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Personal Finance Advice and Education!

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On ‎6‎/‎23‎/‎2016 at 3:41 PM, Vincesanity said:

There are typically 3-4 types of advisers/planners.

Work at a bank - salary and reduced commissions if any

A place like Edward Jones, Merrill Lynch, etc - starting salary for 2-3 years and commissions capped at usually 40% or so

There are places like TD Ameritrade or Fidelity, working in house for them but I don't know much about that.

Lastly you can be independent - no salary but 100% commission ( your actually commissions usually cap at 80-85% )

They all have pro's and con's....in my experience each one will match with your personality and how ambitious you are.  

The only one that allows you to be twin career and start part time is to be independent. The good thing is you can start slowly, the bad part is it takes time to build up income. The way the industry is going is most money management will be fee based going forward. To keep things simple if you are managing $1 million in assets after year one, charging an average of 1%, you'll gross $10,000 and if you are at 60% commission you'll net $6000. That isn't much to live on but the beauty of the industry is you maintain those clients/assets and continue to get paid each year. After 10 years if you're managing $30 million that's $300,000 gross each year....you get the picture. You can sell term insurance and financial plans to help supplement income as well but they're more icing on the cake. The majority of income comes from managing assets. 

 

It's hard to get started because it takes a few years to build up assets and produce an income. A saying in the field goes like this " You're underpaid the first 3 years, paid what you're worth the next 3 and overpaid the rest of your life". Maintaining the licenses and insurance isn't cheap ( $3-$4k a year ), offices, supplies, lead generation, etc etc. I think it's one of the best careers out there, you don't need a degree, licenses are key. There will be a lot of advisers leaving the field over the next 2 years, the average age of advisers is late 50's i believe and over the next 20 years there will be the greatest transfer of wealth we have ever seen. Great time to get started if you have the drive. 

 

good info here.  I haven't read the whole thread but, does anyone in this thread use a wealth mgr.?  I have been self managing via vanguard and am getting to the point when me and the wife are thinking about leaving and heading to Europe.  I would love a solid mgr. that doesn't pressure sell, but will sit down and give me a look.

 

tia

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8 hours ago, Chemical X said:

good info here.  I haven't read the whole thread but, does anyone in this thread use a wealth mgr.?  I have been self managing via vanguard and am getting to the point when me and the wife are thinking about leaving and heading to Europe.  I would love a solid mgr. that doesn't pressure sell, but will sit down and give me a look.

 

tia

What's your definition of a wealth manager? What are you specifically looking for?

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8 hours ago, Chemical X said:

good info here.  I haven't read the whole thread but, does anyone in this thread use a wealth mgr.?  I have been self managing via vanguard and am getting to the point when me and the wife are thinking about leaving and heading to Europe.  I would love a solid mgr. that doesn't pressure sell, but will sit down and give me a look.

 

tia

 

Vanguard has low cost, no pressure management advice.  Free (depending on amount you have), one time fee or you can have them manage it ...though the last option seems to defeat the purpose of Vanguard.

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i call an FA a wealth mgr (bank term).  saving enough?  projected income and assets?  stuff like that.

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10 hours ago, Binky The Doormat said:

Vanguard has low cost, no pressure management advice.  Free (depending on amount you have), one time fee or you can have them manage it ...though the last option seems to defeat the purpose of Vanguard.

I assume that only works if you're using their brokerage, not just buying their ETFs? 

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I want to buy a home in ~18 months. Does anyone put down 20% nowadays? We live in Atlanta area, and any decent home in a good area will cost 400k minimum. We could probably save enough for 10%, but 20% ($80k) would not be feasible because we want to concentrate a lot of our disposable income on paying down graduate loans.

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1 hour ago, Chemical X said:

i call an FA a wealth mgr (bank term).  saving enough?  projected income and assets?  stuff like that.

I can do it for you pretty easily.  We can do it in such a way that the info is all relatively anonymous.  I just did it for my father in law and am very confident in my ability to do it fairly well.  Shoot me a PM if interested

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11 minutes ago, Rick James said:

I want to buy a home in ~18 months. Does anyone put down 20% nowadays? We live in Atlanta area, and any decent home in a good area will cost 400k minimum. We could probably save enough for 10%, but 20% ($80k) would not be feasible because we want to concentrate a lot of our disposable income on paying down graduate loans.

