Vol. 29, Issue 1 January 2018 Retirement WatchBOB CARLSON’S · Trusts are more important to many estate plans than they were a couple of decades ago and often now are more important

Retirement WatchBOB CARLSON’S Strategies for a Secure Future

Vol. 29, Issue 1 January 2018

Dear Reader:What do you want for your money?That should be the question at the

heart of retirement planning. In most plans, money seems to be the end product or goal. The objective often is accumulating as much money as possible or a target amount. When investments are evaluated, it often is with an eye to whether a portfolio is beating a particular index or bench-mark, or “the market.”

Focusing on dollars and percent-ages often pushes the real purpose of the plan to the background. You’re saving and investing that money for

a purpose, not as an end in itself. The purpose should be to enable you to live the retirement you want.

That’s why the first step in the retirement planning process should be to determine the life you want to live in retirement. Think about where you want to live and the standard of living you’d like. Contemplate the ac-tivities you’ll do most days. Consider what you’d like to do each week, month and year.

Only then can you start addressing the money issues. Estimate the cost of this retirement life and that estimate will let you make reasonable estimates

of how much you should save, and the investment return you need.

It takes some work to imagine your retirement and estimate the cost. Then, your goals and finances should be managed and compromised so they match. If it were easy, robots and for-mulas would get the job done.

That’s why I asked, “What do you want for your money?” What do you want to be doing in retirement and how can your finances be arranged to make that possible? The numbers and money aren’t the goals. They are the tools that make it possible to achieve your real retirement goals.

7 Big Estate Planning MistakesDoes your

estate plan contain one or more of the classic mistakes?

Experienced estate planners see certain shortcom-ings recur in a high percentage of estate plans. They know if you’ve never seen an estate planner or haven’t had a plan revised within the last three years, your plan is likely to have at least one of these costly mistakes. (Remember,

even if you haven’t seen an estate planner, you have an estate plan and it’s probably not a good one.)

Relying only on a will. A written will is an essential part of every estate plan, but it isn’t enough.

A complete estate plan includes key documents that might be needed before your passing, such as a power of attorney and advanced medical directive. These documents name one or more people to make decisions regarding your assets or medical care

when you can’t do so. Without these documents, many actions are taken only after a court appoints someone to act for you, and it could be someone you wouldn’t have selected. Or doctors take the actions they deem best, even if it’s not what you would have decided.

A will also doesn’t cover the assets that have ownership transferred by operation of law outside of the will and the probate process. These as-sets include annuities, life insurance,

(Continued on page 2)

Stretching, Protecting Your IRA . . . . . . . . . . . . . . . 4

12 Ways to Simplify Your Financial Life . . . . . . . . . 5

Working Longer Changes Retirement Strategies . . 7

A Broker Can Protect You from Financial Fraud . . 9

Will Diversification Work Again in 2018? . . . . . . 10

Some New Income Sources . . . . . . . . . . . . . . . . . . . . 11

The Power of Small Improvements . . . . . . . . . . . . 16

In This Issue

Actions to Create the Retirement You DesireJanuary 2018 2

retirement accounts (such as 401(k)s and IRAs), jointly-owned property and more. The beneficiary designations of these assets decide who inherits them, often without reference to your will.

Trusts are more important to many estate plans than they were a couple of decades ago and often now are more important than the will. You might want one or more trusts supplement-ing your will. We’ll discuss trusts in a little more detail later in this article.

Expecting too much from a power of attorney. The power of attorney (POA) is an essential estate planning document, but many people don’t know its limits.

Ideally, the agent named in your POA smoothly takes over and seam-lessly manages your affairs when you can’t and continues doing so, either until you again are able to take over or pass away.

Often, however, things don’t work that way.

It can take time and some effort to convince a financial institution to accept a POA and the designated agent. Many institutions want a copy of the POA in their files well before the agent takes authority, so lawyers or other staffers can review it. Others only accept POAs executed recently, say in the last six or 12 months. Some institutions insist that you execute their POA forms or have specific lan-guage in the POA, and others require you to re-affirm a POA periodically if

it hasn’t been used.You shouldn’t think all your work

is done and the problems are solved when you leave the lawyer’s office with a POA. There could be more work needed to ensure your affairs will be handled properly, and you should do it soon.

Not avoiding probate. When an asset passes to others through a will, it must go through the probate process. Probate can be both time-consuming and expensive. The details vary from state to state and even among localities in a state.

Many states in recent decades en-acted less expensive and more stream-lined probate, at least for estates of less-er value. But in other states, the delays and costs of the old probate process remain. In addition to being expen-sive, probate can be disruptive to the management of your assets and leave beneficiaries uncertain when their inheritances will be received and how much they’ll receive. When you own assets in more than one state, your

estate might have probate procedures in each of the states.

Probate also is a public process. Any-one can go through the probate court records to determine how much your probate estate was worth and how you divided it.

Discuss the local probate process with your estate planner so you’ll know the potential cost and time delay involved. Also, consider your privacy preferences. Then, determine how much of your estate you want to avoid probate.

Some assets avoid probate by opera-tion of law, as discussed above. Others can avoid probate by transferring them to a trust, such as a revocable living trust. The living trust is perhaps the most common way to avoid probate, and shortly we’ll discuss it in more detail.

Leaving assets outright to adult children. Many people believe trusts are needed only when minor children inherit. They understand someone needs to manage the assets and make spending decisions until the children mature. They think once children are adults, however, leaving the assets to a trust isn’t a consideration.

There are situations, however, when it makes sense to leave assets in a trust instead of outright to adult children.

There are several potential advan-tages to inheritance trusts. When children aren’t financially sophisticat-ed, the trust can provide professional

Bob Carlson’s Retirement Watch™ (ISSN 1077-3924) is edited by Robert C. Carlson and published monthly by Eagle Products, L.L.C., 300 New Jersey Ave, NW, Suite 500, Washington, D.C. 20001, Customer service: 800-552-1152. E-mail: [email protected]. Website: www.RetirementWatch.com. Subscription cost is $99 annually. Copyright 2017 by Eagle Products, L.L.C. POSTMASTER: Please send address changes to Bob Carlson’s Retirement Watch, Subscriber Services Department, P..O. Box 1901, Williamsport, PA 17701. Postage paid at periodical rates at Centreville, VA and additional mailing offices. The information in this newsletter is from sources believed reliable, but no guarantee or warranty is made as to its accuracy. The editor, owners, and publisher, as well as their clients, employees, associates and/or family may have positions in securities and instruments recommended or reviewed in this newsletter. The editor and publisher assume no liability for the reader’s use of the information contained herein. Letters and e-mail from readers are encouraged. Editor: Robert C. Carlson; Editorial Director: Paul Dykewicz; Group Publisher: Roger Michalski.

