to a portfolio maintained by a highly regarded financial service organization.
Anecdotally, over most of my retirement, my personal portfolio was dominated by active fund holdings. I slightly underperformed the Index benchmark, but I frequently outperformed my pension portfolio. I don’t have access to the pension portfolio’s specific allocations, but I suppose they are more widely and more conservatively distributed than my personal portfolio. They have access to alternate investment products that I can not touch.
One takeaway from all this is that some active managers can deliver the goods, but they are a rare breed. So choose carefully, monitor diligently, and very definitely limit the number of active managers that you hire for your portfolio(s). That’s just my amateurs opinion.
Simplifying is wonderful. It will certainly add to your free time; it will likely enhance your portfolio returns, especially if you use active fund management.
Best Regards.

Hi MikeM,
According to a test trade I just made, TIBIX appears to be available in Fidelity retirement accounts for a $500 minimum with a $49.95 transaction fee for the initial purchase.
Kevin

Hi Paul,
Mr. Marcus managed or co-managed Mutual Series funds for less than 2 years, so I doubt that he earned any "pedigree" during such a brief period. And if you look at the record of MEURX, the only fund he managed by himself, it trailed the category average until the last month of his tenure. So like many new funds, I usually recommend that folks watch until some track record develops and refrain from being an early buyer.
In the World Stock space, my short list of funds to consider would be DODWX, PGVFX, OAKWX and THOIX (per test trade, THOIX is apparently available in Fidelity retirement accounts for a $500 minimum with a $49.95 initial transaction fee).
Kevin

You think you can transfer the retirement account funds after the hard close then add to them using the exception?

Thanks for the news, David. Looks like they've changed the retirement plan/account hard-close exception since the GPGOX and GPIOX hard closes; earlier the exception included accounts at 'intermediary platforms,' and now it's 'direct shareholders only.'
Makes things a little more complicated for GPROX owners like moi who anticipated the rules staying the same as before for later hard closes, like is bound to happen to GPROX too in the not-too-distant future.

The advisor just filed the closure notice.
There are two fairly narrow exceptions:
Institutional Shareholders:

• 401k plans with an existing position
  
• Automatic rebalancing of an existing position (as long as purchase amounts are de minimis, as determined by Grandeur Peak)

Retail Shareholders (Direct Shareholders Only):

• Retirement Accounts
  
• Education Savings Accounts
  
• Minor Accounts (UTMA/UGMA)
  
• Pre-established Automatic Investment Plans
  

The fund reports about $370M in assets and YTD returns of 11.6%, which places it in the top 10% of all E.M. funds. There are a couple more G.P. funds in the pipeline and the guys have hinted at another launch sooner rather than later, but the next gen funds are more domestic than international.
For what that's worth,
David

http://www.sec.gov/Archives/edgar/data/896975/000119312514283727/d761568d497.htm
497 1 d761568d497.htm TWEEDY, BROWNE FUND INC.
TWEEDY, BROWNE FUND INC.
TWEEDY, BROWNE GLOBAL VALUE FUND II — CURRENCY UNHEDGED (the “Fund”)
Supplement dated July 29, 2014
to the Prospectus dated July 29, 2014 (the “Prospectus”)
Effective August 11, 2014 at 4:00 p.m. Eastern Time, the Fund will close to most new investors until further notice.
The Fund will remain open to existing shareholders (up to certain daily limits) as follows:
• Existing shareholders of the Fund may add to their accounts, including through reinvestment of distributions.
• Existing shareholders of other Tweedy, Browne Funds may establish an investment in the Fund.
• Financial Advisors who currently have clients invested in the Fund may open new accounts and add to such accounts where operationally feasible.
• Participants in retirement plans utilizing a Tweedy, Browne Fund as an investment option on August 11, 2014 may also designate the Fund, where operationally feasible.
• Investors may purchase the Fund through certain sponsored fee-based programs, provided that the sponsor has received permission from Tweedy, Browne that shares may continue to be offered through the program.
• Employees of Tweedy, Browne and their family members may open new accounts and add to such accounts.
• Existing separate account clients of Tweedy, Browne may open new accounts in the Fund.
The Fund reserves the right to make additional exceptions or otherwise modify the foregoing closure policy at any time and to reject any investment for any reason.
This Supplement should be retained with your Prospectus for future reference.

