June 2014

 
    June 2014


The Best "Investments"
in Golf Homes

   A house you live in full or part time is not an investment.  It is shelter.  Yes, your full-time or second home can appreciate in price and provide you with a tidy nest egg over a long period of time.  But if you are investing for the shorter term, just think about the five years that began around 2008.  (Case in point:  I bought a piece of property on a South Carolina golf course in 2007, and it has lost about 25% of its value since.)
    If that last note disqualifies me as an estimator of future values, read no further.  Otherwise, what follows are a few golf communities with properties that, if you are patient, could post some handsome returns eventually.  As always, though, treat all predictions with a dose of skepticism and follow your own good sense when investing in anything.  If you’d like to visit any of these communities, I’d be happy to set it up for you.  Write me at This email address is being protected from spambots. You need JavaScript enabled to view it.

Reynolds Plantation, Greensboro, GA
Home sites from $39,000
Cottages/Condos from $198,500
Single-family homes from $299,000

   The case for “investment” in Reynolds Plantation seems strong.  First, its owner, Metropolitan Life, has deep pockets, does not make its own investment mistakes, and is conservatively run.  Also, the aggressive spending of the original owners left behind wonderful amenities that are essentially debt free.  Six golf courses, beautifully appointed clubhouses, a large manmade lake, and all other manner of amenities will be a lure to both second and primary homeowners for years to come.  Now, if only someone could figure out how to move Reynolds an hour closer to Atlanta…(although we were surprised to see the huge supermarket and multiplex cinema just outside the gate, and a new hospital is on the way).
    The single-family home for $299,000 features 4 bedrooms, 3 baths, 1,794 square feet and looks out on the 16th fairway of The Landing Course.  The next lowest priced home is $399,900.

Currahee Club, Toccoa, GA
Home sites from $69,000
Homes from $499,000

   Currahee, which opened 10 years ago, was whipsawed by the recession and went into something of a deep freeze until 2009 when a wealthy South African investor with a taste for luxury brands and a love of golf saw something in the sweeping hillsides overlooking Lake Hartwell.  Possibly, he was hooked by the Jim Fazio-designed golf course, which is both beautiful and brutally tough in equal measures.  Serious golfers will feel as raters for Golfweek magazine did when they visited late last year and pushed up significantly the course’s ranking (now #42 on Golfweek’s list).  The course’s reputation can only grow as more and more golfers discover it.  Managing partner Arendale Holdings, the development company that took over the reins at The Cliffs Communities last year, has a good track record of community stewardship; their slope for success seems less steep at Currahee than at The Cliffs.  
    The $499,000 homes currently for sale comprise 3 bedrooms and 3 ½ baths with a screened porch overlooking the 8th hole.  Nearby Toccoa is a charming town with a modicum of services.  Southern Living, whose decorators accessorized a Currahee home overlooking the par 3 17th hole, thought enough of the development to name it its first “Inspired Community.”  The Southern Living home was listed for $1 million.

The Landings, Savannah, GA
Home sites from $59,000
Condos from $175,000
Single-family homes from $229,000

   I am a broken record about The Landings, but in truth, it really has what most people look for in a golf community, namely:  Lots of excellent golf, including six nicely maintained layouts; just 20 minutes to the fascinating city of Savannah, with all services you need; a large and diverse population inside the gates to offer virtually every kind of club and activity one could conjure; and financial stability that results from the residents owning everything, including the on-site real estate office, which is quite profitable.
    Okay, no place is perfect, and some may be intimidated by the sheer size of The Landings, 4,800 acres, and the condition of homes in the oldest parts of the community, now 41 years old.  But the community has been smartly laid out into neighborhoods, and those old homes, which certainly could use some cosmetic updating, are available at deep discounts.
    If tackling a home in need of an overhaul seems daunting, there are still enough lots left for sale in The Landings that you could build a brand new 2,500 square foot home, probably for about $450,000 or so.  Otherwise, a 3 bedroom, 2 ½ bath 30-year old home with a 2-car garage is priced at $260,000.  (Note:  Another reason I like The Landings is that the two couples we helped purchase homes there still rave about the community, years later.)