What interest rate are your student loans?

How does your rent compare to your possible mortgage payment?

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14 minutes ago, Rick James said:

I want to buy a home in ~18 months. Does anyone put down 20% nowadays? We live in Atlanta area, and any decent home in a good area will cost 400k minimum. We could probably save enough for 10%, but 20% ($80k) would not be feasible because we want to concentrate a lot of our disposable income on paying down graduate loans.

Sounds like you're not ready to buy a home...

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12 minutes ago, Vincesanity said:

I think 20% is pretty common and a good strategy. I wouldn't get a mortgage that's over 25% of my take home income.

We went with zero down (actually like 2% but that's a different story) but that's because we got the VA loan.  If not for that, we'd have worked to get 20% down.  We're looking to either build a cabin in Tennessee or buy a beach house and we absolutely will pay 20% or more down for those.

PMI seems like a killer.  Agreed on the 25% rule too.

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Back in 2009 when we bought our house for cheap (foreclosure), we did an FHA loan (3.5% down) and also got the first time home buyer tax credit. I knew we weren't moving for awhile after the purchase and that the market was going to recover at some point. Granted, the market rebounded quitemail a bit more than we expected and we got a little lucky.

If I was going to do it all over again in today's environment, I would feel very uncomfortable putting less than 20% down. It wouldn't surprise me if values dipped a little bit in the next couple of years with the run up we've had. You might be paying PMI for awhile if you aren't putting 20% down.

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I bought my condo through FHA in early 2013 putting 3.5% down (rolled closing costs into the loan).  But at the time rent costs were just about the same in downtown Denver as mortgage + PMI + HOA + Insurance etc...  I think I was paying about $100/month more than I would to rent a similar place.  It was risky, but so far has been a really lucky investment since Denver has skyrocketed the last few years.  My PMI will disappear in 2020 with no changes since I'll be at 22% of the original value, but that was under the old FHA rules.  Nowadays you pay for the life of the loan.  If I were to switch to a conventional mortgage I'd have a lot more than 20% so I wouldn't be paying PMI anyway.  But I haven't switched yet because the value isn't really there.  I'll be out of PMI either way in 2018 (assuming we don't have a crash in Denver) just by paying an FHA approved appraiser (we have to wait 5 years before they'll cancel even if value is there).  I think I'd do the same thing if buying/renting are about the same cost.  But I don't think I would if renting was a lot cheaper even though I have been very very lucky so far.  I didn't feel stuck in my loan because I figured I could rent the place if I had to move for some reason and only be out ~$200/month on average in a bad economy.

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I don't know if this can be done anymore, but when I got my home in like 2008/9 timeframe my broker suggested I did an 80/10/10 to minimize my down payment and avoid PMI. Basically I took an 80% 30yr with the main mortgage company, put 10% down, and took out a secondary 10% 15yr loan with a different bank for the rest. Plan was to pay double on the 15 every month to get rid of it in 5 years as the rate was higher.

Not sure if that is an option anymore, but it seemed to work well for me.

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3 minutes ago, The Tick said:

I don't know if this can be done anymore, but when I got my home in like 2008/9 timeframe my broker suggested I did an 80/10/10 to minimize my down payment and avoid PMI. Basically I took an 80% 30yr with the main mortgage company, put 10% down, and took out a secondary 10% 15yr loan with a different bank for the rest. Plan was to pay double on the 15 every month to get rid of it in 5 years as the rate was higher.

Not sure if that is an option anymore, but it seemed to work well for me.

Interesting, but I'm surprised the second bank would be willing to do that. Their not the primary and you only have 10% equity. Someone else can weigh in but I'd be surprised if something like this is still available today. 

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2 minutes ago, eoMMan said:

Interesting, but I'm surprised the second bank would be willing to do that. Their not the primary and you only have 10% equity. Someone else can weigh in but I'd be surprised if something like this is still available today. 

the second one was with a credit union and was definitely at a higher rate, so I guess that's where they got theirs, hence the desire to pay off quickly. As you said though, that option may not be available (or legal) today.

The only minor downside was that I couldn't refinance without paying off that extra. I think I refianced around year 4, so I had to pay that off to get my equity up. Still think it was worth it to get the house without draining my cash fund.