The power of attorney (POA) is an essential

estate planning document, but many people don’t know its

limits.

www.RetirementWatch.com January 2018 3

investment management. The trust also protects the assets from creditors of the children. In most states, credi-tors won’t be able to reach assets in the trust. They have claims only to income and assets distributed to the children.

The trust also can protect assets in case an adult child becomes divorced. The child’s share of the trust won’t be considered part of the marital estate in most cases, so it won’t be subject to division by a court.

When the trustee has discretion over distributions, a trust also can be help-ful should a child develop substance abuse or gambling problems. The trustee can withhold distributions un-til it is deemed in the best interests of the beneficiary, or the trustee can pay expenses on behalf of the child directly to the providers of food, housing and other essentials.

Not making full use of a living trust. The revocable living trust is extremely flexible and provides many benefits.

In the typical living trust, you and your spouse transfer the title to most of your assets to the trust and serve as co-trustees. You have full control of the assets and deal with them just as be-fore, except you act as a trustee instead of individual owner.

A successor trustee you named takes over and manages the assets when you are unable to or pass away. The transfer might be smoother than when you rely on a POA. After you pass away, the terms of the trust determine who takes over as trustee and how the assets are distributed to beneficiaries.

All the assets owned by the trust avoid probate. Also, the public doesn’t

know the details of the trust, and the cost and delay of probate are avoided.

The advantages of living trusts, how-ever, often are lost or diminished by mistakes and oversights.

A frequent mistake is for people to neglect to transfer title of assets to

their living trusts. They walk out of the estate planner’s office with the living trust agreement but don’t do the work of transferring legal title to real estate, vehicles, financial accounts and other assets to the trust.

The result is an unfunded trust, of which there are many around the country. The POA must be used to manage assets when the owner isn’t able to, because the trust doesn't have control over them. When the owner passes away, most of the assets go through probate, because title wasn’t transferred to the living trust.

You can combine a living trust with a “pour-over will” to increase priva-cy. The will can state that any assets in the probate estate are transferred to the living trust and distributed to beneficiaries according to the terms of the trust. The assets still have to go through probate, but the public doesn’t know how they are

distributed. The assets also can avoid the creditors and any divorce pro-ceedings of the beneficiaries.

Losing the portability of a spouse’s unused exemption. Since 2010, the portability rule allows any unused lifetime estate and gift tax exemption of a deceased spouse to be transferred to the surviving spouse, ensuring it isn’t lost. After inflation indexing, the joint exemption is $11.2 million ($5.6 million for each spouse) in 2018.

Unfortunately, the portability of the exemption isn’t automatic. The trans-fer of the unused exemption amount happens only if an estate tax return is filed for the first estate. Very few estates are required to file returns because of the high exempt amount. Each time an estate tax return is filed, the unused exemptions aren’t transferred to the sur-viving spouse. Executors and surviving spouses need to know that an estate tax return should be filed, even when not required, to transfer the unused exempt amount to the surviving spouse.

Leaving a messy estate. Once you’re past the accumulation years, it’s a good idea to organize and streamline your estate. Otherwise, assets are likely to be lost or misplaced. If your executor and heirs don’t know what you own, they won’t look for the paperwork. Even if your heirs locate and claim all your assets, they might have to spend a lot of resources in the effort if you haven’t streamlined and cleaned up the estate.

Most financial services firms have accounts whose owners they haven’t heard from for years. Often, these accounts are transferred to the state, a process known as escheat. It’s easier for

There are situations, however, when it

makes sense to leave assets in a trust instead

of outright to adult children.


you than your heirs to prove ownership, so you should check to see if any of your assets have been escheated.

You should consolidate financial accounts. Consider selling smaller

investments and real estate holdings to streamline the estate. Have your paperwork organized and easy to find. Leave your executor and heirs a roadmap to your estate. You can do

this by using my workbook, “To My Heirs: A Book of Final Wishes and Instructions.” It’s available for $24.99 through the Bob’s Library tab on the web site.

Stretching, Protecting Your IRA with a Charitable TrustThe number of

people naming charitable trusts as IRA benefi-ciaries is climb-ing, and for

good reasons.Typically, IRA beneficiaries are

individuals, often the surviving spouse or the adult children of the owner. The goal often is to create a Stretch IRA, with the beneficiary taking only required minimum distributions (RMDs) each year so the tax-deferred compounding of income and gains increases the IRA’s long-term value.

Yet, naming individuals as beneficia-ries has risks.

Beneficiaries that strive to have Stretch IRAs often fall into the many traps in the tax law or make other mistakes, trigger-ing unnecessary taxes and sometimes penalties. We’ve discussed these traps and mistakes in the past, such as in the September 2016 issue.

Beneficiaries also might waste the assets, invest them poorly, or spend down IRAs quickly. One way to avoid these problems is to name a trust as IRA beneficiary, but that has difficulties of its own. See our April 2017 issue for details.

Sometimes there’s hesitation to name a spouse as IRA beneficiary when an IRA owner or the owner’s spouse had

more than one marriage. The situation creates uncertainty about who will re-ceive the IRA balance after the surviving spouse passes away.

Another potential problem is the war on the Stretch IRA. In recent years, there has been a bipartisan effort in Washington to require beneficiaries to empty and pay taxes on an inherited traditional IRA within five years, there-by eliminating the Stretch IRA. The change hasn’t become law, but it could happen at any time.

You can overcome many of these prob-lems, provide for your heirs and help a charity by naming a charitable remain-der trust (CRT) as the IRA beneficiary.

The CRT strategy is very flexible, but here’s an example of a typical use.

Max Profits is a widower in his 80s who has a $1 million traditional IRA and several adult children. The children are in their 50s and 60s. He names a CRT as beneficiary of the IRA. Af-ter Max passes away, the IRA will be distributed to the CRT, and the trust will distribute to the children each year a fixed percentage of its value for the rest of their lives. After the children pass away, the remainder in the trust will go to a charity or charities designated by the parent when he created the trust.

When Max dies, the IRA will be included in his gross estate for estate tax

purposes. The estate receives a charitable contribution deduction for distributing the IRA to the CRT. The deduction should be a large percentage of the IRA’s value, though the amount will depend on current interest rates and the ages of the children. For example, if the bene-ficiary is age 60 today and is to receive distributions for life, the tax deduction would be around $190,000 if the IRA were valued at $500,000.

There will be no income taxes when the IRA is distributed to the CRT, because it is a charitable trust. The CRT isn’t taxed on the income and gains it earns. The children likely will owe taxes on distributions to them from the CRT, which also would be the case with IRA distributions.

Max could set up a separate CRT for each child to avoid conflicts and allow the charities to receive contributions as each child passes away.

