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I started this as a stupid/small question in the megathread but it ended up being less small than I thought - I figured it'd merit a thread. We have a mortgage. We pay biweekly payments of $957.57, which includes $75 towards the principal per payment. All told including taxes and interest, we pay $1915.14 per month towards the mortgage. Its inception was 5/12, total amount roughly $228k. It's presently at $209,695. The principal/interest part of the payment totals $1155, after taxes/insurance $1839 (NJ is a pretty heavily taxed state, but the food rules and our families are here). We have no other debts, our cars are in good mechanical order, we anticipate no major structural failures to the house and we have good medical insurance. As it stands we'll pay off the loan 5 years early with the $75 extra towards principal per payment and biweekly payments, which isn't bad. However, we got a one-time gift from a family member - $16,000. I ran it through a one-time principal payment calculator, and assuming we make the same biweekly payments plus the $75 per payment towards the principal, we save $46,000 in interest over the life of the loan total and it gets paid off 7 years and 1 month early. However, we're a single-income household due to my wife being on unpaid disability, which hopefully will change once we get back Social Security disability and she gets better, which is still up in the air and in a legal process and medical process respectively. That $16,000 might be better off if I invest it. We've been saving major cash windfalls and working with a financial planner, who has done right by us and others and is a cautious, smart guy who makes good calls. Should I put it towards the house or invest it? If it goes to the house, would it even make enough of a dent in the biweekly payment to make a real difference, or would it be best to put the reduction in payment towards the extra principal payments? It seems unrealistic to expect a 250% rate of return if it was to be invested, even if that rate lasts to retirement. I should also note that we pay down our credit card monthly and are otherwise in the black - we make around $250 monthly contributions that we work with the financial planner on going towards my IRA and brokerage account as they recommend. MJP fucked around with this message at 15:08 on Mar 3, 2015 |
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Mar 3, 2015 15:05
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What's the term of your loan? Your current investments with the financial planner, what is your current annual returns from him and over what length of time? What's the interest rate on the loan?
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Mar 3, 2015 15:36
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I think a few other things are needed, too. Do you have a sizable emergency fund? Do you max your 401k match and IRA? Are you saving at least 15% of gross in retirement accounts, before taxable? Then to chime in to JohnGalt's point, whats up with the FP? You may consider just using Vanguard and DIY'ing... And we need more info on the loan such as duration and rate, too.
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Mar 3, 2015 15:45
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Term: 30 years, started 5/12. It was a refi of our initial loan, which was taken out a year before but so horribly bungled by PNC that we got a far worse rate. Current loan is 4% 30 year fixed. The planner's a smart guy with investments. I'm not. I generally keep an eye on the portfolio once or twice a week and talk to the planner if we need to make a change, which isn't too often. In the past if he's made a call that didn't do so well or broke even, he'll waive his commission. Our emergency fund is a savings account, roughly $8k. Our car insurances are $500ish comp/collision. I work in IT, my job is stable, and I've got enough experience that even when I was laid off or terminated in the past, I never went that long without a job commensurate to my current experience. I'm in northern NJ, so the job market is always decent for IT professionals. Our current investments are a pretty heavily diverse portfolio - we're covering a lot of Morningstar quadrants, varied industries, varied degrees of risk, etc. At present our portfolio's roughly $112k, cost basis $92k. I'm also contributing to my company's 401k at 6%, where 3% is matched at 50%, that's the max the company will match. The major strategy is that around $80k of the cost basis went towards low-risk or moderate-risk ETFs to establish a decent baseline for the future. The remainder has gone into higher risk, higher return ETFs or individual holdings that I talked over with the planner. We did well buying Citibank and Ford when they were very low and sold it not long ago, recently bought into EGHT, ADSK, and AMBA to get more into the tech sector. Overall rate of return on investments so far has been 20.84%, but that's since 2006 and only reflecting current holdings, not total portfolio holdings. The $250 we put towards our retirement accounts is around 12.5% of gross, and we generally keep it in a savings account tied to the brokerage, then make our investment decisions with the planner. In general we have around $800-$1000 wiggle room in our checking account that I'd really like to hang onto in case we need immediate emergency cash. The savings account is in Capital One 360, and it takes a couple of days to move funds. Keep in mind, single income - we've been single income since just around when we refi'd, and my wife hasn't worked since then. Happy to answer further clarifying questions. MJP fucked around with this message at 16:25 on Mar 3, 2015 |
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Mar 3, 2015 16:18
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That's a pretty lousy rate of return for 9 years, recession or not. You'd do much, much better with a 4 fund investing strategy. We can do some math for you to show you this, I'm at work on my phone so I can't do it till tonight. Can you see what your 2014 ROI was? And what is your commission fee, and your age? I'd probably consider throwing the money at your house, and maybe refi again as rates have recently tanked, if you could get a no fee refi. I'd also bump up your checking account a few grand myself.
