PBS Frontline : The Retirement Gamble, sorta Must See (1 Viewer)

[NewlyRetired]

Yep.  I've been buying more international funds every year as that seems to be a segment that hasn't seen as significant gains as others.

The whole idea of re-balancing can be a test of ones financial discipline, because you often have to take money from "winning" legs to prop up "losing" legs in the portfolio.

It never feels good.  It almost feels like throwing good money after bad sometimes.

 

[NutterButter]

One of the more complex questions out there, believe it or not.  Do you want to take out the same amount every year?  Comfortable with taking out more in good years and less in bad?  Are you willing to let your allocation drift by taking out more in one allocation than another?   How aggressive do you want to be in stretching your money?  

Also, just for more complication, will you stay in the 15% tax bracket?  Perfect opportunity to shift monies from an IRA to a Roth and tax arbitrage there.

In the scenario I gave, yes, roughly same amount every year.    I realize the math might not add up.  That wasn't the point of what I was getting at. In real life, the amount would change once SS comes into play.  The allocation would follow the formula of 120-age equals stock while the rest is bonds.   Not sure about the tax bracket, but in real life, it would be more complicated as I'll have funds in a roth as well as an investment account so I'll try to maneuver things to minimize taxes.

 

[Doctor Detroit]

8 tips for saving BIG and retiring early

 

[ghostguy123]

. She stupidly converted the pension to a 401K (that was the dumbest thing ever)

I guess i have to ask.  Why is this the stupidest thing ever?

Not saying it isnt.  I have never even thought about this.

 

[wilked]

She must have got a raw deal

if they offered here a million dollars 401k for a $5k annual pension, that wouldn't be such a bad thing to do...

 

[Tiger Fan]

@NutterButterto give you an example of what we do now is this

1) have a cash account inside of investment umbrella

2) have bonds as ~1/3 of portfolio using a bond ladder

3) bonds generate money that streams to cash account

4) once a month cash account sends money directly to our bank to live off of

5) when bond matures, buy next bond to continue the ladder

This way we never touch the mutual funds in terms of having to sell any shares and just allow the bonds to generate the cash we need to live off of.  This allows our balance to remain intact with out having to shift money often.

This is all done in a non retirement account because of our age but the same general format is used frequently for people in retirement who need a monthly stipend from their investments to live off of.

Perhaps a dumb question...but are there any 'automatic' bond ladder type funds?

 

[NewlyRetired]

Perhaps a dumb question...but are there any 'automatic' bond ladder type funds?

I have read you can buy ETF bond funds and build a ladder from them but I don't have experience in that, as we use individual bonds.

 As with most things, there is no right or wrong answer.  Just need to explore options and pick one that works for your situation.

 

[Gawain]

I have read you can buy ETF bond funds and build a ladder from them but I don't have experience in that, as we use individual bonds.

 As with most things, there is no right or wrong answer.  Just need to explore options and pick one that works for your situation.

Where are you buying individual bonds? I have a ladder of T-Bills set up through treasury direct, but would like to branch out to municipals/corporate for better return.

 

[NewlyRetired]

Where are you buying individual bonds? I have a ladder of T-Bills set up through treasury direct, but would like to branch out to municipals/corporate for better return.

I don't.  My adviser gets them.  The whole reason I got her was for bonds as when planning, I could not seem to purchase the type of bonds I wanted due to extreme high minimum buys.  But when going through an adviser, they can pool money together from clients to get into certain vehicles that are out of reach for individuals such as myself.

We have a nice mix of bonds including plenty of muni's which are wonderfully tax efficient.  The goal is to keep every bond until maturity but she has sold a few earlier simply because it worked out better financially.

 

[Sand]

We have a nice mix of bonds including plenty of muni's which are wonderfully tax efficient.  The goal is to keep every bond until maturity but she has sold a few earlier simply because it worked out better financially.

I'm curious.  What are you invested in?  GO bonds, revenue bonds?  I've never thought of buying individual bonds - can you get diversified enough this way?

I've bought some CEFs but never gone this route.  Something to consider.