If Max were married, his surviving spouse, Rosie, could be the CRT benefi-ciary. Max can decide if the CRT should continue to pay income to the children after Rosie passes away or if the remainder should go to charity at that point.

Some wealthy people set up CRTs with a relatively small portion of their estates to eventually benefit charity and to supplement the incomes of less-wealthy siblings or even aging parents.


As I wrote, there’s a lot of flexibility in the strategy.

In the example in the chart, an IRA worth $500,000 is distributed to a CRT when the beneficiary is age 60. The CRT will distribute 5% of its value to the beneficiary each year. The chart shows that if the CRT earns 7.62% annually on its investments, both the annual distribution and the amount eventually left to charity increase over time.

The CRT should avoid future attacks on the Stretch IRA, yet it provides the tax deferral and many of the other ben-efits of a Stretch IRA. The CRT-as-ben-eficiary strategy also overcomes many of the problems discussed earlier with naming individuals as beneficiaries.

The IRS sets a maximum annual payout for the CRT to make it likely the charity will receive a minimum per-centage of the initial CRT balance. The maximum payout depends on several factors but usually is 4% to 7% of the trust value. That means if you leave a $1 million IRA, the beneficiary can receive at least $40,000 the first year. After the

first year, the income will depend on the value of the CRT.

An IRA beneficiary who invested well and withdraws only the required minimum distribution (RMD) each year probably would receive more over a lifetime by inheriting the IRA than through the CRT. But that assumes two pretty big “ifs” that won’t be true in many cases. Also, if one of your goals is to benefit charity, naming the CRT as IRA beneficiary is a good strategy to both provide secure lifetime income for your beneficiaries and to help charity.

Many charities, including universities,

now will invest and administer a CRT without charge. The minimum trust size usually is $100,000. The trust balance is commingled and invested with the rest of the charity’s endowment or invest-ment assets.

If you’d like a quick estimate of how a CRT might work for you, visit the web-site of one of my alma maters, Clemson University. Go to www.clemsongiving.org and click on “Planned Gifts Calcula-tor.” On the next page, click on Unitrust. Follow the directions on the following page to see your estimate.

12 Ways to Simplify Your Financial LifeMost people’s

finances are too complicated. That’s not good.

I’ve found that complicated

finances lead to procrastination and stress. Too much time is spent simply organizing papers and data to figure out where things stand. By then, people are too exhausted to make decisions or

implement changes.If that sounds like your situation, take

some time to simplify your financial

life. In addition to reducing procras-tination and stress, you’re likely to re-duce costs and increase your financial security and independence.

Many financial services firms don’t make it easy to simplify your financial life. They know that most people are busy with other things, so the firms make the process take just enough time and effort to maintain the natural inertia. But the benefits make it worthwhile to persist.

Make one of your goals this year to

start simplifying your financial life.

$300,000

$500,000

1 5 9 13 17 21 25

$600,000

$700,000

$800,000

$900,000

$400,000

$20,000

$30,000

$35,000

$35,000

$40,000

$45,000

$25,000

Annual DistributionRight Axis

CRT ValueLeft Axis


Make it one of your goals this year to start simplifying your financial life.

Be realistic about the process. Accept that it will take time to have everything done. Make a list of the changes you need to make. Then, do some prelimi-nary research to determine exactly what steps must be taken to meet the goals. To reach this point, you probably have to organize information and documents about your current situation, and then research alternatives. Finally, list the specific tasks that need to be done and establish a plan for accomplishing them during the year.

Some simple tasks you can do during relatively short periods each week. For more involved tasks, you might need to set aside a half day or more at different times during the year. It’s often a good idea to set aside a “financial health day” one or more times during the year to knock out either a block of some of the smaller tasks or a major one.

Here are the areas I find most people need to simplify, improve and refine. Your areas of need might be different, but this list should generate some good ideas.

Bank and financial accounts. Most people have too many accounts and too many investments. Often, they pur-chased mutual funds and opened ac-counts over the years for good reasons but didn’t monitor them. Now, they have multiple accounts and funds. Not only are their finances unnecessarily complicated, but they’re missing oppor-tunities to reduce or eliminate fees.

I’m a big advocate of consolidating accounts at one or two firms. It makes decisions and executing them easier and often reduces fees. For example, if

your checking account is at the bank that holds your mortgage, the check-ing account should be free with no or a very low minimum balance. If you have most of your IRAs and investment accounts at one discount broker, you should have free checking, no annual account fees and other benefits. You also should be able to link accounts so

that if you go to the website, you can log in once and see an overview of all your accounts at the firm. You shouldn’t have to log in to each account separately.

Even if your accounts are fairly well-organized, every few years you should survey what’s available. Remem-ber, financial firms count on inertia. They often offer good deals to entice customers, then over time either reduce the benefits or don’t keep up with what others are offering. Ask your current firm if you can get better terms, and then see what others offer.

Reevaluate and shop for insurance. Most people could improve their insur-ance. The coverage isn’t optimum, and they’re paying too much for the cover-age they receive.

In past issues, I made recommen-dations for improving your insurance coverage. Check the August 2015 and May 2013 issues for details about insur-ing your home, autos, personal liability and more.

After deciding how to change your coverage terms, compare premiums from different insurers for that cover-age. This can take some time, because I haven’t discovered good websites where you can compare premiums for most types of coverage. Instead, you have to visit web sites of different insurers and contact local agents to receive quotes.

This can be time-consuming, but many people find it pays off with either significant reductions in premiums or improvements in coverage.

Before choosing new coverage, be sure you’re comparing apples to apples. Each quote should have the same cover-age limits, exclusions, coinsurance and deductibles.

Manage credit cards. Payment cards have gone through a lot of upheaval since the financial crisis and enactment of the Dodd-Frank financial services reform. For example, the rewards programs for debit cards generally were scaled back or eliminated, while credit card rewards programs have improved.

Study the rewards programs for your current cards. Then, manage your spend-ing and finances to maximize the benefits.

For example, some cards give higher rewards for certain types of spending (gasoline, restaurants, etc.) and most place an annual limit on the amount of rewards. One option is to use each card for the purchases for which it provides maximum benefits. Another approach is to use the card with the most generous rewards exclusively until you’ve earned the maximum reward points for the year, and then switch to another card.

It also is a good idea to compare the rewards points you earn from a card to

I’m a big advocate of consolidating accounts

at one or two firms.


its annual fee or other costs. Be sure the rewards you receive exceed any costs.

If you’re ambitious, survey the cards available and consider changing to the one that’s best for you. Some cards with annual fees can be good for people who charge a lot to the card, especially those who travel frequently, because those cards tend to offer greater rewards and other benefits. People who charge less to their cards, however, often are better off with no-fee cards that have less gen-erous rewards and benefits.