Pawleys Plantation, Pawleys Island, SC
Home sites from $54,000
Condos from $155,000
Single-family homes from $259,000

    I may be accused of wishful thinking in putting Pawleys Plantation on this list of “investment grade” golf communities.  I have owned a condo in the community since 1999 and purchased a golf course lot there in 2007, just in time for the recession.  But one thing about investing is that if you follow something relentlessly over time, you start to see (and feel) patterns emerging.  In the case of Pawleys Plantation and the many golf communities within 10 miles, the market fell unusually flat and has stayed depressed for longer than seems reasonable. 
    But signs are there that the market may be improving.  For example, just four months ago, the lowest priced condo in the community was listed at $110,000; today, the bottom is $155,000, an increase approaching 30%.  The Jack Nicklaus golf course, while not private, was purchased a couple of years ago by National Golf Management and the upgrade in course conditions has been clearly noticeable.  NGM considers Pawleys Plantation the jewel in its crown of 23 local golf courses.  Also, Pawleys Island, which claims to be the oldest organized beach resort on the east coast, has been a magnet for families throughout the Carolinas for generations.  That popularity goes on.  And Pawleys Island is about to welcome its fifth supermarket serving a year round population of just 13,000.  Hopefully, those supermarket chains’ planners know something about future growth.
    The $259,000 house for sale is a “patio home,” which means it sits on a small lot (typically less than ¼ acre) but is otherwise of a nice size, in this case 1,600 heated square feet and 2,000 total.

Investing for Retirement Income

by John Ruocco

    As we go through retirement, the cost of living continues to rise.  Although we may slow down our lifestyle over time, people are living longer and healthier lives.  For this reason, we want to be able to keep up with inflation and have the resources to take more income later in life. In other words, retirees need to not only invest for the present, but also invest for the future.  Remember: 85 is the new 70!
    At retirement, investors begin to focus on obtaining income from their portfolios.  In many cases, this leads them to seek out dividend-paying investments such as bonds, utilities, preferred stocks, REITS, and anything else that pays a good dividend.  However, by owning a cross-section of these income securities, an investor is really not diversifying because all of these investments are exposed to the risk of increasing interest rates.  It seems inevitable that we will have some form of inflation in the future, and inflation will ultimately lead to rising interest rates.

 

Inflation:  Not Good, But Not All Bad
    In order for our economy to work, there should be a general expectation that future prices will rise.  With zero inflation, or even negative inflation (prices declining), consumers would have little incentive to buy. This waiting game would continue to slow down the economy and then we would have what is called a deflationary cycle.  This is what we saw in the 1930s, and it is difficult to stop.
    To prevent a deflationary spiral, the Federal Reserve has kept interest rates very low, artificially low, and also “printed” more than $3 trillion.  All of this cash floating around should create a situation in which there is too much money chasing too few goods – the classic definition of inflation.  The Fed has signaled that it is actually willing to risk inflation by printing a lot of money because it is a better scenario than deflation.  
    Yet this is the problem. We have all the excess “printed” cash sitting around, accessible to banks and ready to lend, but for reasons not fully understood, it is not yet circulating.  It is like a garden hose that has a bend in it somewhere.  Many economists believe that once this kink gets out of the hose, the excess pressure will end up creating rampant inflation.

 