 

[Binky The Doormat]

I don't.  My adviser gets them.  The whole reason I got her was for bonds as when planning, I could not seem to purchase the type of bonds I wanted due to extreme high minimum buys.  But when going through an adviser, they can pool money together from clients to get into certain vehicles that are out of reach for individuals such as myself.

We have a nice mix of bonds including plenty of muni's which are wonderfully tax efficient.  The goal is to keep every bond until maturity but she has sold a few earlier simply because it worked out better financially.




 

Only 3-4 years ago, we had about 38% of our savings in various in-state muni bonds.  The interest rates were good enough that a number of them were redeemed ...down to 27% of our holdings (bought them in 2010).  

On one hand, it has upped the risk profile of our portfolio - but I have moved most of it into general vanguard market funds so we are doing better currently than we would have otherwise.   About time to reassess and will probably move some of those monies into bond funds.   

 

[Doctor Detroit]

This is the time of year most people with any kind of financial acumen look at their current financial standing.  Can I increase my 401k or equivalent plan contribution next year?  Do I have a car payment coming off the books?  Do I want to sell some losing stocks for the tax implications?  Do I want to throw some money at charity?  Etc, etc, etc.

So I'm looking through the thrift savings plan forum, and the talk there is supposed to be dedicated to government and military who have the TSP available to them.  Anyway this forum has a million sub forums, no questions get answered, there is a ton of terrible advice in there and the forum generally pushes you into these guys who run these market timing systems based on formulas formulated on a Radio Shack calculator and written in crayon.  I mean the TSP has five basic index funds and then some lifecycle target retirement funds that only include the base five funds.  It's not rocket science, and timing the market never ####### works. 

My point in all this is that this forum should be designed to address the issues of the normal stooge government employee who doesn't know how to invest, and it's basically a forum where 30-50 posters funnel everyone else into one forum where people talk about market timing trying to get people to buy premium services.  It's disingenuous, shady, and ill informed IMO.  I've seen so much better advice and guidance in this one thread than I ever saw in there, and some of you doods have big bank and still take the time to help.  I always tell people I know to never invest anything or buy an annuity or anything like that without talking to me first.  So many grifters out there looking to skim from the top in finance and investing, it's ridiculous.  

 

[rascal]

This is the time of year most people with any kind of financial acumen look at their current financial standing.  Can I increase my 401k or equivalent plan contribution next year?  Do I have a car payment coming off the books?  Do I want to sell some losing stocks for the tax implications?  Do I want to throw some money at charity?  Etc, etc, etc.

So I'm looking through the thrift savings plan forum, and the talk there is supposed to be dedicated to government and military who have the TSP available to them.  Anyway this forum has a million sub forums, no questions get answered, there is a ton of terrible advice in there and the forum generally pushes you into these guys who run these market timing systems based on formulas formulated on a Radio Shack calculator and written in crayon.  I mean the TSP has five basic index funds and then some lifecycle target retirement funds that only include the base five funds.  It's not rocket science, and timing the market never ####### works. 

My point in all this is that this forum should be designed to address the issues of the normal stooge government employee who doesn't know how to invest, and it's basically a forum where 30-50 posters funnel everyone else into one forum where people talk about market timing trying to get people to buy premium services.  It's disingenuous, shady, and ill informed IMO.  I've seen so much better advice and guidance in this one thread than I ever saw in there, and some of you doods have big bank and still take the time to help.  I always tell people I know to never invest anything or buy an annuity or anything like that without talking to me first.  So many grifters out there looking to skim from the top in finance and investing, it's ridiculous.  

Yeah, it's pretty awful.  I tell my employees to ignore it and give them time off for two local financial courses from local colleges.  I've gotten flack from management at times, usually bad managers, but my employees love it.

 

[Doctor Detroit]

Yeah, it's pretty awful.  I tell my employees to ignore it and give them time off for two local financial courses from local colleges.  I've gotten flack from management at times, usually bad managers, but my employees love it.

Good for you, that's a great idea! 