Refinancing loans. Take some time to ensure you’re receiving the best deal on your loans, especially first mortgages and home equity loans. You might be able to refinance to lock in a lower rate or a different loan term. The easy way to do this is to discuss options with your current lenders. If that doesn’t deliver a

better deal, contact other lenders to find the best deal for you.

Automating your finances. Tech-nology can simplify your financial life. There are many ways to automate saving, investing and paying bills. For example, recurring bills automatically can be charged to payment cards or deducted from financial accounts. You avoid late payments and check printing costs, plus you save time. You have more time to analyze and manage your finances and spend less time doing simple tasks.

Automating bill payments also can make it easier to see how much you’re spending and where the money is going. Visit your bank account on the web and see where the money is going. You also might be able to download the data into an accounting program, such as Quicken, where you can analyze the

spending over time.Of course, there almost always are

actions to take on your estate planning and tax planning or restructuring your investments. We discuss these topics every month and supply plenty of ideas and recommendations. You also might work on some retirement plan matters, such as when to begin Social Security benefits, how much to withdraw from your nest egg each year and the order to draw down different financial accounts.

These are the main areas most people need to work on to simplify their finan-cial lives. You might identify other areas that need improvement. What’s import-ant is that you identify areas to work on and begin simplifying and improving your financial life.

How Working Longer Changes Retirement StrategiesMore and

more Americans remain in the work force after age 65.

Some people need the money or don’t want to walk away from the salaries they’re making. Others aren’t ready to leave the structure and activity of the work place. Many people haven’t found other activities that will give meaning and purpose to their lives, so they keep working. There are plenty of other reasons people keep working past normal retirement age.

Those who keep working past tradi-tional retirement age should consider some actions to optimize their plans.

• Establish a path to eventual retirement. Set a target date for retirement. Decide whether it is a hard date, meaning you’ll stop working altogether, or a soft date after which you’ll work less than a

full schedule. Some people don't retire because they don’t know what they’ll do in retirement. They need

to use the additional working years to consider how to spend time after stopping work. Consider activities that interest you and will provide a sense of purpose.

Of course, you don’t have to fully retire. Unless an employer is going to force you out at a certain age, you can decide to “die with your boots on.” Self-employed individuals and profes-sionals are those most likely to never fully retire, if health permits. It is okay to make that your plan, but have a backup strategy in case circumstances force you to stop working.

• Decide when to draw down the nest egg. Some people start to spend some of their nest egg during their last working years. They take more

Those who keep working past traditional retirement age should consider some actions to optimize their plans.


expensive vacations, for example. But if you aren’t confident about being financially secure for retirement, defer the nest egg draw down for a few more years. Waiting a few years can sub-stantially increase retirement financial security.

• Continue saving. A few more years of contributions to a 401(k) or IRA can significantly enhance retirement finan-cial security. That’s especially true if an employer matches 401(k) contributions. You might want to forego the current tax breaks and make contributions to a Roth 401(k) or IRA, ensuring tax-free income in retirement.

• Defer IRA conversions and 401(k) rollovers. When you’re still working, you might not want to convert a traditional IRA to a Roth IRA. The converted amount must be included in gross income and could push you into a higher tax bracket. An IRA conversion might be less expen-sive in the years after retirement be-gins, because you might be in a lower tax bracket. As we’ve discussed in the past, you have to crunch the numbers for your situation to determine the best time to convert an IRA.

You probably can roll over your 401(k) to an IRA anytime after age 59½, even if you continue working. But required minimum distributions (RMDs) have to be taken after age 70½ from a traditional IRA, even if you still are working. RMDs, however, don’t have to be taken from a 401(k) when you’re still working for that em-ployer, unless you’re a 5% or greater owner. Keeping the money in a 401(k) allows you to continue the deferral.

In fact, you might consider rolling a traditional IRA into your 401(k) plan if your employer plan allows such roll-overs. Then, you avoid RMDs as long as you’re working.

• Review Social Security and Medicare strategies. You probably want to delay Social Security retire-ment benefits until at least full re-tirement age. That’s partly to let the

benefit increase and partly because, if you begin benefits early, some or all of the benefits will be reduced when your earned income exceeds the limits.

The earnings limit for 2017 was $16,920 for years before you reach full retirement age. For every two dollars earned above the limit, your benefits are reduced by one dollar. In the year you reach full retirement age, the earnings limit increases to $44,880 and benefits are reduced one dollar for each three dollars earned above the limit before your birthday month. The limit applies only to earned income, not to other income such as invest-ments and pensions.

There is no reduction of Social Secu-rity benefits because of earned income once you reach full retirement age.

The reduction in benefits is really only a deferral. It’s likely that the additional

working income increases your Social Security benefit in the future.

You might need to enroll in Medi-care at age 65 to avoid a lifetime penal-ty for late enrollment. Some employer medical plans qualify you to delay Medicare enrollment without penalty. But if your employer has 20 or fewer employers or you’re self-employed, you probably don’t qualify to delay Medicare. Check with your health in-surer or human resources department to determine if you should enroll in Medicare. See our November 2014 issue for details about when to enroll in Medicare.

• Pay down debt. Those additional working years should be used to re-duce or eliminate any debts you have. Being debt-free in retirement gives you much more flexibility in your spending plan and reduces stress.

• Practice retirement. Many people need time to adjust to retirement. Working past traditional retirement age gives you an opportunity to men-tally and emotionally adjust to the next stage of life.

You can ease the transition by practicing retirement while working, or what I call a retirement intern-ship. You try to live on your expected retirement spending for at least a few months in a row to see if it is comfort-able. You also should spend more time in the activities you expect to take up in retirement. Some people take longer vacations in the years before retirement and spend them primarily on their retirement activities. Details and other suggestions are in our February 2016 issue.

A few more years of contributions to a 401(k) or IRA can significantly

enhance retirement financial security.


How a Broker Can Protect You from Financial FraudA broker or

financial adviser can save you from scams or financial abuse.

That goes counter to what many people think. They believe that Wall Street and the fi-nancial services industry exist primarily to siphon money from people through high fees, excess trading, complicated products and other means. But a signif-icant segment of the financial world is working to protect older investors from being abused or conned, and new rules are helping the change.

The shift began a few years ago when financial regulators decided to focus on providing more protection for the many Americans who are living into their advanced years. Studies and data made it clear that this is the group most likely to be targeted for and victimized by scams and that there weren’t adequate protections and forms of redress.

In the past, financial profession-als generally were not proactively defending clients from scams and financial abuse. It often was consid-ered a violation of a person’s privacy for a firm to identify investments and financial transactions that should be questioned. Firms also didn’t want to insult older clients by second-guess-ing their decisions.

