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Dont Be Your

Own Worst
Enemy

LIFETIME INCOME CASE STUDY


Presented by Puplava Financial Services, Inc.
Registered Investment Advisor Manny & Cheryl Martinez
Important Notice:
This is a hypothetical illustration based on real life
examples. Names and circumstances have been
changed. The opinions voiced in this material are
for general information only and are not intended
to provide specific advice or recommendations for
any individual. To determine which investments or
strategies may be appropriate for you, consult
with a financial advisor prior to investing.

Puplava Financial Services, Inc.


Registered Investment Advisor
ESSENTIAL INFORMATION

Client: Manny & Cheryl Martinez

Ages: Both are age 58.

Retirement: Both hope to retire in 5 - 10 years.

Life expectancy: Manny age 90 and Cheryl age 93.

Risk tolerance: Moderate.

Investment objective: Income with Capital Preservation.


WHO ARE
MANNY AND
CHERYL?

Name: Manny Name: Cheryl


Age: 58 Age: 58
Job: IT Manager Job: Homemaker

Manny has been very active in managing his finances. He started in the Cheryl has been focused on making sure they are prepared for
90s as a day-trader buying stocks and over time other investments. retirement. She remains concerned about the cost of retirement
Hes managed six different accounts spread across three different firms because her family has had a history of longevity and unfortunately
and has experienced some sizable losses during both the dot-com
Alzheimers as well. Cheryl is much more conservative than her
bubble and the 2008-2009 financial crisis. Hes made a lot in gold and
other alternatives but has given back most of the gains and even more husband and is concerned about the riskiness of their investments.
so in some cases. More recently, he has focused on some private equity She is hopeful that Manny is able to retire soon so that they can
investments and hedge funds because of his losses in stocks and gold. spend more time together and take all the trips they have dreamed
He still has maintained a large gold position by his own admission, about over the years.
Because I cant bear to lock in the losses. Manny is thinking about
retiring in 5 years but is not sure if they have the ability to do so. For that
reason, he came to us looking for guidance.
WHAT IS IMPORTANT TO MANNY & CHERYL?

Retiring in 5-10
years

Lowering taxes
Managing
investments risks

Changing investment
philosophy
MANNY & CHERYLS CURRENT BUDGET

Essentials: $65,000
Discretionary: $26,000
TOTAL: $91,000

Mannys Wages: $94,000


Surplus: $3,000
MANNY & CHERYLS RETIREMENT BUDGET

Essentials: $56,000
Discretionary: $28,000

TOTAL: $84,000

Combined Social Security: $49,000


Shortfall: -$35,000
MANNY & CHERYLS ASSETS
Non-Investment Assets
Primary Residence: $320,000
Foreign Real Estate: $350,000
Investment Assets
Mannys Retirement: $902,000
Cheryls Retirement: $73,000
Joint/ROS: $1,020,000
Hedge Funds: $300,000
Precious Metals: $430,000

Total Investment Assets $2,725,000


Total Assets: $3,395,000
Liabilities: -$9,000
Net Worth: $3,386,000
MANNY & CHERYLS FINANCIAL PLAN CHALLENGES

1. Adopting a more suitable


investment style.

2. Improper diversification.

3. Liquidity concerns.

4. Tax efficiency of investments.


MANNY & CHERYLS RETIREMENT INCOME STRATEGY

Combined Social Security $49,000


Investment Income
Manny's Retir. $902K Fixed Income & Dividend Payers @ 3.1%1 $27,962
Cheryls Retir. $73K Fixed Income & Dividend Payers @ 3.1%2 $2,263
Joint/ROS $1.02M Fixed Income & Dividend Payers @ 3.1%3 $31,620
Comp. Stock $300K
Prec. Metals $430K
Total Investment Income $61,845
Grand Total Income $110,845
Less Budget $94,000
Surplus $16,845

1, 2, & 3: Yields are for current portfolio yields as of 10/25/16. Please see disclosures at the end of this presentation for security risks.
GOAL BASED RECOMMENDATIONS
FOR MANNY & CHERYL

Goal Strategy
We highly recommended that Manny quit chasing returns by investing in
Changing investment yesterdays winners and no longer invest in the flavor of the month. Instead, he
should implement a goals based approach to invest in a manner that is sufficient
philosophy to help him and his wife retire. We also recommended that they consider using a
professional money manager to reduce the impact of emotional investing.

Due to several of Mannys self-managed accounts, he found himself overexposed


to certain sectors with 62% of his investments in basic materials and technology
Properly diversifying stocks. We recommended he consolidate his accounts to one firm to make
management easier and reduce overlap of investments.

Minimizing concerns We recommended that Manny drastically reduce his exposure to hedge funds and
about liquidity gold down to 5% allocation of his total assets.

By shifting the investments away from growth and into income-producing


investments like dividend paying stocks and bonds, his portfolio became managed
Lowering taxes in a more tax-efficient manner. In addition, by reducing exposure to precious
metals, hedge funds and other alternatives, we were able to lower their taxes by
reducing short term capital gains and other tax drags like UBTI.
Disclosures:
1. Bonds are subject to market and interest rate risk if sold prior to maturity.
Bond values will decline as interest rates rise and bonds are subject to
availability and change in price.

2. The payment of dividend is not guaranteed. Companies may reduce or


eliminate the payment of dividends at any given time.

3. Fixed annuities are long-term investment vehicles for retirement purposes.


Gains from tax-deferred investments are taxable as ordinary income upon
withdrawal. Guarantees are based on the claims paying ability of the issuing
company. Withdrawals made prior to age 59 1/2 are subject to a 10% IRS
penalty tax and surrender charges may apply.

Puplava Financial Services, Inc.


Registered Investment Advisor
Puplava Financial Services, Inc.
Registered Investment Advisor

If you have any specific questions or comments, please give us a call at

(858) 487-3939
Were happy to speak with you.

Post Office Box 503147 - San Diego, CA 92150-3147


10809 Thornmint Road 2nd Floor - San Diego, CA 92127-2403
(888) 486-3939 Toll Free (858) 487-3939 Tel (858) 487-3969 Fax