Property an Effective Hedge Against Inflation
    Inflation will ultimately cause the value of many assets to rise.  Real property, such as homes in golf communities that have been in the doldrums for seven years, should be a prime beneficiary of this economic reality.  Also, since consumers will purchase goods in anticipation of rising prices, potential growth businesses will be able to increase production and hire more people.  Stocks of companies that grow with the economy and pay little or no dividends can also be beneficiaries.  
    Unfortunately, if the economy really does start to inflate too rapidly, the Fed will be inclined to slow down this rapid growth by increasing interest rates.  This could affect all stocks negatively, but bonds and income-producing investments will be hurt more directly.  Rising interest rates imply that risk-free investments, such as certificates of deposit and treasuries, would generate yields close to those of other more risky dividend-paying investments.
    In other words, if general interest rates in the bank are near zero, it makes sense to take some risk for a 4% to 5% dividend.  You could do this by owning a bond or a stock such as AT&T.  But if rates rise and you can get almost that same yield with zero risk by owning a treasury or a CD, then the dividend from AT&T is not as attractive and investors will tend to move back to something that is more secure.  High dividend-paying stocks tend to follow the pattern of bonds.  As rates rise, bonds decline and higher income bearing stocks follow.
    An example of this can be seen in stock performances last year.  While the S&P 500 surged some 25% to 30%, bonds, REITS and preferred stocks were declining. Utilities struggled to hold their values.  The reason was that investors feared the kink in the hose finally straightened out and there was going to be a surge in inflation that would cause a surge in interest rates.  They also felt that this was all happening because the economy was finally recovering; therefore, smaller stocks did well as the dividend stocks floundered.
    Of course, some investors today say they don’t care about value as long they continue to get dividends. There are two problems with this line of thought.  First, dividends are not guaranteed.  Second, after 25 years of working with investors, I know that as investment values drop, investors lose confidence.  Trust me. They will care about the price!

 

How Much Income to Take from Your Portfolio
    It all comes back to developing a portfolio with real diversification.  Different types of investments behave differently under different economic conditions.  They also behave largely based on the expectation of those conditions in the future.  Therefore, although income stocks are a solid, conservative holding and have their place in a diversified portfolio, a retiree still needs to be invested in other areas that will ultimately allow the portfolio to grow, should the economy start growing.  The investor’s focus should not be on how the money, or income, is made.  It could be earned through dividends or it could be earned through appreciation or capital gains.  What is important is the bottom line value of the portfolio at the end of each year.
    Current wisdom is that a retiree should extract about 4% to 6% in annual income from a portfolio.  But this is only a general guide.  In the real world, if you have a $500,000 portfolio, you need to try to preserve as much of the $500,000 as possible.  If over a year you withdraw 5%, or $25,000, and the account ends up worth $530,000 at the end of the year, then you may feel comfortable taking a little more income the following year.  If, however, the value declined to $480,000, then you really should try to adjust downward the amount of income you withdraw.
    When I set up a retirement income account for a client, I generally select a dollar amount to be withdrawn from a money market fund on a monthly basis. This is based mostly on the client’s needs. This monthly systematic withdrawal gets dropped into the client’s checking account each month, very much like a paycheck.  The investor’s holdings are managed and adjusted as a typically balanced conservative portfolio. On a regular basis, investments are sold and the proceeds from sales are swept to the money fund to provide enough cash to generate the monthly check.  For a non-IRA account, the tax status has to be monitored with respect to the client’s needs.  This means we minimize capital gains, if possible, and also take losses to offset gains.  Also, if taxes are an issue, the tax impact of the dividend income generated should also be considered.  Keep in mind that gains from tax-free municipal bonds are generally taxed at a lower rate, making them a beneficial addition to some portfolios.

    The bottom line is that investing in retirement is not simply the pursuit of high yields; it is managing and adjusting a solid portfolio that will provide for your needs as times change. Times have changed dramatically over the past decade, and they will continue to do so in the future.  We all must be diligent in keeping up with those changes.

 

John R. Ruocco is sole owner of Asset Management Associates, a Connecticut-based financial advisory service.  John has provided independent, fee-only investment advisory and portfolio management services for more than 20 years. For more information, contact John R. Ruocco at 1-800-208-8588 or This email address is being protected from spambots. You need JavaScript enabled to view it. in South Windsor, CT. His first consultation is always free. Information, a brochure, and form ADV part II are available upon request; or log-on to www.assetmanagementassociates.com. John waives his fees for veterans and their spouses for the first six months of his service.

 

Editor's Note: The above article is for information purposes only and does not constitute endorsement or recommendation of any kind by the publisher.  Please seek appropriate investment or tax counsel before entering into any investment or financial transaction.