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Mar 3, 2015 17:30
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At that rate of return you should put the windfall against the principle. It seems like your investments are kinda underutilized and wouldn't give you a return that is higher than your savings from paying off you're loan 7 years early would. If you wanted to invest the 16,000 at a much higher market exposure you could easily have returns that would be worth investing over putting into the house, especially if you can refi to a lower interest rate. Just don't give it to your current planner over putting it towards the principle.
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Mar 3, 2015 18:55
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I just had time to pull M* growth of 10k for Vanguard Target 2045, from 01/01/06-12/31/14. This assumes you put in equal 10.2k amounts per year. You would now have $137k, at a return of 49%. Completely hands off and beating the sh!t out of your 'advisors' portfolio. This happens 99.9% of the time, FWIW. Active advisors are a horrid use of funds. E: forgot the 'to' between pull and M* SiGmA_X fucked around with this message at 22:16 on Mar 3, 2015 |
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Mar 3, 2015 20:38
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Happy to see strategies that might work better, just so long as we don't risk our principal. I've come from a very risk-averse situation, given that if we lose out the principal we are going to be way way worse off down the road. I'm not really sure how to get just my 2014 ROI, though - couldn't find it on Sagepoint's website, nor in Google Finance. Commission fees vary but on average looks to be around $95. Refi rates seem to be at or higher than 4%, so it doesn't seem like that's the best option. This is a quick breakdown of our holdings: http://pastebin.com/uXe1zhyp The planner will definitely be open to higher exposure investments at present - he's the one that suggested a little bit more risk, hence AMBA/EGHT/etc. going forward, amongst others. Edit: I have no clue what time pull M is or what I should do with what you just said. I mean, I get that the Vanguard fund is a hands-off fund (I've seen stuff like it on 401ks) but $10,000/year is more than I'd ever put into a 401k. Should I be pushing my advisor to maybe re-evaluate the holdings I've got in my portfolio? He's been fairly conservative and has advised keeping stuff like CMACX, etc. as sort of a bulwark for the long haul. The idea of making my own calls about retiring based on the time and attention I devote to it is as foreign to me as major engine repair and more than a little intimidating. MJP fucked around with this message at 21:04 on Mar 3, 2015 |
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Mar 3, 2015 20:50
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You said you invested 92k with your advisor in the last 9 years, which works out to 10.2k a year. I typo'd, I meant 'time to pull M*'. M* is Morning Star, and they offer historical growth of a fixed dollar amount. What I did was put in time periods of 1/1/2006-12/31/2014, and copied the growth number into excel. Repeat for each year from 2006-14. The. Multiply it by 1.02 because you put in 10.2k per year based on your cost basis. Then added the individual growths to get 137k and a 49% cumulative return. If I were you, I'd pick up The Four Pillars of Investing and spend a couple evenings reading it. Then pull your funds out and stick them into a Vanguard Target fund and do nothing else. Your advisor is giving your bad advice that is greatly underperforming the market... In my opinion, anyone who invests more than 10% of their net worth into single stocks (sounds like you invest a lot of your investments in singles from what you've said so far) is playing with fire. Or picking really bad funds. (I haven't looked at your file yet due to being on my phone, I'll review it tonight.. But your returns don't lie.) Basically, you'll never beat the market with an advisor, and you'll get skimmed horridly. As you've seen this is what you've been doing, from what you've posted so far. I would suggest you go read the first post here: http://forums.somethingawful.com/showthread.php?threadid=2892928&perpage=40#post345722713 And buy this book: http://www.amazon.com/Four-Pillars-Investing-Building-Portfolio/dp/0071385290 Edit: This is the M* tool I was referring to: http://quotes.morningstar.com/chart/fund/chart.action?t=VTIVX®ion=usa&culture=en-US I would really, really, really strongly suggest reading the Four Pillars. And check out this article: https://www.bogleheads.org/wiki/Vanguard_four_fund_portfolio SiGmA_X fucked around with this message at 06:19 on Mar 4, 2015 |