I send out emails trying to help people, they often get forwarded and I'm a benefits guru legend.  I still don't think people follow the advice though but it's the lead the horse to water thing, you can only do so much.  The way I see it is if I can impact even a couple of people then it's worth my time to put it out in electrons, I love this stuff anyway so it's not really work.  My boss said I'm a great "mentor" for doing it, but it's just giving people the information they need.  In private or public sectors there is so much out there that gives you a leg up, sharing that info to help your crew is what we should all do IMO. 

 

[NewlyRetired]

I'm curious.  What are you invested in?  GO bonds, revenue bonds?  I've never thought of buying individual bonds - can you get diversified enough this way?

I've bought some CEFs but never gone this route.  Something to consider.

My knowledge level of bonds is extremely low (which is one of the reasons we got an adviser to begin with).

From what I can tell, we have a mix of muni bonds from the names but I don't know how to break them down further.  I don't know whether bond funds provide a tax free vehicle but there are other reasons we want to keep our tax profile as low as possible and the muni bonds help with that.

 

[rascal]

Good for you, that's a great idea! 

I send out emails trying to help people, they often get forwarded and I'm a benefits guru legend.  I still don't think people follow the advice though but it's the lead the horse to water thing, you can only do so much.  The way I see it is if I can impact even a couple of people then it's worth my time to put it out in electrons, I love this stuff anyway so it's not really work.  My boss said I'm a great "mentor" for doing it, but it's just giving people the information they need.  In private or public sectors there is so much out there that gives you a leg up, sharing that info to help your crew is what we should all do IMO. 

I agree.  I know enough to tell them go talk to more knowledgeable people.

 

[Sand]

My knowledge level of bonds is extremely low (which is one of the reasons we got an adviser to begin with).

From what I can tell, we have a mix of muni bonds from the names but I don't know how to break them down further.  I don't know whether bond funds provide a tax free vehicle but there are other reasons we want to keep our tax profile as low as possible and the muni bonds help with that.

Bond funds (typically) shed interest, which is taxed as income, which is why they are often kept in tax sheltered accounts.  

 

[NewlyRetired]

Bond funds (typically) shed interest, which is taxed as income, which is why they are often kept in tax sheltered accounts.  

I think that is one of the reasons I have individual bonds since we want to have our income generating investments in our non retirement accounts since we need that money to live off of and we don't want to get any where near 72t at our age.

 

[pantherclub]

8 tips for saving BIG and retiring early

thats from 2012

 

[Sand]

Bond funds (typically) shed interest, which is taxed as income, which is why they are often kept in tax sheltered accounts.  

That may be the worst grammar I have put on paper in the last few decades.  My humble apologies to the board for that abomination.

 

[Doctor Detroit]

thats from 2012

So what?  What in that article doesn't apply to 2016? 

Cant wait to hear this.  

 

[James Daulton]

This is the time of year most people with any kind of financial acumen look at their current financial standing.  Can I increase my 401k or equivalent plan contribution next year?  Do I have a car payment coming off the books?  Do I want to sell some losing stocks for the tax implications?  Do I want to throw some money at charity?  Etc, etc, etc.

So I'm looking through the thrift savings plan forum, and the talk there is supposed to be dedicated to government and military who have the TSP available to them.  Anyway this forum has a million sub forums, no questions get answered, there is a ton of terrible advice in there and the forum generally pushes you into these guys who run these market timing systems based on formulas formulated on a Radio Shack calculator and written in crayon.  I mean the TSP has five basic index funds and then some lifecycle target retirement funds that only include the base five funds.  It's not rocket science, and timing the market never ####### works. 

My point in all this is that this forum should be designed to address the issues of the normal stooge government employee who doesn't know how to invest, and it's basically a forum where 30-50 posters funnel everyone else into one forum where people talk about market timing trying to get people to buy premium services.  It's disingenuous, shady, and ill informed IMO.  I've seen so much better advice and guidance in this one thread than I ever saw in there, and some of you doods have big bank and still take the time to help.  I always tell people I know to never invest anything or buy an annuity or anything like that without talking to me first.  So many grifters out there looking to skim from the top in finance and investing, it's ridiculous.  

So that's where @LHUCKS went!