But regulators determined that bro-kers and other financial professionals are the first and best line of defense for many seniors. New rules issued in 2015

make it easier for financial firms to pro-tect seniors, and regulators encouraged firms to put protections in place.

One of the new rules encourages brokers and other financial custodians to ask account holders to identify one or more “trusted contacts” who can be alerted when the firm thinks there is a suspicious transaction or series of trans-actions or is concerned about cognitive decline in the client.

In addition, firms can place tempo-rary holds on disbursements of funds or securities from accounts when they have a reasonable belief financial exploitation might be occurring. Many firms now have in place technology and procedures that identify older clients and alert the firm to any unusual transactions.

Financial firms aren’t required to do this monitoring or take any actions. The rules provide safe harbors, so firms can act to protect clients without fear of adverse legal consequences.

Now, about 90% of brokers have a dedicated team or process for ad-dressing senior issues. About 95% of firms provide employees some type of training related to senior issues, such as how to recognize signs of elder financial abuse. And 94% have a pro-cess for employees to report concerns that a client has diminished capac-ity or is subject to financial abuse, according to a recent survey by the North American Securities Adminis-trators Association (NASAA).

These practices and rules don’t apply to only full-service brokerage firms. Many discount brokers have protections

in place for seniors, as do many mutual fund firms.

The Financial Industry Regulato-ry Authority (FINRA) also estab-lished a toll-free senior help line (844-57-HELPS) that seniors, or anyone concerned about a senior, can call with concerns about finan-cial accounts. FINRA has dedicated employees who answer the calls and will initiate action when transactions raise concerns.

The NASAA said that in 2015, 61 broker-dealers reported more than 2,300 cases of suspected senior-related fraud to authorities. About 45% of the cases involved clients ages 81-90. Many of the cases were of guardian abuse, so 62% of the cases were reported to adult protective services.

More than half of the cases were at-tempts by family members or third par-ties to access accounts or other funds of the clients. In some cases, an attempt is made to change the beneficiary of a client’s IRA or other accounts.

It is established that cognitive ability declines after age 35 or so, and seniors are more trusting than other generations. We all need safe-guards against fraud and financial abuse as we age. You should care-fully consider whom to designate as your trusted contacts with your financial firms. Also, ask your bro-ker and other financial firms which policies and procedures they have in place to limit the probability you’ll be harmed by a scam or financial abuse.

Investment Recommendations and PorfoliosJanuary 2018 10

Will Diversification Work Again in 2018? Diversification

paid big divi-dends in 2017, but not in the last month or so.

For most of 2017, we benefitted from having an array of different investments in our portfolios: U.S. stocks, international stocks (both developed and emerging market stocks), commodities, gold and more. The non-U.S. stocks delivered for us.

That changed as the year closed.U.S. stocks surged in the last four

months of the year and shot ahead of all other investments as the year closed. International stocks began a correction in late November, and emerging market stocks led the way down. Commodities and gold also declined beginning in No-vember. Non-U.S. stocks still have very strong returns for the year, but they gave up some of those gains as the year closed.

U.S. stocks certainly grabbed the mo-mentum. The late-year rally propelled the major indexes to a series of records, with the Dow Jones Industrial Average setting a record high at least 64 times during the year. In addition, the major indexes either set or were very close to records for the longest periods without price declines of at least 3%, 5%, 10%, or 20%.

Strong positive momentum in the

markets is a two-edged sword. Mo-mentum can feed on itself. New record highs often are followed by a series of even more records, as happened in 2017. But momentum also can push prices to unsustainable levels and eventually lead to sharp corrections.

It is understandable that the late-2017 surge gives some investors pause. By most of the measures that are used to evaluate the health of markets, U.S. stocks are overbought, and many are extremely overbought. This is true of the major market indexes, the sector indexes and most individual stocks.

The overbought condition means U.S. stocks are likely to pause or even have their first real correction since early 2016. But that doesn’t mean it’s time to sell.

As always, we exam-ine the factors that really matter to the markets and ignore short-term noise and market changes. As I said in the December Retirement Watch Spotlight Series online webinar, we assess both the underlying fundamentals and the market trends.

Most important is that none of the re-liable early warning signs of recession are raising concern. Despite some tightening by central banks, there’s a lot of liquid-ity in the world. Support for continued growth comes from low interest rates, rising asset prices and availability of credit. Central banks are changing policy very cautiously. Inflation remains below their targets, so central banks aren’t likely to tighten monetary policies more

Investment Recommendations

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rapidly than markets expect. Momentum, as mentioned, is very

strong. The major indexes are above their moving averages and the moving average lines are sloping upward.

We’ve seen these corrections, especially in the emerging market stocks, in this international stock bull market. The long-term case for owning international stocks remains in place. International stocks

continue to have lower valuations and higher margins of safety than U.S. stocks.

International economies also are much earlier in their business cycles than the United States, giving overseas earnings more room to grow. Market prices un-derstate the strength of overseas econo-mies and the potential for higher profits.

Commodities also should benefit from this global growth. In fact, commodities

have barely started to recover from their bear market that ended in 2016. Commodities usually do best late in the business cycle and early in recessions, so the rally should be just beginning.

While diversification didn’t provide much benefit in the last month or so, it did for much of 2017 and should again in 2018.

Established Growth Favorites and Some New Income SourcesIt is time to

make some changes in our Retirement Paycheck portfolio, so

we’ll begin with it this month.This portfolio was created to provide

higher income than is available from the traditional retirement income investments without taking the risks of yield hogs who reach for double-dig-it-percentage yields. We aim for a yield well above the 10-year treasury yield, and want to earn some capital gains.

We hold non-traditional investments, such as preferred stock, high-yield bonds, closed-end funds, master limit-ed partnerships and more. We don’t buy and hold. We buy or add to positions in an investment when prices seem low, and sell or reduce positions when prices seem too high.

With central banks starting to tighten policy while interest rates still are low, we have to avoid fixed-income invest-ments that lose value when rates rise. We probably reached the bottom of the long-term bond bull market in July 2016. I think in 2018 interest rates will

rise more than markets anticipate.Let’s start with some positions I rec-

ommend adding to the portfolio.There are a few high-yield stocks

worth buying. These stocks didn’t participate in

much of the 2017 stock market rally. Each is a good value, has attractive PORTFOLIO

Sector Portfolio Fund Allocation Ticker 4-Wk Return Add New

Cash?