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Mar 3, 2015 22:24
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This may sound dumb but I'll ask anyway. What if I'm not trying to beat the market per se, but instead am trying to have a secure nest egg for retirement? My wife has been unable to work since 2012 and we're not sure how much back disability we'll be eligible for, so my real concern is a loss of principal. Also, I should note that the 10.2k/year figure is based on single windfalls that have come our way. We had very little growth from 2006-2008, a minor spurt of buying once the market went very south in '08 (a minor inheritance from my grandparents' annuity), and after that, we had jumps upward after we bought our house in 2011 (we had more than 20% for down payment in gifts from both our parents, so we invested the rest) and I rolled over a 401k in 2012, then her father started cutting us in on his bonus checks (he's a senior exec at a huge company and the sole income earner; I expect he's making gifts of it to reduce taxable income). Insert "you spoiled brat" here. I know, I know. Things would be different if my wife didn't get sick. So honestly, to me, 20% annual return seems reasonable and pretty darn decent, so long as I keep contributing, no? Given that our contributions are really more reflective of 2011-2014, for which I'm actually asking the guy to pull annual rate of return since I couldn't find it. I mean, I make $80k, so 15% saved of gross is roughly $1000/mo - we can't do that with my income and the mortgage. Maybe a visit to the goon budget dude is in order, but I'm really still iffy about going solo in the market, even if it's in date-targeted and risk-targeted funds. We don't really have unreasonable spending - $60 for internet, $100 for phones, normal grocery spending and such.
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Mar 4, 2015 15:06
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I guess saying beat the market is a bad way to phrase it. In my opinion, the only reason to hold stocks or an actively managed portfolio is because you feel your advisor is able to out earn a balanced S&P, international, and bond fund. Your advisor has shown he does not get you better returns, and you're likely losing a lot of money both because you aren't making regular contributions (saving up X$ before investing vs auto invest every dollar transferred - look up 'dollar cost averaging') and you're getting charged fees up the behind. A $95 commission on a trade is highway robbery, unless you're trading many thousands of dollars at once. And then, still, over $0 is pretty bad IMO. I have never paid a fee on any trades, and my average ER is ~0.15% or so (not on my computer w the spreadsheets...) You don't have 20% annual return. You have 20% cumulative return, which is rather low for a decade of investing. If you listed the years and dollar amounts I could give you an estimate of what it would have earned in a zero effort, and likely far safer, mutual fund. I understand that you don't feel comfortable making the decisions, but you owning single stocks vs say 500-1000 stocks (total market funds, etc) is far more risky. I wouldn't want you to invest in something you're not comfortable with, but your current strategy is only 'comfortable' because you trust your salesman, I mean advisor. I HIGHLY suggest reading The Four Pillars. My folks are in their 60's and have done a poo poo job INVESTING (but a fine job saving thankfully) and their returns show it; my mom is also a bankruptcy turnaround specialist CPA and ex-CFO, so you'd think she was good at investing. But she, and my dad, were scared of the market due to all the downturns they have lived through. They read The Four Pillars and how have their money very, very safely invested with a high % of bonds. And they had the largest return on investment in their lifetime last year. I suggest you read that book, and consider your options outside of the advisory sales service. If you rethink your investment strategy, I would say put the money into your retirement funds. Otherwise, apply it to the mortgage.
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Mar 4, 2015 17:40
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Yeah, you aren't earning 20% annual return. You're getting hosed and your risk profile is probably worse, as Sigma_X said. If you are absolutely risk averse, bond market is fine, but if the S&P craters permanently you're going to have more serious problems than the amount of money you have in your portfolio (and your equity exposure in your portfolio would get hammered as well, so your actively managed money would not end up better off).