 

[FUBAR]

This is the time of year most people with any kind of financial acumen look at their current financial standing.  Can I increase my 401k or equivalent plan contribution next year?  Do I have a car payment coming off the books?  Do I want to sell some losing stocks for the tax implications?  Do I want to throw some money at charity?  Etc, etc, etc.

So I'm looking through the thrift savings plan forum, and the talk there is supposed to be dedicated to government and military who have the TSP available to them.  Anyway this forum has a million sub forums, no questions get answered, there is a ton of terrible advice in there and the forum generally pushes you into these guys who run these market timing systems based on formulas formulated on a Radio Shack calculator and written in crayon.  I mean the TSP has five basic index funds and then some lifecycle target retirement funds that only include the base five funds.  It's not rocket science, and timing the market never ####### works. 

My point in all this is that this forum should be designed to address the issues of the normal stooge government employee who doesn't know how to invest, and it's basically a forum where 30-50 posters funnel everyone else into one forum where people talk about market timing trying to get people to buy premium services.  It's disingenuous, shady, and ill informed IMO.  I've seen so much better advice and guidance in this one thread than I ever saw in there, and some of you doods have big bank and still take the time to help.  I always tell people I know to never invest anything or buy an annuity or anything like that without talking to me first.  So many grifters out there looking to skim from the top in finance and investing, it's ridiculous.  

Oof.  I've never checked that forum, sounds horrible.  

Yeah, it's pretty awful.  I tell my employees to ignore it and give them time off for two local financial courses from local colleges.  I've gotten flack from management at times, usually bad managers, but my employees love it.

We start teaching another FPU (Ramsey's class) in a few weeks, I haven't encouraged my colleagues to join though perhaps I should.  I'd love to get into the next level without going full time into advising.  Your comment about the local colleges is a great idea. 

Along those lines, I've toyed with the idea of providing free advice to people in the adoption process with our agency.  Mostly budgeting and getting out of debt type advice and not much portfolio management.  Obviously I'd need to talk with the agency but what else would I need to do to protect ourselves from anyone thinking I gave bad advice?  I can get waivers created and as an attorney I'm used to dealing with PII and maintaining confidences but as a government attorney, insurance hasn't been an issue. 

 

[pantherclub]

So what?  What in that article doesn't apply to 2016? 

Cant wait to hear this.  

I would think the mortgage rates would be significantly lower from 2012 to now.   So it doesnt make all that much sense in paying off your mortgage early vs plopping the extra in retirement accounts or other investments

 

[FUBAR]

I would think the mortgage rates would be significantly lower from 2012 to now.   So it doesnt make all that much sense in paying off your mortgage early vs plopping the extra in retirement accounts or other investments

"In general, pay off your mortgage as soon as possible. With investment yields so low, and returns so unpredictable, using extra income to pay down a high-rate mortgage loan can be an excellent investment. In some cases it may make sense to keep paying a low-rate mortgage. But don’t underestimate the peace of mind and confidence that come from living totally debt free."

Seems applicable still, but I do agree that I'd rather invest than pay off the mortgage.  Would have said the same in 2012.

 

[Doctor Detroit]

So what?  What in that article doesn't apply to 2016? 

Cant wait to hear this.  

I would think the mortgage rates would be significantly lower from 2012 to now.   So it doesnt make all that much sense in paying off your mortgage early vs plopping the extra in retirement accounts or other investments

And you would be wrong.

Paying off a mortgage is still what most people would do and it's good advice.  It makes a lot of sense to pay down a mortgage early, especially if you don't have high interest loans or revolving debt.  Paying it off or not paying it off is a personal choice, but I don't know many people without a mortgage payment complain about not having one. 

 

[Binky The Doormat]

And you would be wrong.

Paying off a mortgage is still what most people would do and it's good advice.  It makes a lot of sense to pay down a mortgage early, especially if you don't have high interest loans or revolving debt.  Paying it off or not paying it off is a personal choice, but I don't know many people without a mortgage payment complain about not having one. 




 

Also peace of mind for many of us.  It's one less thing to worry about if things go south for you.  