A Few Words about Bluffton, SC, one of Forbes Magazine's Best Places to Retire  

    I am not a big fan of "best of" lists as guides to where you or I might choose to live. These lists tend to use a range of criteria, often from widely different sources. And some of the criteria may not be high on your importance list, and features of importance to you may not have even been considered. These lists can make for entertaining reading but should be taken with a grain of salt as guidance.
    That said, some "best of" lists come to conclusions with which I agree substantially. One such list is Forbes magazine's The 25 Best Places to Retire in 2014, which includes four Carolina towns that we know well: Bluffton, SC; Brevard, NC; Charleston, SC; and Clemson, SC. Forbes' comments about each town are rather sketchy, with a few pros and one or two cons each, and you won't find any mention of top golf communities in each area. I am happy to fill that void, starting this issue with Bluffton and Brevard.

 

Bluffton, SC

     The golf community courses strung out along Highway 278, the road that comes off Hilton Head Island and bisects the town of Bluffton, rank among the best per square mile anywhere. There are also a lot of them, including Colleton River (45 holes by Nicklaus and Dye), Belfair (36 by Tom Fazio) and Berkeley Hall (another 36 by Fazio). Although the sweet spot for home prices in the three communities is generally in the mid six figures, a few lots are on the market for under $10,000, listed by owners who want to get out from under the obligation of club dues (which are attached to the property, not the individual). The most highly rated golf course in the area is May River, a Nicklaus gem set back four miles into the marshland that abuts the lush resort of Palmetto Bluff (pay the $500 nightly rate for lodging. and you can get access to the golf course, if you are not a member). One does not require a champagne budget, though, to find a terrific golf situation in Bluffton; for example, homes in the venerable Moss Creek, just off Hilton Head Island, start in the high $100s, with some sizable and nice-looking homes listed at $300,000 and up. The 36-hole Moss Creek layout was good enough to once host an annual LPGA event. At Hampton Hall, created by the developer of Colleton River, Belfair and Berkeley Hall, newer homes in the $300s look out on the Pete Dye layout.

    One of our customers scored an exceptional lot two years ago at Berkeley Hall. It looked over a pond and down the fairway of a par 5 hole, and it cost him (at the time) a mere $45,000. He recently completed construction of his new home. For those interested in learning more about Berkeley Hall and our customer's stories about building his and his wife's dream home, contact me and we will put you in touch.

ColletonRiverfinishonmarsh 
Parts of the Nicklaus golf course at Colleton River run along the marsh and Colleton River.

Brevard, NC

    Love of mountains or fear of hurricanes drive many retirees and others to western North Carolina, especially the area around Asheville. But for those who like their mountain towns smaller and more intimate, with an arts and crafts cachet, Brevard and its select group of golf communities within a half hour or so are worthy of strong consideration.
    The most "local" golf community, with a Brevard address, is the 3,900-acre Connestee Falls whose vintage George Cobb golf course changes elevations frequently as it bends and twists through the surrounding wooded hills that also help separate the layout from the surrounding homes, many of which hang above the fairways. The golf course is open to the public, at reasonable prices, but when I visited and played the course with a member, it appeared members dominate the rounds. Residents dominate the four mountain lakes inside the community's boundaries, and all the customary amenities are in place. Some lots remain for sale in Connestee for $10,000 and up, with a good selection of resale homes starting in the $300s.
    Brevard hosts a famous summer music festival; just a half hour through the mountain passes is Flat Rock, host to a famous summer theater festival and the home of Kenmure Country Club, a golf community that lives somewhat in the shadows of the nearby Champion Hills, in Hendersonville. Kenmure's golf course, by Joe Lee, is scenic and challenging and dominated by the Kenmure Mansion, the 165-year-old clubhouse that can be seen from many parts of the course. I have always been struck by Kenmure's reasonable real estate prices. For example, I note that a lot of nearly two acres is currently listed for $49,900, and a large detached villa –- 3 bedrooms, 3 baths, 2,590 square feet -– with a view of stream and woods, is listed at $265,000. Golf fees for the private club are reasonable as well.
    Other Brevard area golf communities to consider include Lake Toxaway, former playground of the Fords, Edisons and Firestones; the aforementioned Champion Hills, in Hendersonville, with its highly ranked Tom Fazio golf course; and the golf communities of Glen Cannon, Burlingame and High Vista.