DoubleLine Floating Rate 15.0% DBFRX 0.23% Yes

Cohen & Steers Realty Shares 10.0% CSRSX -0.91% Yes

Mairs & Power Growth 14.5% MPGFX 3.39% Yes

DoubleLine Emerging Mkts FI 9.0% DBLEX -0.22% Yes

Price Latin America 9.0% PRLAX -2.20% Yes

WCM Focused International Growth 32.5% WCMRX -0.31% Yes

iShares Gold Trust 5.0% IAU -2.60% Yes

iShares Commodities Select Strategy 5.0% COMT -1.06% Yes

*Returns are as of December 8, 2017

Most of the funds in the portfolio lost value in the last four weeks. The losses were modest, however, and there's no resaon to change the portfolio at this time. Hold all positions.

Balanced PortfolioFund Allocation Ticker 4-Wk

ReturnAdd New

Cash?DoubleLine Floating Rate 20.0% DBFRX 0.23% Yes




Price Latin America 8.0% PRLAX -2.20% Yes





There are no changes to make in the portfolio this month. This was our worst month in a while, but it's to be expected after a year of strong returns. Hold all positions.


prospects for the next year or more, sports a high dividend yield and has a history of increasing dividends.

In the last five years, International Business Machines (IBM) delivered a negative total return, while the S&P 500 returned more than 130%.

Revenue declined for years because it shed non-strategic businesses and lost share to competitors in other business-es. But revenue overall is stabilizing, and the company is increasing in its strate-gic businesses. The company is deliver-ing breakthroughs in cloud computing, computer hardware, servers and other areas after years of investing heavily.

The dividend yield currently is 3.89%. The stock shot up a bit in November af-ter a positive article in Barron’s, but gave back some of those gains. It’s a good deal near the recent price of $155.

I’m also recommending a couple of telecommunications stocks. Telecom-munications stocks lost value in 2017. The stocks started to increase late in the year as investors noticed the bargains. Also, telecom companies are likely to be major beneficiaries of any tax reform.

Verizon (VZ) is known for its wireless network, all-fiber network and various business services. It has had fairly steady revenue, earnings and cash flow growth in recent years. The current yield is 4.67%. The stock is down about 7% for 2017 but is above its low of the year.

AT&T (T) is not the old telephone monopoly where my father worked. Today, it offers a wireless network and a high-speed internet network, as well as a range of business technology services.

It is expanding in Latin America. The dividend regularly increases each quarter

and the current yield is 5.34%. The stock is down about 15% in 2017 but is above the lows reached in early November.

Buy either of these telecom stocks at current prices.

If you don’t want to buy individual stocks, you can buy the exchange-trad-ed fund iShares U.S. Telecommunica-tions (IYZ). Its current yield is 4.23%. It’s down about 15% for 2017 but above its lows. Verizon and AT&T are the top holdings, together making up more than 23% of the fund.

We’ll make room for these stocks by reducing our position in DoubleLine Floating Rate (DBFRX).

The fund yields 3.91%. It is up 0.23% in the last four weeks and 3.51% for the year to date.

DBFRX owns primarily bank loans to companies. The yields on the loans change with a published interest rate, such as LIBOR. This means, unlike tra-ditional fixed-rate bond funds, DBFRX is unlikely to lose value when interest rates rise. It can lose value if there’s a liquidity crunch or concerns about the financial security of the borrowers.

Floating-rate debt and bank loans have attracted a lot of attention from

investors over the last year. We’re unlikely to earn more than the yield, so I think this is a good time to move money to the other opportunities.

We added master limited partnerships (MLPs) in the summer of 2016 through JPMorgan Alerian MLP ETN (AMJ). MLPs looked cheap in 2016 and rallied soon after our purchase. But they’ve been sliding since early 2017.

Tax-loss selling and fears about the consequences of tax reform contributed to some of the decline in late 2017.

The rest of the weakness was due to carryover effects of the 2014-2016 bear market. Key MLPs announced struc-tural changes and reductions in future distributions to investors. Though positive for the long term, these moves hurt prices in the short term.

I’m expecting stability and then some growth from MLPs in 2018. MLPs tried to deliver all the bad news in 2017, and there’s insider buying at the recent low prices.

AMJ recently was yielding 7.15%. It lost 1.74% in the last four weeks and is down 10.73% for the year to date.

It was another month of mixed news from DoubleLine Income

Income Growth Portfolio Fund Allocation Ticker 4-Wk

Return Add New Cash?

DoubleLine Floating Rate 26.0% DBFRX 0.23% Yes





JPMorgan Alerian MLP ETN 7.0% AMJ -1.74% Yes




I recommend holding all positions. Most of the investments declined for the month, the first time in a long time that's happened. But there's no reason to make changes.


Solutions (DSL). The negative news is that the closed-

end fund declined 1.82% in the last four weeks and has a 1.04% negative return for the last three months. The fund still is up 15.33% for the year to date and yields 8.92%.

The good news is that the net asset value (NAV) of the fund increased again. Investors are selling, though the fund’s investments are doing well.

We first purchased DSL when it trad-ed at about an 8% discount to its NAV. The discount shrank during the year as investors were attracted to its strong

returns. The discount was less than 3% for a while. In the last couple of months, that trend reversed. The discount is back to over 7%.

That makes me much more com-fortable holding DSL. The fund is well-positioned for this interest-rate environment. It holds mostly emerging market and high-yield bonds with low durations. It has about 27% leverage.

SECTOR, BALANCED AND INCOME GROWTH PORTFOLIOS

In all the portfolios, we own

DoubleLine Emerging Markets Fixed Income (DBLEX).

Unlike most other emerging market bond funds, it focuses on safety of prin-cipal ahead of high yield. The fund also continues to avoid currency risk, investing only in bonds denominated in dollars.

When we first invested in DBLEX, it owned primarily bonds of Latin Amer-ican issuers and almost no bonds issued by sovereign countries. Now, sovereign bonds are about 27% of the portfolio. Corporate bonds are over 46% of the fund and quasi-sovereign bonds are another 23%. The top industries of the issuers are banking, oil & gas, telecom-munications and transportation.

The fund also has diversified out of Latin America. The top countries of the issuers are Chile, India, Singapore, Panama and Malaysia.

The yield is 2.67%. DBLEX declined 0.22% in the last four weeks and has returned 8.56% so far in 2017.

There was a wide range of returns in the portfolios in the last four weeks. As mentioned in Market Watch, internation-al stocks retreated from their 2017 highs.

