Investing & Economy

Long-term Equities Investments Crucial for Successful Retirement

Most people who retire spend about 120 percent of what they used to make

It’s been widely reported by national financial news sources that business magnate and iconic investor Warren Buffett recommends that retirees have as much as 90 percent of their savings in equities. While the actual percentage may vary, it’s a sentiment shared by Chuck L. Cooper, president of the Master’s Financial Group, LLC., with offices in Colorado and Michigan.

Chuck Cooper 244x300Cooper’s retirement approach for clients is equities-based.

“Long term, money has to be in equities,” he says. “Put it in bonds, you’re lucky if you get a 2 percent return, and you can’t live on that. It’s a guaranteed loser – you will run out of money.”

Cooper tells clients that when they invest with him, the equity portfolio will climb 14 percent annually, every three years it will climb 15 percent, but sometimes there will be a bad year and stocks will drop 40 percent.

In his view, the media has a way of driving fear and focusing on the negative when it comes to investing and equities.

“On any given day, 75 percent [of reporting] is about the next market crash,” he says, but he teaches clients to buy stocks every month to balance it out.

Cooper points to a lack of understanding in the industry about how equities work over the long haul. Seeing a 55-year-old with a target date portfolio in 10 years, and 50 percent of it is in bonds frustrates him.

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Cooper had clients who took a huge hit in the 2008 market crash, but it bounced back. In 2009, his clients didn’t call him in a panic, because they understood it was one of those 40 percent decline times.

Because people are living longer today, they need their money to last longer than previous generations. It’s a concern for many retirees.

“Most people who retire spend about 120 percent of what they used to make,” according to Cooper. “They have to have money set for them so they don’t burn through everything.”

While he previously recommended long-term care insurance, there are now only a few companies in that business and the price is “through the roof.” The life insurance industry has come up with long-term riders on life insurance policies, which are a huge help. With such hybrid policies, clients will use it one way or the other, either by having their heirs get the death benefit or having it pay for assisted living. Pension plans are less common, and 401(k)s don’t do what pensions do, but If people save, they can build up substantial monies in their 401(k)s.

“If they invested right, they can take out 5 percent in some years,” he says, advising that people should save 10 percent in their 401(k)s from the beginning, putting in as much as possible for matching.

A former policeman, Cooper has worked in the industry since 1983, and bought out the senior partner in his firm in 1989. There are ten advisors who have been with him for 1.5 to 35 years.

While the firm doesn’t have a minimum per se, he likes to see at least $500,000 from an efficiency point of view. However, he enjoys meeting someone young, fired up and going places, and help them to get started.

During the interview process, clients are asked what they want from the firm, and the answers run the gamut. Some want to call their own shots, and then there are those who want Cooper to set up everything and monitor it for them. He encourages clients to ask questions, so they don’t lose sleep over any aspect of the investment process.

For more information, visit The Master’s Financial Group, Inc.

 

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