 

   Larry Gavrich, Founder & Editor

   GolfCommunityReviews.com

   GolfHomesListed.com

 

 

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    June 2014


The Best "Investments"
in Golf Homes

   A house you live in full or part time is not an investment.  It is shelter.  Yes, your full-time or second home can appreciate in price and provide you with a tidy nest egg over a long period of time.  But if you are investing for the shorter term, just think about the five years that began around 2008.  (Case in point:  I bought a piece of property on a South Carolina golf course in 2007, and it has lost about 25% of its value since.)
    If that last note disqualifies me as an estimator of future values, read no further.  Otherwise, what follows are a few golf communities with properties that, if you are patient, could post some handsome returns eventually.  As always, though, treat all predictions with a dose of skepticism and follow your own good sense when investing in anything.  If you’d like to visit any of these communities, I’d be happy to set it up for you.  Write me at This email address is being protected from spambots. You need JavaScript enabled to view it.

Reynolds Plantation, Greensboro, GA
Home sites from $39,000
Cottages/Condos from $198,500
Single-family homes from $299,000

   The case for “investment” in Reynolds Plantation seems strong.  First, its owner, Metropolitan Life, has deep pockets, does not make its own investment mistakes, and is conservatively run.  Also, the aggressive spending of the original owners left behind wonderful amenities that are essentially debt free.  Six golf courses, beautifully appointed clubhouses, a large manmade lake, and all other manner of amenities will be a lure to both second and primary homeowners for years to come.  Now, if only someone could figure out how to move Reynolds an hour closer to Atlanta…(although we were surprised to see the huge supermarket and multiplex cinema just outside the gate, and a new hospital is on the way).
    The single-family home for $299,000 features 4 bedrooms, 3 baths, 1,794 square feet and looks out on the 16th fairway of The Landing Course.  The next lowest priced home is $399,900.

Currahee Club, Toccoa, GA
Home sites from $69,000
Homes from $499,000

   Currahee, which opened 10 years ago, was whipsawed by the recession and went into something of a deep freeze until 2009 when a wealthy South African investor with a taste for luxury brands and a love of golf saw something in the sweeping hillsides overlooking Lake Hartwell.  Possibly, he was hooked by the Jim Fazio-designed golf course, which is both beautiful and brutally tough in equal measures.  Serious golfers will feel as raters for Golfweek magazine did when they visited late last year and pushed up significantly the course’s ranking (now #42 on Golfweek’s list).  The course’s reputation can only grow as more and more golfers discover it.  Managing partner Arendale Holdings, the development company that took over the reins at The Cliffs Communities last year, has a good track record of community stewardship; their slope for success seems less steep at Currahee than at The Cliffs.  
    The $499,000 homes currently for sale comprise 3 bedrooms and 3 ½ baths with a screened porch overlooking the 8th hole.  Nearby Toccoa is a charming town with a modicum of services.  Southern Living, whose decorators accessorized a Currahee home overlooking the par 3 17th hole, thought enough of the development to name it its first “Inspired Community.”  The Southern Living home was listed for $1 million.

The Landings, Savannah, GA
Home sites from $59,000
Condos from $175,000
Single-family homes from $229,000

   I am a broken record about The Landings, but in truth, it really has what most people look for in a golf community, namely:  Lots of excellent golf, including six nicely maintained layouts; just 20 minutes to the fascinating city of Savannah, with all services you need; a large and diverse population inside the gates to offer virtually every kind of club and activity one could conjure; and financial stability that results from the residents owning everything, including the on-site real estate office, which is quite profitable.
    Okay, no place is perfect, and some may be intimidated by the sheer size of The Landings, 4,800 acres, and the condition of homes in the oldest parts of the community, now 41 years old.  But the community has been smartly laid out into neighborhoods, and those old homes, which certainly could use some cosmetic updating, are available at deep discounts.
    If tackling a home in need of an overhaul seems daunting, there are still enough lots left for sale in The Landings that you could build a brand new 2,500 square foot home, probably for about $450,000 or so.  Otherwise, a 3 bedroom, 2 ½ bath 30-year old home with a 2-car garage is priced at $260,000.  (Note:  Another reason I like The Landings is that the two couples we helped purchase homes there still rave about the community, years later.)

