Issues I: Issues For Retired Investors

H. S. Dreher Capital Management Investment Counsel

Please take a moment to see if you have some common ground with our clients, most of who are retired or preparing for retirement. Here are the issues.

Access to capital:

How much is a million dollars worth? If I have one, two, three or more, how much should be invested in income and how much in growth; and what can I spend without depleting the principal? Sounds like a good problem to have, but that doesn’t make the answers easy. Accumulating capital for retirement many times results in low-cost stock, lump-sum retirement plans or annuities loaded with tax traps. All of these investments have unique tax consequences that require an access strategy. And generating income isn’t the only question. Some of the capital may need to continue in a growth mode for future use or for estate purposes.

Rate of return:

Accumulating capital, either in business or investing, may involve a rate of return associated with a risk I am no longer willing to take. What return can I expect with less risk, and how do I measure performance?

Disclosure of fees:

I may or may not mind paying commissions, mutual fund loads or charges for insurance products, especially if these investments offer a fair rate of return. But I demand full disclosure of the investment costs, hidden or otherwise.

Where do I keep the money?

Custodians provide many conveniences. Once I am comfortable with safety, I can base my selection of a custodian on services such as monthly statements, commission rates, investment research (if I want it) and access.

How do I get the capital to my spouse?

Estate plans work best when there is trust stemming from an underlying relationship. Getting to where I am on the learning curve could waste a lot of principal if my spouse has to start from scratch. A pre-established, long-term relationship with an investment adviser facilitates this process.

How do we get the capital to our children?

Or our estate? Selecting an attorney to disperse our assets according to our wishes is important. Estate plans can affect investments. Our investment manager needs to be available to work closely with the attorney we choose to plan our estate. By understanding our estate plans, our investment manager can help us get the right investments into the correct accounts.

These are some of the issues our clients face. They are the same but the answers vary depending on individual circumstances. At Dreher Capital Management, our services are structured around these core issues and their related questions. We find we can be most helpful with a small number of long-term client relationships, so our practice is designed to accommodate questions about what we do and meetings to discuss how we’re doing. Please give us a call; we’d like to visit with you about our investment services.

Sam Dreher Tom Velevis
275 SE Broad St, Southern Pines, NC 28387 910-692-4330