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3 hours ago, Rick James said:

I want to buy a home in ~18 months. Does anyone put down 20% nowadays? We live in Atlanta area, and any decent home in a good area will cost 400k minimum. We could probably save enough for 10%, but 20% ($80k) would not be feasible because we want to concentrate a lot of our disposable income on paying down graduate loans.

How steady are your jobs?  How long do you want to be in Atlanta for?

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3 hours ago, Rick James said:

I want to buy a home in ~18 months. Does anyone put down 20% nowadays? We live in Atlanta area, and any decent home in a good area will cost 400k minimum. We could probably save enough for 10%, but 20% ($80k) would not be feasible because we want to concentrate a lot of our disposable income on paying down graduate loans.

Finish paying down your loans, then save like hell for another year to get as close to 20% as possible. You don't want to have loan debt and also be on the verge of being underwater on your mortgage should there be a decent drop in values. 

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Along the same lines, has anyone here built a home using a mortgage to pay for it?  How does the process differ from the usual appraisals and what-not?

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49 minutes ago, Tiger Fan said:

How steady are your jobs?  How long do you want to be in Atlanta for?

Steady jobs. Wife is a PA at a busy hospital in northern Atlanta, and I've had the same job for going on 5 years at a successful family business. Combined we make good money (over 160k). 

I've received literature from my wife's credit union offering 97% financing with no PMI. I'm sure they just include PMI into the mortgage, but I don't know. Haven't gotten involved with them.

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7 hours ago, FUBAR said:

I assume that only works if you're using their brokerage, not just buying their ETFs? 

Not sure, but I would think no matter what you are buying, as long as you have the minimum required amount that this support is included.  

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2 hours ago, FUBAR said:

Along the same lines, has anyone here built a home using a mortgage to pay for it?  How does the process differ from the usual appraisals and what-not?

We did this.  The house/land was valued prior to the loan being approved.  The only thing I remember really different is the staged release of dollars to the contractor based on construction milestones.  I don't remember if they sent out someone to check but we had to approve them.  They did a final inspection - I do remember that.  

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And your payment increases as the draws are done. So you aren't paying what will be your full mortgage at the beginning. Just near the end. 

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3 hours ago, Rick James said:

Steady jobs. Wife is a PA at a busy hospital in northern Atlanta, and I've had the same job for going on 5 years at a successful family business. Combined we make good money (over 160k). 

I've received literature from my wife's credit union offering 97% financing with no PMI. I'm sure they just include PMI into the mortgage, but I don't know. Haven't gotten involved with them.

With that income, I would just ease up on the student loan payments temporarily and go nuts saving the down payment. You'll have your 20% in no time.

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3 hours ago, eoMMan said:

With that income, I would just ease up on the student loan payments temporarily and go nuts saving the down payment. You'll have your 20% in no time.

We have no idea how what their loan balance or interest.  Too early to recommend anything.

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15 hours ago, FUBAR said:

Along the same lines, has anyone here built a home using a mortgage to pay for it?  How does the process differ from the usual appraisals and what-not?

I'm two months from being done with my house and building it with a construction loan. We did the plans first, took to a builder who gave us an itemized bid, I took that to the bank and they loaned me 80% of the appraised value. My goal was to build it with that 80% and save 20% by being the general contractor, thus basically putting 20% down without really using any cash. It's worked out well if you're up to the task and have experience. My construction loan is 6% and you pay that monthly based on how much has been taken out, so near the end it's pretty pricey, thus you don't drag out the process. 45 days out you work on the final mortgage and that's where I'm currently at.

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44 minutes ago, Vincesanity said:

I'm two months from being done with my house and building it with a construction loan. We did the plans first, took to a builder who gave us an itemized bid, I took that to the bank and they loaned me 80% of the appraised value. My goal was to build it with that 80% and save 20% by being the general contractor, thus basically putting 20% down without really using any cash. It's worked out well if you're up to the task and have experience. My construction loan is 6% and you pay that monthly based on how much has been taken out, so near the end it's pretty pricey, thus you don't drag out the process. 45 days out you work on the final mortgage and that's where I'm currently at.

Thanks! 

Why is it higher than most mortgages seem to be right now?  

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Because it's an interim loan and they're always higher, you're only paying that for 6-8 months while building. It's hard enough finding a bank that will even give you one, that process took me 4-5 months, had to go to a small bank where I could speak directly to the president.