Pawleys Plantation, Pawleys Island, SC
Home sites from $54,000
Condos from $155,000
Single-family homes from $259,000

    I may be accused of wishful thinking in putting Pawleys Plantation on this list of “investment grade” golf communities.  I have owned a condo in the community since 1999 and purchased a golf course lot there in 2007, just in time for the recession.  But one thing about investing is that if you follow something relentlessly over time, you start to see (and feel) patterns emerging.  In the case of Pawleys Plantation and the many golf communities within 10 miles, the market fell unusually flat and has stayed depressed for longer than seems reasonable. 
    But signs are there that the market may be improving.  For example, just four months ago, the lowest priced condo in the community was listed at $110,000; today, the bottom is $155,000, an increase approaching 30%.  The Jack Nicklaus golf course, while not private, was purchased a couple of years ago by National Golf Management and the upgrade in course conditions has been clearly noticeable.  NGM considers Pawleys Plantation the jewel in its crown of 23 local golf courses.  Also, Pawleys Island, which claims to be the oldest organized beach resort on the east coast, has been a magnet for families throughout the Carolinas for generations.  That popularity goes on.  And Pawleys Island is about to welcome its fifth supermarket serving a year round population of just 13,000.  Hopefully, those supermarket chains’ planners know something about future growth.
    The $259,000 house for sale is a “patio home,” which means it sits on a small lot (typically less than ¼ acre) but is otherwise of a nice size, in this case 1,600 heated square feet and 2,000 total.

Investing for Retirement Income

by John Ruocco

    As we go through retirement, the cost of living continues to rise.  Although we may slow down our lifestyle over time, people are living longer and healthier lives.  For this reason, we want to be able to keep up with inflation and have the resources to take more income later in life. In other words, retirees need to not only invest for the present, but also invest for the future.  Remember: 85 is the new 70!
    At retirement, investors begin to focus on obtaining income from their portfolios.  In many cases, this leads them to seek out dividend-paying investments such as bonds, utilities, preferred stocks, REITS, and anything else that pays a good dividend.  However, by owning a cross-section of these income securities, an investor is really not diversifying because all of these investments are exposed to the risk of increasing interest rates.  It seems inevitable that we will have some form of inflation in the future, and inflation will ultimately lead to rising interest rates.

 

Inflation:  Not Good, But Not All Bad
    In order for our economy to work, there should be a general expectation that future prices will rise.  With zero inflation, or even negative inflation (prices declining), consumers would have little incentive to buy. This waiting game would continue to slow down the economy and then we would have what is called a deflationary cycle.  This is what we saw in the 1930s, and it is difficult to stop.
    To prevent a deflationary spiral, the Federal Reserve has kept interest rates very low, artificially low, and also “printed” more than $3 trillion.  All of this cash floating around should create a situation in which there is too much money chasing too few goods – the classic definition of inflation.  The Fed has signaled that it is actually willing to risk inflation by printing a lot of money because it is a better scenario than deflation.  
    Yet this is the problem. We have all the excess “printed” cash sitting around, accessible to banks and ready to lend, but for reasons not fully understood, it is not yet circulating.  It is like a garden hose that has a bend in it somewhere.  Many economists believe that once this kink gets out of the hose, the excess pressure will end up creating rampant inflation.

 

