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market spotlight | monthly review
 

Following an up-and-down path similar to what occurred in April, the indexes listed here ultimately closed the month of May higher (except for the Global Dow). The month started with a run of positive returns, only to see much of the month's gains given back by the end of May. Information from the Fed that interest rates could be raised as early as June could be interpreted as both a positive (improving economy) and a negative (higher lending rates), which seemed to flummox investors a bit. Several economic indicators picked up the pace in May as employment remained steady, the housing market gained some momentum heading into the summer months, and consumer prices increased along with mounting oil prices.

Long-term bond yields fluctuated during the month, ultimately closing at essentially the same yield as April's closing return. The price of gold (COMEX) decreased by month's end, selling at $1,217.50--about $77 below April's end-of-month price of $1,294.90.

 
 
 
did you know?

Beacon’s Vantage 2.0 Aggressive portfolio is now available in 401(k) plans! Beacon Capital Management portfolios bring retirement savers a competitive investment option to help them maximize gains, minimize losses and maintain a disciplined investment approach for their long-term retirement savings goals. For a complete list of plan participants, contact your Beacon Wholesaler to learn more.

 
 
bright ideas
 
Financial Independence
Don’t Let Your Financial Strategy "Blow Up" Before Retirement

With the 4th of July around the corner, Americans are beginning to make plans for the celebration of this landmark occasion of our national independence. While the country as a whole fought for and won its independence centuries ago, to this day the people of this nation have a different, more personal battle to fight – financial independence.

Since the introduction of 401(k) plans in 1978, the United States has seen a significant shift away from defined benefit pension plans to defined contribution savings and investment plans, placing more of the responsibility on individual investors to provide for their retirement futures. As such, personal savings and investments are truly the only reliable means of retirement income, but only if it’s invested wisely. Saving alone, without investing, will not let most boomers become financially independent in retirement. Yet, investing with exposure to extreme volatility will not provide the security most boomers need to become financially independent in retirement either. So what will give them sustained growth without overexposure to market volatility?

Conventional wisdom used to tell us that a retiree could withdraw about 4% per year from their investment portfolio without running out of money for at least three decades. This came to be known as the “4 percent rule,” and was based on historical calculations done by a financial planner in the 1990s. But boomers counting on the “4 percent rule” as a retirement income plan may be in for another surprise. Traditional investment allocations, such as the broad market (as measured by the Vanguard S&P 500) or a traditional retirement asset allocation (as measured by the 60/40 Balanced Index,) begin to fail in today’s economy at just a 3-4% distribution rate (see our Withdrawal Rates piece linked below for referenced data). The reason for this increased risk of running out of money when compared to the 1990’s when the 4 percent rule was introduced is that today’s retirees face significantly lower interest rates, which the Feds indicated in this month’s meeting will continue perhaps at an even slower increase than previously envisioned. Additionally, there are volatile equity markets and longer life expectancies (with increased healthcare costs) to consider.

This is why Beacon Vantage 2.0 is an ideal tool to consider for this growing group of “aspiring to retire” boomers. When tested in the same Monte Carlo simulation as the traditional retirement portfolios, Vantage 2.0 was able to sustain the 4 percent income withdrawal over a 30-year time horizon in the same market period. The challenge today is gaining the yields necessary to grow significant retirement savings while protecting the principal from sudden market volatility. In what some may consider a “modern retirement plan,” Vantage 2.0 works to generate consistent returns via equity allocations. Those allocations are designed to enable the portfolio to keep up with inflation and the rising costs of retirement, while still accounting for regular income withdrawals. It also works to provide account preservation from market volatility through its stop-loss protections, taking the risk of significant loss off of the table. Losses can be more powerful than gains when approaching retirement, and this stop-loss helps provide the protection needed to maximize one’s savings and create more predictability for retirement.

To learn more about Beacon’s portfolio options, or to download our print piece: Withdrawal Rates: Can You Sustain a 4% Retirement Income, visit BeaconInvesting.com today.

 
 
beacon news

We are excited to announce that Beacon Capital Management has been named one of the 300 Top Registered Investment Advisors by Financial Times for 2016.

Thank you for being a part of our vision to be a next-generation money management firm to make this success possible. This accomplishment is a tribute to your dedication and hard work, and we hope you will consider sharing this recognition as one of your own.

Disclosure: The 2016 Financial Times 300 Top Registered Investment Advisors is an independent listing produced by the Financial Times (June, 2016). The FT 300 is based on data gathered from RIA firms, regulatory disclosures, and the FT’s research. As identified by the FT, the listing reflected each practice’s performance in six primary areas, including assets under management, asset growth, compliance record, years in existence, credentials and accessibility. Neither the RIA firms nor their employees pay a fee to The Financial Times in exchange for inclusion in the FT 300. 

 

FOR ADVISOR USE ONLY, NOT TO BE USED WITH CLIENTS.

Beacon Capital Management, Inc. is an investment advisory firm registered with the Securities and Exchange Commission. Additional information about Beacon Capital Management is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 120641. Beacon Capital Management only transacts business in states where it is properly registered, or excluded or exempted from registration requirements.

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