 

[Jed]

1. open IRA account on TD Ameritrade
   
2. roll over scrilla to IRA account
   
3. purchase VTI, BND, and VEU in the percentages you feel is appropriate
   

or some other options similar to that.  I'm sure others will chime in.  This is what I do based on 100 pages ago in this threat

VTI, BND, VEU are vanguard low cost ETFs with commission free transactions at TD.  Total (US) stock market, Total (US) bond market, and Foreign stock market

There's other options to do essentially the same thing, but that's what I did.  I have a 401(k) located at TD(self employed) where I contribute once a month.  I keep the balances at roughly 60/25/15 stock/bond/foreign.  I'm 43 with retirement somewhere in the 55-60 range most likely. 

ETA: I honestly didn't take into account the last half of your post.  just going on "I've got money in an old 401k - I still want to use it for retirement - what should I do with it"?

Nice advice, one question though: Why open the IRA at TD? Why not stick with Vanguard especially if you are investing in those funds anyway?

Edit: I see others had the same question. Still don't see an answer though.

 

[FUBAR]

And you would be wrong.

Paying off a mortgage is still what most people would do and it's good advice.  It makes a lot of sense to pay down a mortgage early, especially if you don't have high interest loans or revolving debt.  Paying it off or not paying it off is a personal choice, but I don't know many people without a mortgage payment complain about not having one. 

For sure, I'm just thinking when the mortgage is under 4% it makes a bit less sense to rush to pay it off.  Security and emotional reasons would be the key. 

 

[Steve Tasker]

For reference, before I get into this blurb, I will specify that I am a CPA who works for a ~50-person public accounting firm.  In the past few weeks, two of our staff accountants and I noticed what I will call a peculiarity in our respective 401(k)s.  I won't get into too many specifics, but I'm one of the "higher-ups" in our retirement plan group and these guys audit a number of 401(k) plans for our clients.  This is to say that none of us have any control over our individual 401(k) plans with our employer, but know enough to know when something is fishy/doesn't look right as we work on such plans and advise on them to our clients.

I brought it up to our HR director who was astounded that no one had brought this up to her.  She is half-in-charge of the 401(k) plan, long story, but she admitted to me that she doesn't even check her own plan - she's not a numbers person.  Which is fine, but apparently the person in charge of the plan didn't notice these errors either....either because he was too lazy to review the 401(k) or just plain didn't notice.

Our managing partner flipped out and instituted immediate changes.  He is taking over control of the 401(k) and I presumably will become more involved going forward.  I brought up how horribly bad some of our investment options are in terms of fees, and they said that they hadn't really done a full overhaul and review of the investment options in years because no one ever complained before.  We will be moving to a new third-party administrator as a result of this as well.

The bottom line of this entire story is that if you feel like your employer isn't fully acting in your best interests on your 401(k) - say something.  It's easier for a 50-person plan to implement changes than a 10,000-person plan, obviously, but if you see something that looks fishy, say something.....it's possible that the people running your plan don't even notice it.  These plans are unbelievably complicated.

 

[Jed]

For sure, I'm just thinking when the mortgage is under 4% it makes a bit less sense to rush to pay it off.  Security and emotional reasons would be the key. 

My mortgage is 3.75 and investing is a tax shelter. No brainer to dump money in an IRA before paying off your mortgage to me.

 

[Sand]

For sure, I'm just thinking when the mortgage is under 4% it makes a bit less sense to rush to pay it off.  Security and emotional reasons would be the key. 

Mathematically it's an easy decision - carry the mortgage.  I'm at 2.875 and with tax deductions probably more like 2.5.  Beating 2.5% in this market is pretty easy (over the long haul).

Having said that, even though I should have gone for the 30 year, I went with 15 as I don't want the possibility of having one in retirement.

 

[Fruitbat]

Nice advice, one question though: Why open the IRA at TD? Why not stick with Vanguard especially if you are investing in those funds anyway?

Edit: I see others had the same question. Still don't see an answer though.

Mentioned above I don't recall exactly...might have been s-corp 401k options. Might have been because I didn't necessarily know I'd be going 100% vanguard. And since they are commission free at TD not sure there's a practical difference?  Was dipping my toe into self-directed investing for the first time. 