Property an Effective Hedge Against Inflation
    Inflation will ultimately cause the value of many assets to rise.  Real property, such as homes in golf communities that have been in the doldrums for seven years, should be a prime beneficiary of this economic reality.  Also, since consumers will purchase goods in anticipation of rising prices, potential growth businesses will be able to increase production and hire more people.  Stocks of companies that grow with the economy and pay little or no dividends can also be beneficiaries.  
    Unfortunately, if the economy really does start to inflate too rapidly, the Fed will be inclined to slow down this rapid growth by increasing interest rates.  This could affect all stocks negatively, but bonds and income-producing investments will be hurt more directly.  Rising interest rates imply that risk-free investments, such as certificates of deposit and treasuries, would generate yields close to those of other more risky dividend-paying investments.
    In other words, if general interest rates in the bank are near zero, it makes sense to take some risk for a 4% to 5% dividend.  You could do this by owning a bond or a stock such as AT&T.  But if rates rise and you can get almost that same yield with zero risk by owning a treasury or a CD, then the dividend from AT&T is not as attractive and investors will tend to move back to something that is more secure.  High dividend-paying stocks tend to follow the pattern of bonds.  As rates rise, bonds decline and higher income bearing stocks follow.
    An example of this can be seen in stock performances last year.  While the S&P 500 surged some 25% to 30%, bonds, REITS and preferred stocks were declining. Utilities struggled to hold their values.  The reason was that investors feared the kink in the hose finally straightened out and there was going to be a surge in inflation that would cause a surge in interest rates.  They also felt that this was all happening because the economy was finally recovering; therefore, smaller stocks did well as the dividend stocks floundered.
    Of course, some investors today say they don’t care about value as long they continue to get dividends. There are two problems with this line of thought.  First, dividends are not guaranteed.  Second, after 25 years of working with investors, I know that as investment values drop, investors lose confidence.  Trust me. They will care about the price!

 

How Much Income to Take from Your Portfolio
    It all comes back to developing a portfolio with real diversification.  Different types of investments behave differently under different economic conditions.  They also behave largely based on the expectation of those conditions in the future.  Therefore, although income stocks are a solid, conservative holding and have their place in a diversified portfolio, a retiree still needs to be invested in other areas that will ultimately allow the portfolio to grow, should the economy start growing.  The investor’s focus should not be on how the money, or income, is made.  It could be earned through dividends or it could be earned through appreciation or capital gains.  What is important is the bottom line value of the portfolio at the end of each year.
    Current wisdom is that a retiree should extract about 4% to 6% in annual income from a portfolio.  But this is only a general guide.  In the real world, if you have a $500,000 portfolio, you need to try to preserve as much of the $500,000 as possible.  If over a year you withdraw 5%, or $25,000, and the account ends up worth $530,000 at the end of the year, then you may feel comfortable taking a little more income the following year.  If, however, the value declined to $480,000, then you really should try to adjust downward the amount of income you withdraw.
    When I set up a retirement income account for a client, I generally select a dollar amount to be withdrawn from a money market fund on a monthly basis. This is based mostly on the client’s needs. This monthly systematic withdrawal gets dropped into the client’s checking account each month, very much like a paycheck.  The investor’s holdings are managed and adjusted as a typically balanced conservative portfolio. On a regular basis, investments are sold and the proceeds from sales are swept to the money fund to provide enough cash to generate the monthly check.  For a non-IRA account, the tax status has to be monitored with respect to the client’s needs.  This means we minimize capital gains, if possible, and also take losses to offset gains.  Also, if taxes are an issue, the tax impact of the dividend income generated should also be considered.  Keep in mind that gains from tax-free municipal bonds are generally taxed at a lower rate, making them a beneficial addition to some portfolios.

    The bottom line is that investing in retirement is not simply the pursuit of high yields; it is managing and adjusting a solid portfolio that will provide for your needs as times change. Times have changed dramatically over the past decade, and they will continue to do so in the future.  We all must be diligent in keeping up with those changes.

 

John R. Ruocco is sole owner of Asset Management Associates, a Connecticut-based financial advisory service.  John has provided independent, fee-only investment advisory and portfolio management services for more than 20 years. For more information, contact John R. Ruocco at 1-800-208-8588 or This email address is being protected from spambots. You need JavaScript enabled to view it. in South Windsor, CT. His first consultation is always free. Information, a brochure, and form ADV part II are available upon request; or log-on to www.assetmanagementassociates.com. John waives his fees for veterans and their spouses for the first six months of his service.

 

Editor's Note: The above article is for information purposes only and does not constitute endorsement or recommendation of any kind by the publisher.  Please seek appropriate investment or tax counsel before entering into any investment or financial transaction.