True Diversification PortfolioFund Ticker Alloc. 3 mos. 1-Yr. 3-Yr. 5-Yr. 10-Yr.Total Portfolio 100% 2.55 10.94 4.17 4.82 4.04

Plus or minus S&P 500 -5.10 -11.93 -6.68 -11.03 -3.84

Price Capital Appreciation PRWCX 11% 3.64 15.51 9.60 12.79 8.86

Price HY PRHYX 11% 0.74 7.76 5.62 5.84 7.28

FPA Crescent FPACX 18% 4.16 8.63 5.74 9.22 7.14

PIMCO All Assets All Auth* PAUDX 10% -1.10 9.95 2.24 0.14 3.88

Berwyn Income BERIX 13% 1.26 2.62 2.81 5.60 6.40

Cohen & Steers Realty Sh CSRSX 5% 0.88 8.30 6.28 10.18 7.05

PIMCO Real Return** PRRDX 5% -0.59 2.74 1.20 -0.75 3.56

Oakmark** OAKMX 5% 8.73 18.26 10.86 16.17 10.36

William Blair Macro Alloc*** WMCNX 12% 0.93 5.46 -0.40 3.59 n/a

Leuthold Core Investment**** LCORX 10% 5.53 13.68 6.26 9.24 4.29

Returns longer than one year are annualized. *Added to the portfolio in February 2012 issue. **Added in the December 2014 issue. ***Added in the September 2015 issue. ****Replaced MainStay Marketfield in the June 2016 issue. Portfolio returns are as of November 30, 2017. Fund returns are as of December 8, 2017. N/A=Not Applicable.

Retirement Paycheck Portfolio

Fund Ticker Allocation12-mo. Yield

Add New Cash?

DoubleLine Floating Rate DBFRX 35.0% 3.91% Yes

IBM IBM 5.0% 3.89% Yes

Verizon VZ 5.0% 4.67% Yes

AT&T T 5.0% 5.34% Yes

DoubleLine Emerging Mkts FI DBLEX 20.0% 2.67% Yes

DoubleLine Income Solutions DSL 15.0% 8.91% Yes

JPMorgan Alerian MLP ETN AMJ 15.0% 7.15% No


I recommend reducing our position in DoubleLine Floating Rate and to invest the money in three high-yielding stocks, International Business Machines, Verizon and AT&T. Hold all other positions.


Latin American stocks were the first to lose ground. We’ve owned them through T. Rowe Price Latin America (PRLAX) since early 2016. It has been a bumpy ride with several sharp drops along the way.

The fund reached a high in early Octo-ber and has been bouncing up and down since. It’s down 2.20% in the last four weeks but still is up 26.08% for the year to date. It’s up more than 50% from its 2016 low.

Latin American stocks were due for a pause after their strong returns. Brazil-ian political scandals are behind most of the recent decline. The economy is doing well, but there still are a number of imbalances that need to be worked out following the worst recession in the country’s modern history that ended in 2016. The biggest risk is that the

political scandals prevent policymakers from taking necessary actions, so I’m watching the region closely.

There has been less drama in WCM Focused International Growth (WCMRX).

The fund looks for a few premier growth companies around the globe no

matter where they’re based. It doesn’t try to follow an index. The fund invests in companies with quality management, low or little debt, barriers to competition and that benefit from strong global trends.

Only a few companies meet the fund’s criteria, and it tends to hold their stocks for about five years. The fund recently

One-Stop Recommended PortfoliosAlternative Funds

RW Recommended Fund NTF Funds* ETFs Fidelity Price Vanguard

DoubleLine Floating RateDoubleLine Floating Rate N

First Trust Senior LoanFloating Rate HI

Floating Rate N/A

Cohen & Steers Realty Shares

Cohen & Steers Realty Shares

iShares C&S REIT Real Estate Inv Real Estate REIT Index

Mairs & Power Growth Mairs & Power Growth Vanguard Dividend Appr. Equity Income Equity Income Equity Income

DoubleLine Em Mkts Fixed Inc

DoubleLine Em Mkts Fixed Inc

iShares EM Corp BondNew Markets Inc

EMkts Corp Bond

Em Markets Gov't Bond

Price Latin America Price Latin America iShares Latin American 40 Latin America Latin AmericaEmerging Markets Stock

WCM Focused Int'l GrowthWCM Focused International Growth

iShares MSCI ACWI Global Equity Europe Europe

JPMorgan Alerian MLP ETN N/A JPMorgan Alerian MLP ETN Select Energy New Era Energy

iShares Gold Trust N/A iShares Gold Trust N/A N/A N/A

iShares Commod. Select Strategy

BlackRock Commodity Strat

iShares Commod. Select Strategy

Commodity Strategy

New Era N/A

IBM, Verizon, AT&T N/A iShares Telecomm (IYZ)Select Telecomm

Media & Telecom

N/A

DoubleLine Income Solutions N/A N/A N/A N/A N/A

*Not all NTF funds listed are available from all the NTF programs. Some are more restrictive than others, and some funds do not want to be available on all the NTF programs.

Simplify your investment life and probably improve returns for concentrating your investments at one or two mutual fund firms or brokers. It will be easier to track and manage your portfolio. The One-Stop Portfolios let you follow our margin-of-safety investment approach at the major fund companies and No Transaction Fee (NTF) broker programs. There is not always a good alternative to one of my recommended funds. Those cases are indicated by "N/A" in the table. In those cases, consider paying a fee to invest in my recommended fund or opening an account directly in that fund.

Portfolio PerformanceSector Balanced Income

GrowthRetirement Paycheck IWW ETFs

One Month 0.78% 0.93% 1.00% -0.48% -4.01%Year to Date 16.11% 17.42% 11.47% 3.41% -5.16%Last 12 Months 16.78% 18.14% 12.43% 4.76% -5.26%3 Years* 6.57% 5.57% 4.05% 5.47% -9.17%5 Years* 4.97% 4.06% 3.19% 5.86% -6.42%10 Years* 3.05% 2.20% 3.28% N/A 0.50%Compound Return 389.39% 346.32% 64.36% 70.15% 51.15%

*Annualized. Returns are as of November 30, 2017. The Income Growth Portfolio was begun in July 2001. The Retirement Paycheck Portfolio began December 2010. The IWW-ETF Portfolio began December 2005. Other portfolios began January 1995.Most of the strategies had a positive November. Retirement Paycheck slid a little. But that's good, considering that November was a tough month for income investments. The new IWW-ETF strategy has struggled for three consecutive months, but I'm hopeful that it will reverse course soon.


owned 33 stocks, and its turnover was 21%. The 10 largest positions take up 39% of the fund. Top holdings recently were CSL, Tencent Holdings, Chubb, Reckitt Benckiser Group and Nestle. The fund lost 0.31% in the last four weeks but has returned 28.55% so far in 2017.

We own U.S. stocks through Mairs & Power Growth (MPGFX), which has beaten the indexes over the long term. The fund is up 3.39% for the last four weeks and 15.28% for the year to date.

This is another fund that owns a select few stocks and holds them for a long time. The fund recently owned 51 stocks, and the 10 largest positions were 38% of the fund. Turnover is only 11%, and many of the stocks in the fund were purchased before 2000.

