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Nick Hodge here and I wanted to talk about your long-term financial security and how Wall Street, financial institutions, and advisors can prevent you from attaining that long-term financial security.
Here's a chart I wanted you to look at. This is a Vanguard 2025 target date retirement fund.
This is a fund for people who are expecting to retire starting between 2023 and 2027 is what the Vanguard website tells us. And this is a fund that automatically adjusts a typical 60/40 retirement or long term portfolio as you age. So starting with 60% stocks and 40% bonds and taking you more into bonds as you approach your retirement age. In this case, with a target of 2025.
The only problem is that this target date 2025 retirement fund hasn't gone anywhere in an entire decade. It's trading at the same value today in 2023 that it was trading at ten years ago. And that means retirees expecting to retire starting this year — teachers, firemen, nurses, your mom, your dad, my mom, my dad — just lost 26% of their nest egg over the past couple of years.
Just imagine having a half a million dollar nest egg and seeing 25% of that erased in the past two years as you head into retirement age. And unfortunately, this is all too common in the game of long-term saving, retirement, and wealth creation in the United States.
There are some specific reasons we can point to of late. You have a stock market that's been in a downdraft since 2021, still not back to the peak it was at to start 2022. You have no breadth in the market. Equal weighted, the S&P is relatively flat for the year with only a small handful of tech stocks buoying the rest of the market. And so unless you own those, you've had a really tough go of it.
And then bonds, which no one seems to understand or want to talk about, have had what Bank of America is now calling their “worst bear market of all time.” And all time of course is a long time. It means forever. And so if you have a traditional retirement or long-term portfolio based on Wall Street's prescribed pie chart, then your retirement account, especially as evidenced by the target date fund I just showed you, has been annihilated.
Bonds have had their worst year in something like 150 years as the Fed has raised interest rates. So not only are these retirement portfolios that are set up and pushed by Wall Street eroding your nest egg by 25% in two years, it comes at a time when costs are the highest they've been in 40 years, at least in terms of the rate of inflation.
People, especially retirees on fixed incomes, need more money at the same time that their Wall Street based retirement portfolios have just experienced a lost decade.
And it's not just retirees and near-retirees. I'm not even 40 years old yet, although I'm dang close to it. I've been thinking about my long-term wealth for a decade now. It's likely why I've had success doing that.
I'm Nick Hodge, by the way. I run Foundational Profits, which is a monthly newsletter where I tell you exactly how I'm positioning my long-term wealth. And the November issue is out, and it’s an important one because we're heading into stagflation. We're heading into low domestic growth here in the United States. Europe's already in a recession. Asia's reporting terrible economic data. I just told you the bond market is in its worst bear market ever. And the stock market's been down since the beginning of 2022.
So where do you turn?
If I look at the performance of Foundational Profits over the past several years and then compare it to that target date fund that I mentioned earlier, since 2018 that target date fund has delivered something like 22% returns. I'm talking about the cumulative return. The return every year added up since 2018. Whereas the portfolio that I use, and that's always changing by the way, and that I write about monthly in the Foundational Profits issues, is up 123% in that time. So it's outpacing the annual return of that Vanguard target date fund by five times over.
And I do it in various ways. We buy country ETFs, we buy sector ETFs, we buy commodity ETFs, and we're not necessarily always holding them for the long term. You know, we just sold an India ETF this month for a gain. And we don't own a lot of stocks or equities right now. And we certainly don't own any bonds.
In the November issue, I get into exactly what you can expect for the rest of the year in the stock market and the economy as we head into Thanksgiving and Christmas. I look forward to what you can expect in the first and second quarters of 2024. We look at jobs, we look at GDP growth — or non-growth or stagnation as it were. And we look at inflation.
And then I go through exactly how I'm positioned for the next couple of months. And this is a crucial juncture because we're at a time when not a lot is working in the market, whether that's stocks or bonds.
I can count where 75% of my long-term wealth is in five different positions. That means I'm highly concentrated in a couple of positions that I believe are going to insulate me from the additional downside that I expect in the stock market over the coming months.
And I have a few concentrated positions in sectors that have been performing well and that continue to perform well. So this issue goes through the full portfolio that I'm invested in right now and exactly what allocations I have in those positions. There are cash positions to be sure, considering that the short term T-bills are yielding over 5%, but there are also several gold positions, uranium positions, a defense industry position, and some critical metals positions.
And the rest of the issue covers insights on what I see coming for the next couple of months and in different sectors of the market.
The long-term stewardship of your capital is the most important thing for you and your family. It’s a determining factor in educational success and health success.
And so if you're behind, if you think you're behind, if you want to get started… you should know that Wall Street doesn't have your best interests in mind. I just showed you how someone who used a fund meant to have them retire in 2025 just lost a quarter of their wealth over the past two years and now has the same bottom line today in 2023 as they would have had in 2013.
That's a tragedy and a travesty. Frankly, it’s what's broken with Wall Street and the financial advisor system.
But there's a better way.
There's a way to avoid drawdowns. There's a way to manage and steward your own capita.
If you haven't found that way or figured that way out on your own, then I encourage you to copy someone who has pioneered that long-term strategy of investing successfully. And I offer a blueprint for you to do that with the Foundational Profits portfolio and the monthly issues that you get.
It's entirely risk-free. You have 60 days to try it out. All the risk is on me. Even if you wanted to subscribe for the November issue, see my current retirement allocations and then contact customer service to get your money back.
I encourage you to check it out and read the November issue and look forward to welcoming you as a new member.
Simply fill out the form below to get started.
Hope to see you over at Foundational Profits soon!