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Mar 4, 2015 17:53
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MJP posted:So honestly, to me, 20% annual return seems reasonable and pretty darn decent, so long as I keep contributing, no? The fact that you thought you had a 20% annual return and just thought of it as 'pretty darn decent' is, I think, a good sign that you may want to read up on some basics about investing. Even if you ultimately want to follow the advice of a financial planner, you should know enough about investing that you can understand what they're telling you, and be able to tell if you're getting taken for a ride.
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Mar 4, 2015 19:51
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SiGmA_X posted:I suggest you read that book, and consider your options outside of the advisory sales service. The book part will take time, but I'll see about giving it a shot. However, it's a way uphill battle for me to go headfirst into doing things solo. The advisor did a darn good job turning around the lovely annuity my grandparents bought into usable cash and has done well for my parents, who are retired and doing decently. Also I got the dates wrong - I started in 2008, not 2006. In 2008 we bought CMACX, JKE, JKL, JKF, EEM, and JKK (portfolio link is a few posts ago if anyone wants details), then we made no changes from '08 to '12, at which point we started getting the windfalls from my FIL. You think maybe I should talk to the FIL who's windfalling us and spend some time going over our portfolio with him? He's in finance and does everything himself for the family, and is a decent thinking guy. While I'm still a bit nervous about diving in, it's pretty telling that I think everything he does is through Vanguard in some way, shape or form despite working for another major financial company. Also let's say I do tell the advisor that we're done and move my stuff over - who should I talk to for sanity checks/second opinions?
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Mar 4, 2015 19:59
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MJP posted:Also let's say I do tell the advisor that we're done and move my stuff over - who should I talk to for sanity checks/second opinions? Where you're already asking. For example: http://forums.somethingawful.com/showthread.php?threadid=2892928
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Mar 4, 2015 20:06
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You don't do poo poo solo. You allocate a fund mix one time and then you put money towards it. You're making this way harder than it needs to be. You can talk to the FIL, probably a good idea, but having a specific portfolio of individual stocks is not a good idea if you are concerned about not knowing what you're doing.
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Mar 4, 2015 20:08
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KYOON GRIFFEY JR posted:You don't do poo poo solo. You allocate a fund mix one time and then you put money towards it. You're making this way harder than it needs to be. Op, if your FIL also believes in single stocks, you shouldn't take his advice either. MJP posted:The book part will take time, but I'll see about giving it a shot. However, it's a way uphill battle for me to go headfirst into doing things solo. The advisor did a darn good job turning around the lovely annuity my grandparents bought into usable cash and has done well for my parents, who are retired and doing decently. Vanguard has some podcasts about investing basics and mutual funds vs single stocks and passive vs actively managed funds. They're quite good and should help dispel the fear a bit. I'm not sure where to find them for DL, I've listened to them as published or live. If your FIL uses Vanguard, that makes me more comfortable as to his mentality. I'd suggest asking him about a good mutual fund allocation for your family. I hope he supports that vs stocks. Let us know! You can actually have Vanguard tell your advisor you're done, but being your folks use him, you probably should tell him yourself I guess. Or have your folks move at the same time!
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Mar 4, 2015 20:59
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OK. While I do get the logic of focusing more on a Vanguard fund or funds targeted at retirement date/risk acceptance I do also like the idea of directly diversifying. I think I'm nowhere near more than 10% of any individual holding in a single stock, but I will give the book a proper read and due consideration. If nothing else I'd like to avoid being the goon in the well, and to be honest, as long as I do well enough to retire at some point (given the economy and the world I'll just be happy to retire, period) I'm open to advice and hearing out alternatives. I'll hold off on using the windfall until I figure something out. Thank you for your patience and guidance, thread.
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Mar 4, 2015 21:46
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quote:I do also like the idea of directly diversifying
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Mar 4, 2015 21:49
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The beauty of something like Vanguard is that they do everything you want that your guy does for you, only better, and cheaper.
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Mar 4, 2015 21:50
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MJP posted:The advisor did a darn good job turning around the lovely annuity my grandparents bought into usable cash and has done well for my parents, who are retired and doing decently. You need to realize that you are currently not able to make any judgement whatsoever regarding your financial advisor's performance. Doing an accurate analysis of your FA's performance is complicated, and he is statistically very unlikely to perform better than a simple allocation to low cost, broad market index funds. I would at the very least recommend that you figure out how much your financial advisor's firm makes off you and your parents each year. That should be relatively easy and might motivate you to take control of your own finances.