 

[Judge Smails]

Need to make a decision in the next 2 months.  Right now I have the bulk of my 401K money with my brother in law in a managed Wells Fargo account.  Returns have been so so, but the bigger issue is I don't want it to get personal and would rather keep money stuff out of the family at this point.  I have another couple hundred K sitting in my previous employers plan, which is through Fidelity.  Mostly target funds. 

Option 1: - Do it all myself.  Could go Boglehead 3 fund model.  I would also need to get a financial plan done from a fee only planner.  Don't know my number, would like to get a couple different scenarios as thoughts on retirement (location, when) have changed.  Do fee only planners update the plans on an annual basis?

Option 2 - UBS wealth management firm recommended to me (my President/mentor) bundles financial plan that is updated annually with their model of selecting individual securities (not funds) based on my objectives, risk tolerance, etc.  They are saying net fees (which includes the financial plan) are lower than the Wells Fargo account.

They compared my previous returns in the Wells Account only to what they would have done.  My brother in law blinked in February and suggested I get heavier in cash.  Of course then the market went up 3-4,000 through today and I missed a good chunk of that upside.  One of the reasons I want to get it out of the family.  From the UBS guys:

1.    Summary review of your current Wells Fargo IRA:

a.    Your Wells Fargo portfolio is currently 10.0% Cash; 42.0% Bonds; 42.0% Stocks; and 6.0% Other

b.    Ex-Cash - 90%+/- of the portfolio is invested in mutual funds

c.    The standard deviation (measure of volatility) of your portfolio is 7.20% or 42.0% of the U.S. Stock Market

d.    Your seven year returns ended April 15, 2016 are 6.29%

 

2.    Summary review of our proposal based on your current age of X and a retirement age of X:

a.    We will most likely recommend a portfolio of 74.0% stocks and 26.0% bonds

b.    The stocks will be split between Quality Growth stocks and Quality Dividend paying stocks

c.    The bonds will be 80.0% investment grade corporates and 20.0% Global Hi- Yield

d.    Overall you will own 50+/- stocks and 30 +/- Bonds – No single security will represent more than 3.0% of your portfolio

e.    The standard deviation (measure of volatility) of the portfolio is 10.44% or 62.0% of the U.S. Stock Market

f.     The seven year returns ended March 31,2016 (net of "ALL" investment fees of 1.15%) are 12.59% (includes ongoing financial planning)

 

3.    Our Wealth Management Philosophy:

a.    Start with a plan

b.    Keep it simple and consistent

c.    Know what you own and why

d.    “Quality does not matter until it matters, then it’s the only thing that matters.”

 

So basically they are saying I would have had double the returns with them than what I had with Wells.  

I'm getting bonus money in chunks now and need to be smart with it.   How much to keep safe in cash.  Pay off real estate? Buy more?  I'm willing to do the work to get educated.  I want a financial plan no matter what (what's a good one cost?).  I don't have a great accountant - not getting advice there.  I've done the basics (adequate insurance, trust, living will, etc) but I do need guidance.  My CEO basically does the Vanguard approach and then keeps one account where he can buy municipal bonds and other vehicles cheap when needed.  I could also just pick his brain - he's offered.

I know most here are of the do it yourself variety. But is it really that easy? 3 Vanguard funds and fuggedaboutit?

 

[Don't Noonan]

Need to make a decision in the next 2 months.  Right now I have the bulk of my 401K money with my brother in law in a managed Wells Fargo account.  Returns have been so so, but the bigger issue is I don't want it to get personal and would rather keep money stuff out of the family at this point.  I have another couple hundred K sitting in my previous employers plan, which is through Fidelity.  Mostly target funds. 

Option 1: - Do it all myself.  Could go Boglehead 3 fund model.  I would also need to get a financial plan done from a fee only planner.  Don't know my number, would like to get a couple different scenarios as thoughts on retirement (location, when) have changed.  Do fee only planners update the plans on an annual basis?

Option 2 - UBS wealth management firm recommended to me (my President/mentor) bundles financial plan that is updated annually with their model of selecting individual securities (not funds) based on my objectives, risk tolerance, etc.  They are saying net fees (which includes the financial plan) are lower than the Wells Fargo account.