A Few Words about Bluffton, SC, one of Forbes Magazine's Best Places to Retire  

    I am not a big fan of "best of" lists as guides to where you or I might choose to live. These lists tend to use a range of criteria, often from widely different sources. And some of the criteria may not be high on your importance list, and features of importance to you may not have even been considered. These lists can make for entertaining reading but should be taken with a grain of salt as guidance.
    That said, some "best of" lists come to conclusions with which I agree substantially. One such list is Forbes magazine's The 25 Best Places to Retire in 2014, which includes four Carolina towns that we know well: Bluffton, SC; Brevard, NC; Charleston, SC; and Clemson, SC. Forbes' comments about each town are rather sketchy, with a few pros and one or two cons each, and you won't find any mention of top golf communities in each area. I am happy to fill that void, starting this issue with Bluffton and Brevard.

 

Bluffton, SC

     The golf community courses strung out along Highway 278, the road that comes off Hilton Head Island and bisects the town of Bluffton, rank among the best per square mile anywhere. There are also a lot of them, including Colleton River (45 holes by Nicklaus and Dye), Belfair (36 by Tom Fazio) and Berkeley Hall (another 36 by Fazio). Although the sweet spot for home prices in the three communities is generally in the mid six figures, a few lots are on the market for under $10,000, listed by owners who want to get out from under the obligation of club dues (which are attached to the property, not the individual). The most highly rated golf course in the area is May River, a Nicklaus gem set back four miles into the marshland that abuts the lush resort of Palmetto Bluff (pay the $500 nightly rate for lodging. and you can get access to the golf course, if you are not a member). One does not require a champagne budget, though, to find a terrific golf situation in Bluffton; for example, homes in the venerable Moss Creek, just off Hilton Head Island, start in the high $100s, with some sizable and nice-looking homes listed at $300,000 and up. The 36-hole Moss Creek layout was good enough to once host an annual LPGA event. At Hampton Hall, created by the developer of Colleton River, Belfair and Berkeley Hall, newer homes in the $300s look out on the Pete Dye layout.

    One of our customers scored an exceptional lot two years ago at Berkeley Hall. It looked over a pond and down the fairway of a par 5 hole, and it cost him (at the time) a mere $45,000. He recently completed construction of his new home. For those interested in learning more about Berkeley Hall and our customer's stories about building his and his wife's dream home, contact me and we will put you in touch.

ColletonRiverfinishonmarsh 
Parts of the Nicklaus golf course at Colleton River run along the marsh and Colleton River.

Brevard, NC

    Love of mountains or fear of hurricanes drive many retirees and others to western North Carolina, especially the area around Asheville. But for those who like their mountain towns smaller and more intimate, with an arts and crafts cachet, Brevard and its select group of golf communities within a half hour or so are worthy of strong consideration.
    The most "local" golf community, with a Brevard address, is the 3,900-acre Connestee Falls whose vintage George Cobb golf course changes elevations frequently as it bends and twists through the surrounding wooded hills that also help separate the layout from the surrounding homes, many of which hang above the fairways. The golf course is open to the public, at reasonable prices, but when I visited and played the course with a member, it appeared members dominate the rounds. Residents dominate the four mountain lakes inside the community's boundaries, and all the customary amenities are in place. Some lots remain for sale in Connestee for $10,000 and up, with a good selection of resale homes starting in the $300s.
    Brevard hosts a famous summer music festival; just a half hour through the mountain passes is Flat Rock, host to a famous summer theater festival and the home of Kenmure Country Club, a golf community that lives somewhat in the shadows of the nearby Champion Hills, in Hendersonville. Kenmure's golf course, by Joe Lee, is scenic and challenging and dominated by the Kenmure Mansion, the 165-year-old clubhouse that can be seen from many parts of the course. I have always been struck by Kenmure's reasonable real estate prices. For example, I note that a lot of nearly two acres is currently listed for $49,900, and a large detached villa –- 3 bedrooms, 3 baths, 2,590 square feet -– with a view of stream and woods, is listed at $265,000. Golf fees for the private club are reasonable as well.
    Other Brevard area golf communities to consider include Lake Toxaway, former playground of the Fords, Edisons and Firestones; the aforementioned Champion Hills, in Hendersonville, with its highly ranked Tom Fazio golf course; and the golf communities of Glen Cannon, Burlingame and High Vista.

 

   Larry Gavrich, Founder & Editor

   GolfCommunityReviews.com

   GolfHomesListed.com

 

 

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