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Mar 4, 2015 21:52
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Cicero posted:What does this mean and why do you like it? Having something like Vanguard 2045 with a majority or at least significant plurality of my holdings, with other ETFs as other pluralities, and a few single stocks to diversify once I'm at a place where I can tolerate a little more risk. Until we got to the $90k portfolio value mark that's how the advisor and I handled it, and that at least gave a secure base to try the single stocks as I discussed them with him. I mean, I'm still starting through The Four Pillars so my opinion/outlook could change. That's just where I'm coming from/how I've been doing things so far.
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Mar 4, 2015 22:27
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quote:a few single stocks to diversify You also didn't mention why you like that strategy, or in other words, what leads you to believe that this strategy is better than just buying the market and waiting. You probably can't give a real answer to that question right now, which was my point. So yeah, go blow through 4 Pillars.
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Mar 4, 2015 22:39
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A few people have harped on this, but I'm not sure that it's been made sufficiently clear how poorly OP's current advisor has done. It looks like ~2.5% annual returns (20.6% over 8 years). Compare to the last ten years on the S&P, which has averaged ~7.5% annually (sourced from Wikipedia). That means OP is paying someone to make him 1/3 as much money as he should be making essentially passively in the index. Needless to say, this seems like an awful, awful deal. Am I missing anything? Also, my understanding is that you shouldn't be paying for your own "guy" unless you have substantially more assets than what OP is dealing with. Edit: looks like the last eight years on the S&P might be closer to >5% returns, which is still double what OP is making. Vox Nihili fucked around with this message at 23:51 on Mar 4, 2015 |
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Mar 4, 2015 23:48
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MJP posted:Having something like Vanguard 2045 with a majority or at least significant plurality of my holdings, with other ETFs as other pluralities, and a few single stocks to diversify once I'm at a place where I can tolerate a little more risk.
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Mar 5, 2015 03:34
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Vox Nihili posted:A few people have harped on this, but I'm not sure that it's been made sufficiently clear how poorly OP's current advisor has done. It looks like ~2.5% annual returns (20.6% over 8 years). Compare to the last ten years on the S&P, which has averaged ~7.5% annually (sourced from Wikipedia). That means OP is paying someone to make him 1/3 as much money as he should be making essentially passively in the index. The current portfolio is not diverse. VTIXV, Vanguard Target 2045, is made up of 19,902 stocks and bonds. That is VERY diverse. And VERY simple, and yields great returns while being 'safe' as far as investing goes.
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Mar 5, 2015 03:37
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MJP posted:Should I be pushing my advisor to maybe re-evaluate the holdings I've got in my portfolio? He's been fairly conservative and has advised keeping stuff like CMACX, etc. as sort of a bulwark for the long haul. Sweet Jesus, that fund has an expense ratio higher than 2% (and so do the other Calvert funds your "advisor" has you in). For reference, over 1% is considered expensive and a very bad sign. Good domestic index funds are usually in the sub-0.1% range. CMACX is not a conservative long-term holding; it's a steady ripoff. Either your advisor is an idiot who's easily convinced by flashy marketing materials, or they're kicking something back to him. If you want to continue the car analogy, you're paying for blinker fluid, winter air in your tires, and a magic rock on your dashboard that prevents accidents.
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Mar 5, 2015 16:30
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moana posted:You have no idea what you just typed, but overweighting anything by buying single stocks is the opposite of a diversification strategy. Your FP has been loving you over for years. I'm sorry you're getting defensive, it's a natural reaction to having been hosed over. I hope you unfuck yourself soon, we will be glad to help you! That wasn't me being defensive. Someone had a question about what I meant by "directly diversifying" and I explained what my understanding of it was. I'm not sure if I seemed defensive, having stated that I'm open to ideas/criticism and acting on them - at least by starting on the Four Pillars book. My one concern is the hypothetical future. If I was to leave the FP, is it just that I'm basically putting everything into Vanguard 2045 and that's that? I guess what I could use is concrete advice given what I want to do with my money. Step one seems to be "get out of the planner." Step two seems to be "get into Vanguard 2045." Is that really it? Should I be doing nothing but maxing my IRA as close to possible (maybe I could do the windfall to the IRA so I could max 2015) and making normal regular contributions to a brokerage savings account which I then use to buy more Vanguard 2045? Like I said, I'm reading the book and am totally open to advice including leaving the advisor. I am giving it very real consideration. If it's "get into Vanguard 2045 and keep buying Vanguard 2045" then I would give that real consideration as well.