They compared my previous returns in the Wells Account only to what they would have done.  My brother in law blinked in February and suggested I get heavier in cash.  Of course then the market went up 3-4,000 through today and I missed a good chunk of that upside.  One of the reasons I want to get it out of the family.  From the UBS guys:

1.    Summary review of your current Wells Fargo IRA:

a.    Your Wells Fargo portfolio is currently 10.0% Cash; 42.0% Bonds; 42.0% Stocks; and 6.0% Other

b.    Ex-Cash - 90%+/- of the portfolio is invested in mutual funds

c.    The standard deviation (measure of volatility) of your portfolio is 7.20% or 42.0% of the U.S. Stock Market

d.    Your seven year returns ended April 15, 2016 are 6.29%

 

2.    Summary review of our proposal based on your current age of X and a retirement age of X:

a.    We will most likely recommend a portfolio of 74.0% stocks and 26.0% bonds

b.    The stocks will be split between Quality Growth stocks and Quality Dividend paying stocks

c.    The bonds will be 80.0% investment grade corporates and 20.0% Global Hi- Yield

d.    Overall you will own 50+/- stocks and 30 +/- Bonds – No single security will represent more than 3.0% of your portfolio

e.    The standard deviation (measure of volatility) of the portfolio is 10.44% or 62.0% of the U.S. Stock Market

f.     The seven year returns ended March 31,2016 (net of "ALL" investment fees of 1.15%) are 12.59% (includes ongoing financial planning)

 

3.    Our Wealth Management Philosophy:

a.    Start with a plan

b.    Keep it simple and consistent

c.    Know what you own and why

d.    “Quality does not matter until it matters, then it’s the only thing that matters.”

 

So basically they are saying I would have had double the returns with them than what I had with Wells.  

I'm getting bonus money in chunks now and need to be smart with it.   How much to keep safe in cash.  Pay off real estate? Buy more?  I'm willing to do the work to get educated.  I want a financial plan no matter what (what's a good one cost?).  I don't have a great accountant - not getting advice there.  I've done the basics (adequate insurance, trust, living will, etc) but I do need guidance.  My CEO basically does the Vanguard approach and then keeps one account where he can buy municipal bonds and other vehicles cheap when needed.  I could also just pick his brain - he's offered.

I know most here are of the do it yourself variety. But is it really that easy? 3 Vanguard funds and fuggedaboutit?

I would be very careful of anyone showing you what your returns "would have been" as that is an industry no no for advisors.

 

[DocHolliday]

I vote for Smails to do it himself. 

 

[Sand]

 

2.    Summary review of our proposal based on your current age of X and a retirement age of X:

a.    We will most likely recommend a portfolio of 74.0% stocks and 26.0% bonds

b.    The stocks will be split between Quality Growth stocks and Quality Dividend paying stocks

c.    The bonds will be 80.0% investment grade corporates and 20.0% Global Hi- Yield

d.    Overall you will own 50+/- stocks and 30 +/- Bonds – No single security will represent more than 3.0% of your portfolio

e.    The standard deviation (measure of volatility) of the portfolio is 10.44% or 62.0% of the U.S. Stock Market

f.     The seven year returns ended March 31,2016 (net of "ALL" investment fees of 1.15%) are 12.59% (includes ongoing financial planning)

80 positions?  There is no conceivable reason for something this complicated.  As a topper I despise the bond allocation - bonds are there to counterbalance equities and 80% corporates does absolutely nothing there.  Having no UST exposure is loco.  And, as the kicker their investment fee of 1.15% is eye popping.  

This allocation has obviously done great during a strong bull market (and who knows, that may continue), but if we hit a sharp bear turn watch out below.  There is nothing that will keep this portfolio (which, to be honest, is actually 90+% equities) from taking a header into the abyss.

IMO, I'd post this on Bogleheads forum and see what they have to say.  I'll bet my comments are on the charitable side.

 

[Binky The Doormat]

Vanguard or Fidelity Judge.  

Looks like you have plenty to qualify for their advisors as well anyway.  Adding 1.15% to your annual return will be the best decision you can make.  