http://www.sec.gov/Archives/edgar/data/1141819/000089418914003336/geneva-tpm_497e.htm
497 1 geneva-tpm_497e.htm SUPPLEMENTARY MATERIALS (497E - STICKER)
--------------------------------------------------------------------------------
Supplement dated July 28, 2014
to the
Prospectus dated December 27, 2013 and Statement of Additional Information
dated December 27, 2013, as supplemented May 14, 2014
for Geneva Advisors Mid Cap Growth Fund (the “Fund”),
a series of Trust for Professional Managers (the “Trust”)
--------------------------------------------------------------------------------
The Board of Trustees (the “Board”) of Trust for Professional Managers (the “Trust”), based upon the recommendation of Geneva Investment Management of Chicago, LLC (the “Adviser”), the investment adviser to the Geneva Advisors Mid Cap Growth Fund (the “Fund”), a series of the Trust, has determined to close and liquidate the Fund. The Board concluded that it would be in the best interests of the Fund and its shareholders that the Fund be closed and liquidated as a series of the Trust effective as of the close of business on August 28, 2014.
The Board approved a Plan of Liquidation (the “Plan”) that determines the manner in which the Fund will be liquidated. Pursuant to the Plan and in anticipation of the Fund’s liquidation, the Fund will be closed to new purchases effective as of the close of business on July 28, 2014. However, any distributions declared to shareholders of the Fund after July 28, 2014 and until the close of trading on the New York Stock Exchange on August 28, 2014 will be automatically reinvested in additional shares of the Fund unless a shareholder specifically requests that such distributions be paid in cash. Although the Fund will be closed to new purchases as of July 28, 2014, you may continue to redeem your shares of the Fund after July 28, 2014, as provided in the Prospectus. Please note, however, that the Fund will be liquidating its assets as of the close of business on August 28, 2014.
Pursuant to the Plan, if the Fund has not received your redemption request or other instruction prior to the close of business on August 28, 2014, the effective time of the liquidation, your shares will be redeemed, and you will receive proceeds representing your proportionate interest in the net assets of the Fund as of August 28, 2014, subject to any required withholdings. As is the case with any redemption of fund shares, these liquidation proceeds will generally be subject to federal and, as applicable, state and local income taxes if the redeemed shares are held in a taxable account and the liquidation proceeds exceed your adjusted basis in the shares redeemed. If the redeemed shares are held in a qualified retirement account such as an IRA, the liquidation proceeds may not be subject to current income taxation under certain conditions. You should consult with your tax adviser for further information regarding the federal, state and/or local income tax consequences of this liquidation that are relevant to your specific situation.
The Adviser will bear all of the expenses incurred in carrying out the Plan.
Shareholder inquiries should be directed to the Fund at 1-877-343-6382.
Please retain this supplement with your Prospectus and Statement of Additional Information

More errors on my part: but what happened was in spring of 1992 I put 5k in CGM Mutual Fund, averted my eyes, and just after Labor Day 1997 moved it all (it had more than doubled) to CGMFX, averting my eyes further until early spring 2011, when fearing downsizing and earlier-than-desired retirement, I rolled half of it over into something more prudent (of course anything would be more prudent) but left half w Heebner, except moved into CGMRX, which, having still averted my eyes, I finally bailed out of spring of last year. So the total rollover came to >65k, not 165k, my bad. From 5k, with no additions. My point naturally was that the only way to have even been able to have exposure to some lucky timing with the guy in all of those ~21y, achieving >3.5 doublings, was almost never to watch. He's a one-man shop, famously nerdy and studious. Amazingly (to me), he lives like a block or three from Tillinghast. And now yet again he is pronounced fallen.