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Mar 5, 2015 16:44
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Space Gopher posted:If you want to continue the car analogy, you're paying for blinker fluid, winter air in your tires, and a magic rock on your dashboard that prevents accidents. Hahaha this is a great analogy.
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Mar 5, 2015 16:57
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MJP posted:That wasn't me being defensive. Someone had a question about what I meant by "directly diversifying" and I explained what my understanding of it was. If you want to get a little more involved, you could pick the same split (70/30 domestic/international, 10/90 bond/stock) and go for Admiral class funds, and invest in the 4 funds yourself. This saves a small amount of fees - but based on what you're paying now (5-10x a Target fund), meh. Fwiw I don't think you're being defensive (tho I'm not a great judge ha, give me lifeless numbers on the screen Kthx) but you more so have been misled by an advisor, and don't know better. One of my best friends had this happen. We fixed it!
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Mar 5, 2015 16:58
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SiGmA_X posted:Honestly that's really all you need to do. Depending on your age, change the target. My folks have a pretty large sum invested in a target fund cuz they want hands off. It works fine. I picked 2045 for my example cuz I figured you were in your mid-30's and had a rough 30yr till retirement time frame. OK. FeeX did a good breakdown of my fund holdings, showing what has lower expense ratios and higher rates of return (I found it by googling around arguments for/against financial planners, and it's actually a pretty cool and simple tool) and it definitely pointed towards Vanguard funds rather than Calvert. I'm going to sanity-check this with my FIL and another neutral party if I can find one, but I do intend to give it very real consideration. I think I'm better off than a lot of people in my peer group for saving to this degree but keeping it growing and secure is a real concern for the long term.
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Mar 5, 2015 17:05
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MJP posted:OK. FeeX did a good breakdown of my fund holdings, showing what has lower expense ratios and higher rates of return (I found it by googling around arguments for/against financial planners, and it's actually a pretty cool and simple tool) and it definitely pointed towards Vanguard funds rather than Calvert. 
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Mar 5, 2015 17:21
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MJP posted:I'm not sure if I seemed defensive, having stated that I'm open to ideas/criticism and acting on them - at least by starting on the Four Pillars book. "Keeping it growing and secure" - you'll get this from the readings, but these are two goals in opposition to each other. Risk and reward pretty much go hand in hand, and while you want to minimize risk, if you're doing it at the expense of your long-term returns you are not going to get the outcome you're hoping for. Preserving capital is fine for a 5-year time horizon, but investing conservatively will gently caress you over if you have a long time horizon. I think you're confused on this because of this part of your post: quote:The major strategy is that around $80k of the cost basis went towards low-risk or moderate-risk ETFs to establish a decent baseline for the future. quote:My one concern is the hypothetical future. If I was to leave the FP, is it just that I'm basically putting everything into Vanguard 2045 and that's that? Even if you picked a Vanguard Target retirement fund by throwing darts, you'd do better than you're doing with your FP. That's why we're all harping on you getting out of there. Pick a Target fund, move everything including your IRA into Vanguard, and keep reading. If you decide later you want to reallocate to different funds, you can always do that later.
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Mar 5, 2015 18:18
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MJP posted:That wasn't me being defensive. Someone had a question about what I meant by "directly diversifying" and I explained what my understanding of it was. Vanguard 2045 is good for exactly what it says on the tin: it gives you a mix of index funds that are well diversified and automatically rebalanced for retirement in 2045, plus or minus a few years. If you're worried about the complexity of investing, putting your entire IRA balance into Vanguard Target Retirement {{year I want to retire}} gives you a safe and good one-button retirement strategy. You can read more and adjust things later if you want to, but it is very unlikely that you'll ever look back and say "I regret putting money into that target retirement fund." It's hard to beat Vanguard; that's why they're the largest mutual fund company on the planet despite very little advertising. If you want to put money into non-retirement investments, the target retirement funds are not the best choice, because they do their rebalancing with the specific target date in mind. For money you expect to spend in a few years, cash in a high-yield savings account is king. The returns stink, but stocks and even bonds can suffer short term dips - no big deal if you're decades out and can afford to let the market catch up over the long term, but really lovely if you're trying to buy a house and need the down payment or something. If you find yourself with a cash surplus after you've funded your expenses, emergency fund, and paid off debt, and you haven't maxed your available retirement accounts, up those contributions first. Even a bad fund selection in a 401(k) is likely to win after you take the tax advantages into account. Finally, if after all that you still have a pile of cash you're not sure what to do with, congratulations, you're rich. Vanguard has some "LifeStrategy" funds that work on principles similar to target retirement, except without the end-date-focused rebalancing. Those are likely your best choice - which one in particular depends on things like your tax situation. This is often where it pays to get an accountant to tell you what to do.