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Construction financing is fairly common.  The bank extends you a construction loan and you pay interest during the construction period based on your borrowings.  Then once construction is finished you convert the construction loan into permanent financing.  I've never done it but see it pretty often at work, though mostly in commercial rental real estate.  A friend of mine built his house about a year and a half ago and the process was pretty much what Vincesanity is describing.

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another question. 

As I stated before, I've balanced our portfolio in the past considering everything in one basket - college, retirement and short term needs.  I've reconsidered that and am in the process of making changes - just sold a bunch of emerging international ETF (VWO) and bought into a corporate bond fund (VSLT).  But that move costs $7 to sell and $7 to buy.  While that isn't huge money, it's enough to make me not want to rebalance everything quickly.  I'm not all that interested in changing brokerages, although I might be convinced... but what do you all do when you rebalance?  Just cough up the transaction fees and knock it out, wait and just put more money into the areas you're below target? 

I'm tempted to not worry so much about international stock vs. US stock in each basket and focus on stocks vs. bonds in each - more heavily in bonds in the college funds of course, I'm still at ~3% in bonds in our retirement account, moving towards 33% in the college accounts.

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These are in a taxable account FUBAR?

 

All of my retirement is in tax-sheltered accts and I don't get charged for transfers.  If the dollars are big (XX,XXX or better) $7 is 'in the noise' realistically if you are rebalancing a couple times per year.

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14 minutes ago, wilked said:

These are in a taxable account FUBAR?

 

All of my retirement is in tax-sheltered accts and I don't get charged for transfers.  If the dollars are big (XX,XXX or better) $7 is 'in the noise' realistically if you are rebalancing a couple times per year.

almost all not taxable - Roth and Coverdell.   I'm buying and selling ETFs, not transferring between mutual funds.  (except with the TSP, no charge for that and over half our retirement funds are there - but it's the Coverdell accounts I'm talking about not wanting to make a lot of moves)

The moves are mostly in the thousands but not 5 digits. The fees end up being about 1% for each move, but if multiple moves that adds up.  Maybe I'm being "penny wise, pound foolish" by thinking too much about those fees.

Edited by FUBAR

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40 minutes ago, FUBAR said:

almost all not taxable - Roth and Coverdell.   I'm buying and selling ETFs, not transferring between mutual funds.  (except with the TSP, no charge for that and over half our retirement funds are there - but it's the Coverdell accounts I'm talking about not wanting to make a lot of moves)

The moves are mostly in the thousands but not 5 digits. The fees end up being about 1% for each move, but if multiple moves that adds up.  Maybe I'm being "penny wise, pound foolish" by thinking too much about those fees.

Why not transfer them into the equivalent mutual funds so you can rebalance going forward at lower cost?

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16 minutes ago, thecatch said:

Why not transfer them into the equivalent mutual funds so you can rebalance going forward at lower cost?

expense ratios. 

tell me where my logic, understanding or math fail - the ETFs I'm in range from 0.05% for a total index to 0.19% for an international small cap ETF.  Similar mutual funds at my brokerage and bank are 0.17% to around 1.1%  Just to use round numbers here, if I have $10,000 in VTI vs. $10,000 in the cheapest mutual fund, there's a difference of $12 per year in expenses, in the cheapest fund.  The more pricey accounts - usually international, become closer to $100 difference each year.  Granted, that's only for the holdings which are over $10k, which about half of my holdings are currently.  It would seem to make sense to buy mutual funds for lesser holdings.

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34 minutes ago, FUBAR said:

expense ratios. 

tell me where my logic, understanding or math fail - the ETFs I'm in range from 0.05% for a total index to 0.19% for an international small cap ETF.  Similar mutual funds at my brokerage and bank are 0.17% to around 1.1%  Just to use round numbers here, if I have $10,000 in VTI vs. $10,000 in the cheapest mutual fund, there's a difference of $12 per year in expenses, in the cheapest fund.  The more pricey accounts - usually international, become closer to $100 difference each year.  Granted, that's only for the holdings which are over $10k, which about half of my holdings are currently.  It would seem to make sense to buy mutual funds for lesser holdings.

Is your brokerage account at Vanguard?  I don't remember the ETF and mutual fund expense ratios differing much, if at all there. Since you apparently like the Vanguard ETFs, switching might make sense (if not already there). 