Avert your eyes. That's how (the only way) I turned $5k in this fund into $165k over the decades. And I bailed a couple years ago only cuz I was (forcibly) entering retirement.

Congratulations. Also, you had to have added new monies to that original $5k, not just reinvested distributions, to turn $5k into $165k

Avert your eyes. That's how (the only way) I turned $5k with this fund manager into >$65k over two decades. And I bailed a couple years ago only cuz I was (forcibly) entering retirement. Would it had been $50k waay back when. But then I would have been totally unable to avert my eyes. At least I have one my children in FLVCX.

Maybe I can say this better than what I posted and deleted over the weekend. If you held this fund since inception you are ahead of the S&P. But besides being -4.54% YTD it has also underperformed the S&P by 8.12% and 6.65% per annum over the past three and five years respectively. Yes, I know its benchmark is not the S&P and I realize we have been in a long term bull since March of 09. But retirement and old age comes quicker than you might think and looking back in my younger years I would have hated to have been stuck in such an underperformer to the overall market over the past many years. Not my idea of building long term wealth. Then again, I admit to be biased against all these alternative/bear, and long/short funds that have sprung up out of nowhere since 2000.

Hmmm. Available in my retirement account. $5M minimum investment. Closed to new investors.
Sorry if I pry, but are you guys such high flyers that you trade in and out of a $5M minimum fund? Or maybe the minimum has not always been that high?

Minimum definitely wasn't $5M.

Hmmm. Available in my retirement account. $5M minimum investment. Closed to new investors.
Sorry if I pry, but are you guys such high flyers that you trade in and out of a $5M minimum fund? Or maybe the minimum has not always been that high?
There are several classes of this fund - including load classes and an investor class MFNDX at a $2500 minimum, apparently open. Are you invested in one of these lesser classes, and using MFLDX as a proxy for what you own?
JMO - I'd expect an investor with above $5M in MFLDX would be in the super-$25M investable assets range, and I would expect them to employ professional money management services. Maybe not ...

Just FYI for Champlain fans. I have owned the CIPSX and CIPMX for sometime. So this was automatic for me. I was moving some assets and bought CIPYX yesterday when the market was down.
Needless to say I'll be monitoring their SAI next year since fund is new to make sure manager has skin in the game. Champlain has shown to be good fiduciary and I have confidence I will not be wrong. The fund is already up 10% this year. One can never time these things perfectly, but I expect to hold and DCA into for long haul.
Artisan, Bridgeway, champlain are only few fund families I'm prepared to do "large","mid","small" with. Else its all boutique funds for me and indexing / balanced in retirement accounts.
I'm VF and I approve this message.