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Mar 5, 2015 18:24
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MJP posted:The book part will take time, but I'll see about giving it a shot. However, it's a way uphill battle for me to go headfirst into doing things solo. The advisor did a darn good job turning around the lovely annuity my grandparents bought into usable cash and has done well for my parents, who are retired and doing decently. If your FIL does finance for the family I hope he's not the one that got you in touch with that shyster of FA that put you in a horribly under performing portfolio with a dumb amount of fees. The number one reason those funds exist is because people are easily scared into giving money to sharks. The numbers never add up but people continue to make serious money on the fees and they are aggressive about keeping that going. So, if your FIL is the one advising an adviser that put you in this spot, steer clear. It's ok to be a little defensive, this is hard to adjust to a new thinking. You are doing ooooohkaaay in the sense that your returns are not nothing, but you could be doing way better and it's early in the game to right the ship and stop feeding the sharks!
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Mar 5, 2015 18:31
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AgrippaNothing posted:If your FIL does finance for the family I hope he's not the one that got you in touch with that shyster of FA that put you in a horribly under performing portfolio with a dumb amount of fees. The number one reason those funds exist is because people are easily scared into giving money to sharks. The numbers never add up but people continue to make serious money on the fees and they are aggressive about keeping that going. So, if your FIL is the one advising an adviser that put you in this spot, steer clear. No, the FA came from my parents' recommendation. Again (in a not defensive fashion) they're doing well with him but they're baby boomers who are retired. The in-laws' family has no adviser, I think the FIL does everything himself. So here's a hypothetical scenario that I'm looking at: 1) Transfer IRA to Vanguard, sell all funds for Vanguard 2045 2) Transfer brokerage holdings to Vanguard 3) Sell longest-held brokerage investments first 4) Use proceeds to max IRA for the year 5) Use remainder to throw $10k at the 401k (maximum contribution to the 401k for my company is $18k if you're under 50 and I set aside around $6000 after maxing the match) 6) Do something that minimizes the taxable burdens for the rest, basically acting on Vanguard's advice
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Mar 5, 2015 19:53
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Are they doing well, or are they doing well in the sense that you are doing well? Don't get fixated specifically on Vanguard 2045 - I think you're missing the forest for that particular tree.
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Mar 5, 2015 19:59
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KYOON GRIFFEY JR posted:Are they doing well, or are they doing well in the sense that you are doing well? They take something like six vacations a year. I'm fairly sure that a paid-off mortgage that originated in 1986 on a house that was bought before the big suburban NJ real-estate boom with a two-income family, one of which was a matrimonial attorney and paid-off cars probably helped them out a lot. I'm looking more at 2045 as a backbone for our plans - the IRA would go into it for sure, and depending on tax-deferred options (since we're 60/40 standard post-tax brokerage/IRA) I'd look at covering the Morningstar quadrants with other Vanguard funds to explore a little outward. I guess replace "Vanguard 2045" with "future plans" as needed. But again, this is why I was asking for specific advice. I get what the point of this thread is - to learn and develop on my own - but for now there's a very concrete amount of money that I need to figure out what to do with, the sooner the better.
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Mar 5, 2015 20:07
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Taking six vacations a year doesn't mean they are doing well either. They could just be making poor choices.
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Mar 5, 2015 21:11
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If you have a decent sized pile of money, like most attorneys end up with, it's not hard to live off of your portfolio without issue, and optimal management of your money is less of an issue.
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Mar 5, 2015 21:25
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