MPGFX is based in Minnesota and invests primarily in Midwest-based companies. It can invest in any size company, but most of the holdings tend to be larger, growing companies. The top holdings recently were Ecolab, U.S. Bancorp, Honeywell International, Graco and 3M.

Real estate investment trusts (REITs) had a tough time in 2016, so we pur-chased them late in the year through Cohen & Steers Realty Shares (CSRSX). Since then, they’ve delivered positive returns with some volatility. The fund is down 0.91% for the last month but up 6.79% for the year to date.

This should be a good environment for commercial real estate. Solid economic growth without a lot of speculative build-ing should result in steady declines in vacancy rates and increases in rents.

CSRSX was the first fund to focus on REITs and still is among the top

performers in the sector. Its focus is on REITs with high-quality management and properties.

Recently, top sectors in the fund were apartments, offices, data centers, health care and regional malls. Top holdings were Equinix, Simon Property Group, UDR, Digital Realty Trust and Prologis.

Commodities gave up some gains in the last four weeks, which we added recently through iShares Commodities Select Strategy (COMT). The ETF is down 1.06% for the last month but is up 7.14% for the last three months and 7.19% for the year to date.

I expect demand for commodities to increase because of continued global eco-nomic growth. Supply isn’t likely to ramp up to meet the new demand, because production and capital investment were curtailed during the bear market. It takes a while to reverse those actions. Com-modities also should benefit as inflation increases around the globe.

COMT is managed by BlackRock, which uses proprietary formulas to de-cide how to allocate the portfolio among the commodities in the Goldman Sachs Commodities Index. Energy usually is the largest allocation in the fund and always is at least 25% of the fund.

About 30% of the fund is invested in stocks of commodity producers, while 70% is invested in commodity futures and options. The stock portion was invested 16% in agriculture, 6% in base metals, 4% in timber, 3% in precious metals and 2% in energy. The futures were invested 42% in energy, 15% in agriculture, 6.5% in base metals, 4.6% in livestock and 1% in precious metals.

We own gold partly as an inflation

hedge and partly as insurance against geopolitical turmoil.

I expect inflation to rise more than is priced into the markets in 2018, and that should give a lift to gold. You see the media reports and know the poten-tial for turmoil and crises around the globe. Should a crisis occur, the rise in gold should offset some of the decline in our other assets.

I recommend iShares Gold Trust (IAU) because it usually has the lowest fees among comparable ways to invest in gold. It also isn’t held as much by insti-tutions as other exchange-traded funds, which gives it some protection from the effects of changes by short-term traders.

TRUE DIVERSIFICATIONOur True Diversification portfolio

continues to deliver the strong, steady returns we expect.

We created this as a buy-and-hold portfolio that would protect us from steep losses in bearish stock markets and deliver steady returns in almost every market environment.

We take an in-depth look at the port-folio every three months, and we’ll do that again next month. I point you this month to the table of returns on page 13. It shows we’ve earned solid returns, but this is a period when a non-diversi-fied portfolio earns higher returns than our well-balanced strategy. In time, our portfolio will overtake the S&P 500, as it has in the past.

INVEST WITH THE WINNERSIt is time to switch to a broad-based

emerging markets fund, iShares MSCI Emerging Markets (EEM). Invest with


Robert C. Carlson wrote the book on retirement and retirement planning—twice: The New Rules of Retirement (Wiley, 2nd ed. 2016) and Personal Finance after 50 for Dummies (with Eric Tyson; 2nd ed. 2015). He also serves as Chairman of the Board of Trustees of the Fairfax County (Va.) Employees’ Retirement System (a more than $3.0 billion portfolio) and served on the Board of Trustees of the Virginia Retirement System (a $42 billion portfolio in 2005) from 2000-2005. He was educated at the University of Virginia School of Law and McIntire School of Commerce (M.S.) and Clemson University.

Challenges Investors Face: The TJT Solution to Portfolio Management Many investors need help with their portfolios. We saw that with the strong registration and turnout for the webinar featuring Bob Carlson and TJT Capital, “Challenges Investors Face: How TJT Capital Manages Portfolios to Participate in Bull Markets and Protect Capital in Bear Markets.” The webinar is available for replay at www.tjtcapital.com. If you like Bob Carlson’s margin of safety approach and methods of selecting mutual funds, log in or contact TJT Capital at 877-282-4609 or [email protected].

the Winners is a trading strategy that uses computer models to select one exchange-traded fund to own. We have

been invested in iShares Latin Ameri-can 40 (ILF) for a few months, but the models say it is time to switch. There

are no sell signals between our issues. We’ll hold EEM until at least the next issue, when we rerun the models.

The Power of Small ImprovementsAs we roll into

2018, many people will be burdened by New Year’s Res-olutions. I say

they’ll be burdened, because many people set overly ambitious goals. Soon, they perceive they aren’t making much progress toward the goals, become frustrated or feel overwhelmed and abandon the resolutions.

Many people, after learning that I’ve written books, say they never could do that. Among other things, they say such a project is overwhelming. That’s also why many people don’t have retirement or estate plans. There are too many decisions to make, and too much information to gather and process.

There’s a key to success in these situations. Recognize the power of small improvements. Break down a big task into many smaller tasks. Or

divide a major goal into a series of smaller goals. Someone who wants to lose 20 pounds this year could set a goal of losing at least two pounds per month and establish a plan to do that. To create a retirement plan, identi-fy the parts of the plan and the data needed for each part. Then, select one part of the plan and begin assembling the data for it. As each section of your project is completed, the progress will make you more optimistic and confi-dent about finishing.

That brings our first visit of 2018 to a close. This is likely to be another event-filled year, and I’ll be on top of all the changes for you. Congress still is working on tax reform as I finish this issue. If a new law is enacted, I’ll tell you the details and the strategies you need to know. I’ll be back next month with the latest recommenda-tions and research on estate planning, income tax reduction, managing your IRA, saving money and more.

Sincerely,

P.S. You can enjoy the first three online seminars of my new Spotlight Series and see the upcoming presentations by signing up now. Many readers asked for more in-depth discussions of key topics, so we developed these online webinars. From the comfort of your home or office, you can join me each month for these deep dives into your retirement finances. To learn more about my new Spotlight Series (includ-ing the first three segments), go to the top of RetirementWatch.com’s home page, and select the Spotlight link.P.P.S. I hope you’ll join me at the Mon-eyShow Orlando. I’ll be giving several presentations as will some of my Eagle Financial Publications' colleagues and dozens of other financial experts. It’ll be February 8-11, 2018. See Carlson.OrlandoMoneyShow.com for details.

Documents

Vol. 29, Issue 1 January 2018 Retirement WatchBOB CARLSON’S · Trusts are more important to many estate plans than they were a couple of decades ago and often now are more important