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16 minutes ago, thecatch said:

Is your brokerage account at Vanguard?  I don't remember the ETF and mutual fund expense ratios differing much, if at all there. Since you apparently like the Vanguard ETFs, switching might make sense (if not already there). 

pretty much my entire financial life is through USAA.  I might consider changing to Vanguard but the simplicity of having everything in one place is nice.

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USAA is about the undergo pretty substantial changes from what I've heard due to the changing DOT laws, have they informed you of anything?

 

I don't mind the $7 trades if it's less than 1%, just part of it. I would also highly consider Fidelity or Vanguard. You can still use ETFs and mix in some nice mutual funds to because in some sectors they'll outperform ETFs. 

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7 hours ago, Vincesanity said:

USAA is about the undergo pretty substantial changes from what I've heard due to the changing DOT laws, have they informed you of anything?

 

I don't mind the $7 trades if it's less than 1%, just part of it. I would also highly consider Fidelity or Vanguard. You can still use ETFs and mix in some nice mutual funds to because in some sectors they'll outperform ETFs. 

Transferring accounts is a pain.  I did it from buyandhold.com about 15 years ago and from sharebuilder maybe 10. But it does seem the smart move. I have been considering making that move before anyway, so maybe now is the time. 

And no, I haven't heard about any significant upcoming changes. I don't use their advisory services anyway.  Thinking about it, the only reason I use them for investments is convenience and that just isn't a good enough reason at this point. 

Edited by FUBAR

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On 7/21/2016 at 9:36 PM, Vincesanity said:

USAA is about the undergo pretty substantial changes from what I've heard due to the changing DOT laws, have they informed you of anything?

 

I don't mind the $7 trades if it's less than 1%, just part of it. I would also highly consider Fidelity or Vanguard. You can still use ETFs and mix in some nice mutual funds to because in some sectors they'll outperform ETFs. 

I have everything with USAA too (although I have IRAs that I contribute to every month at Vanguard). What changes are you talking about?

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They're doing away with the advisers and moving everything to the call center. If you handle things yourself it shouldn't effect you. Idk if that's the first step and later on they get out of investments, wouldn't surprise me. State Farm or Farmers is doing this as well, doubt anyone on here as accounts with them.

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On July 21, 2016 at 1:05 PM, FUBAR said:

another question. 

As I stated before, I've balanced our portfolio in the past considering everything in one basket - college, retirement and short term needs.  I've reconsidered that and am in the process of making changes - just sold a bunch of emerging international ETF (VWO) and bought into a corporate bond fund (VSLT).  But that move costs $7 to sell and $7 to buy.  While that isn't huge money, it's enough to make me not want to rebalance everything quickly.  I'm not all that interested in changing brokerages, although I might be convinced... but what do you all do when you rebalance?  Just cough up the transaction fees and knock it out, wait and just put more money into the areas you're below target? 

I'm tempted to not worry so much about international stock vs. US stock in each basket and focus on stocks vs. bonds in each - more heavily in bonds in the college funds of course, I'm still at ~3% in bonds in our retirement account, moving towards 33% in the college accounts.

How far are you off target. I personally don't bother until I'm 5% off (e.g., 60% target so 65% or 55%).  If that's too much for you, just change where the deposits are going to "rebalance" once you get a percent or so off. If you have to trade, if the commission is <1%, I'd be comfortable. 

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What you guys got for mobile budget and financial tracking that merges a bunch of accounts to one place?

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14 hours ago, culdeus said:

What you guys got for mobile budget and financial tracking that merges a bunch of accounts to one place?

Mint.com

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15 hours ago, culdeus said:

What you guys got for mobile budget and financial tracking that merges a bunch of accounts to one place?

i use mvelopes.com for budget/tracking

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16 hours ago, culdeus said:

What you guys got for mobile budget and financial tracking that merges a bunch of accounts to one place?

Personalcapital.com

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Wife is leaving her current job to be a substitute teachers aide. No benefits/retirement until hired full time. So we need to move her ~$8k 401k.

Does the Roth IRA contribution limit apply to transfers?

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10 minutes ago, BigJohn said:

Wife is leaving her current job to be a substitute teachers aide. No benefits/retirement until hired full time. So we need to move her ~$8k 401k.

Does the Roth IRA contribution limit apply to transfers?

No.

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