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MCIM Methodology Retirement Income Portfolios -Check It Out
MCIM "Retirement Ready Income" portfolios combine risk minimization, asset allocation, equity trading, investment grade value stock (IGVSI) investing, and "base income" generation in a manner that embraces the cyclical nature of markets, interest rates, and economies.
Little weight is given to the short term movement of indices and averages, or to the notion that the calendar year is a valid time frame to use for performance measurement. Life Cycle portfolios are designed to prepare investors for retirement, financially.
Goals of Market Cycle Investment Management "Retirement Readiness" Portfolios
- Higher lows during market downturns, i.e., less of a drawdown than the S & P 500 Average
- Increasing cash positions prior to market corrections as a result of both profit taking and routine income generation from portfolio securities
- Steady, even rising, income levels during corrections
- Timely movement to new all-time portfolio market value levels, fueled by the discipline to purchase securities during the downturn
- Steady growth in realized base income from the reinvestment of dividend and income cash flow in the "income bucket" of the portfolio
- 100% realized reasonable profit experience at all times, and with no looking back --- no major disappearing profits, ever
Steps taken to lower portfolio investment risk levels include:
- Strict focus on Investment Grade Value Stocks and equally high quality level ADRs (These are almost exclusively "Low Beta" Securities.)
- Conservative diversification rules with regard to individual and sector holdings
- Some income production from every security owned
- Zero tolerance for margin debt
- Disciplined, reasonable, profit taking targets.
- No Mutual Funds, No IPOs, No NASDAQ = no problems (think how that would have worked for you during the Dot Com Bubble)
- Actively managed/traded income CEFs
Keeping The Program Simple
- Three basic asset allocations: 60-40; 40-60; 20-80 with income positions either 100% in taxable CEFs or 100% in Municipal CEFs.
- 60-40 asset allocations are generally best for younger investors, or those with at least seven years until retirement;
- 40-60 allocations are for those who are more risk averse, of very high net worth, or within six or seven years of retirement;
- 20-80 arrangements are generally for those who are just starting their investment program, or considering retirement within the next five years.
Private Retirement Program Suggestions
- Private "Getting Retirement Ready" portfolios should be funded with at least $150,000 to ease diversification efforts and to assure an adequate equity selection universe ( there are only 350 IGVSs and a handfull of ADRs to choose from).
- Withdrawals should be planned for with cash reserves, and replaced as soon as possible by income generated within the portfolio.
- As a benchmark, total fees for a direct-contact-with-your-manager (20% Equity) portfolio should start at around 1.55% per year, and move downward with larger portfolio commitments, and/or after the first full year of operation..
- Also as a benchmark, CEF income production (in September 2015) was above 6% for tax free funds and in the 7.5% area for taxable and tax favored funds...
- There should be no penalty for terminating the program (some custodians do charge reasonable ternmination fees), but you should expect to continue with it for at least one market cycle, or 36 months --- whichever is longer.
- You should always have direct contact with the investment manager.
- You must receive (and acknowledge receipt of) disclosure documentation from all parties to any management arrangement.
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