(My condolences to his family)
http://www.sec.gov/Archives/edgar/data/1366043/000116204414000830/ocean497201407.htm
Oceanstone Fund
Supplement dated July 18, 2014
To Prospectus dated October 24, 2013
With deep and sincere regrets, the Board of Trustees hereby informs you that Mr. James J. Wang passed away. He was the Fund's portfolio manager since its inception in 2006. He was very sincere, hard working, humble, efficient and caring. On July 18, 2014, the Board of Trustees of Oceanstone Fund (the “Trust”) determined, based primarily upon the recommendations of Oceanstone Capital Management, Inc., R.I.A, the investment adviser to the Oceanstone Fund (the “Fund”), to close the Fund and provide for its orderly dissolution. Accordingly, the Trustees have authorized the officers of the Trust to take all appropriate actions necessary for the liquidation of the Fund on or about August 31, 2014. Upon the date of liquidation, those shareholders remaining in the Fund will have their shares redeemed and the proceeds will be distributed as directed.
As a result of these developments, the Fund is closed to new investors, and shares are no longer available for purchase by current shareholders, other than through reinvested dividends. The Fund is no longer pursuing its investment objective.
ANY SHAREHOLDERS WHO HAVE NOT REDEEMED THEIR SHARES OF THE FUND PRIOR TO AUGUST 31, 2014 WILL HAVE THEIR SHARES AUTOMATICALLY REDEEMED AS OF THAT DATE, AND PROCEEDS WILL BE SENT TO THE ADDRESS OF RECORD (For retirement plan accounts, federal taxes of ten percent (10%) of the proceeds will be withheld as per IRS rules if shares are not redeemed before August 31st, 2014). Prior to AUGUST 31, 2014 you may redeem your account, including reinvested distributions, in accordance with the “How to Redeem Shares” section in the Prospectus. Because of the extraordinary circumstances we are waiving the requirement for signature guarantee. If you have questions or need assistance, please contact Mutual Shareholder Services, LLC at 1-800-988-6290.
IMPORTANT INFORMATION FOR RETIREMENT PLAN INVESTORS
If you are a retirement plan investor, you should consult your tax advisor regarding the consequences of a redemption of Fund shares. If you receive a distribution from an Individual Retirement Account or a Simplified Employee Pension (SEP) IRA, you must roll the proceeds into another Individual Retirement Account within sixty (60) days of the date of the distribution in order to avoid having to include the distribution in your taxable income for the year. If you receive a distribution from a 403(b)(7) Custodian Account (Tax-Sheltered account) or a Keogh Account, you must roll the distribution into a similar type of retirement plan within sixty (60) days in order to avoid disqualification of your plan and the severe tax consequences that it can bring. If you are the trustee of a Qualified Retirement Plan, you may reinvest the money in any way permitted by the plan and trust agreement.
______________________________________
This supplement dated July 18, 2014 to the Prospectus dated October 24, 2013 provide the information an investor ought to know and should be retained for future reference.

Hi Bhopali. Be very careful in thinking anyone on a discussion board or anyone marketing an investment news letter is a guru. We are all here to offer opinions and listen to the ideas of others. Not to say there are not a lot of smart people on this board to help you form your own style - there are. But take in ideas to form your own style, which I kind of think you already have.
With that, my opinion would be to DCA the new money into a diversified portfolio based on your age and risk tolerance. This bull is long in the tooth, so putting all the $ to work now could be a mistake.
If you have an urge to follow a news letter, set aside maybe 10% of the money for that purpose. It might be fun to play the game, but don't risk a lot of money on a stranger.
If it is a substantial windfall, it might not be a bad idea to talk with a 'fee only' financial advisor. They should give you more of the detail catch22 referred to (important considerations). It could be just for a one-time assessment and plan outline with no further obligations. I actually found that this type of assessment and financial advice is offered free through some of the big investment houses like Schwab and Fidelity. I'm in the process of rolling over my 401k to an IRA at Charles Schwab. I went to my local branch to speak with an advisor there. I was very happy and impressed at the personalized retirement and investment overview I received - for free.
Bhopali, just my 2 cents with a grain of salt. Congratulations on your windfall and good luck on your plans.

I too would get rid of FSCRX, because of its size. It's probably not a bad time to dial down on small caps anyway. I hate to pay taxes, but a concern with WSCVX is that its manager is also nearing retirement age (born 1945), so it's probably not one you will want to leave to your heirs, and I think it's pretty similar to VVPSX in its profile. GPROX I don't think overlaps with the others, since it's mostly global.
So my vote would be to sell FSCRX and, if you can sell something else at a loss to compensate for the capital gains, sell WSCVX too. Otherwise just sell FSCRX and call it a day.
Or you can just sit tight -- I think consolidation for the sake of consolidation is overrated, and FSCRX, with its low turnover and good downside protection, seems to be managing its size well.
Congrats on having chosen such good funds!