 

[mquinnjr]

http://www.marketwatch.com/story/passive-investing-a-winner-in-2016-shows-no-sign-of-stopping-2016-12-27

Suck it, non-fiduciaries.

 

[FUBAR]

Haven't checked in here in a while, but I'm roughly 3 months from "first retirement" and have my first job interview ever on Monday (ROTC - commission / job - retirement).

The interview is with first command financial services, somewhat similar to Edward Jones.  I might also apply to Edward Jones but haven't done so yet.  Honestly I'm not sure I want to leap into this field and need to know more about the expectations and compensation.  If it's just glorified insurance salesman I'm not doing it.  If it's actually helping people plan for their goals, I'm more likely to take it.  Pay appears close to what I would get in the government (all but locked, if I want it despite a probable delay).  

This job hunt stuff sucks big time. 

 

[NutterButter]

Haven't checked in here in a while, but I'm roughly 3 months from "first retirement" and have my first job interview ever on Monday (ROTC - commission / job - retirement).

The interview is with first command financial services, somewhat similar to Edward Jones.  I might also apply to Edward Jones but haven't done so yet.  Honestly I'm not sure I want to leap into this field and need to know more about the expectations and compensation.  If it's just glorified insurance salesman I'm not doing it.  If it's actually helping people plan for their goals, I'm more likely to take it.  Pay appears close to what I would get in the government (all but locked, if I want it despite a probable delay).  

This job hunt stuff sucks big time. 

This is a nice to have gig right just to fill your time and get you a little more spending cash?  Not a need to have?   I'd think it would be pretty relaxing knowing that your fall back is just continuing to be retired.   

 

[FUBAR]

This is a nice to have gig right just to fill your time and get you a little more spending cash?  Not a need to have?   I'd think it would be pretty relaxing knowing that your fall back is just continuing to be retired.   

My pension is good, by itself puts us roughly at the median salary in Alabama, but with 5 kids and aspirations of building a cabin soon, we'll need this salary.

 

[saintfool]

Haven't checked in here in a while, but I'm roughly 3 months from "first retirement" and have my first job interview ever on Monday (ROTC - commission / job - retirement).

The interview is with first command financial services, somewhat similar to Edward Jones.  I might also apply to Edward Jones but haven't done so yet.  Honestly I'm not sure I want to leap into this field and need to know more about the expectations and compensation.  If it's just glorified insurance salesman I'm not doing it.  If it's actually helping people plan for their goals, I'm more likely to take it.  Pay appears close to what I would get in the government (all but locked, if I want it despite a probable delay).  

This job hunt stuff sucks big time. 

Have you thought about becoming a certified financial planner? that might get you closer to what you want to do as consulting rather than carrying a quota or whatever.

 

[FUBAR]

Have you thought about becoming a certified financial planner? that might get you closer to what you want to do as consulting rather than carrying a quota or whatever.

Yes.   Looks like I can take a capstone course and then the exam. Haven't done so yet, figuring I don't know yet if I'll pursue this or get the GS gig. 

If I go this route, my current goal (maybe more of a thought) is to do this with a known company for a few years then start my own practice - estate planning and financial planning. 

 

[slackjawedyokel]

If someone had a traditional IRA maxed out and accumulated over 2015 and 2016 (x2 to include both spouses) to now be worth $22k (for sake of example, ignore gains), and also experienced a significant increase in income from 2016 (15% bracket) to 2017 (25% bracket), is it too late to convert that $22k portfolio to a Roth with the 15% tax basis now that it is 2017? Is it advisable to do so?  Just not sure the best route and I'm preparing to do my taxes but want to handle this transition wisely.

I thought I read somewhere that I would be required to pay taxes but could I not just pay taxes out of the balance of the IRA?

 

[Sand]

If someone had a traditional IRA maxed out and accumulated over 2015 and 2016 (x2 to include both spouses) to now be worth $22k (for sake of example, ignore gains), and also experienced a significant increase in income from 2016 (15% bracket) to 2017 (25% bracket), is it too late to convert that $22k portfolio to a Roth with the 15% tax basis now that it is 2017? Is it advisable to do so?  Just not sure the best route and I'm preparing to do my taxes but want to handle this transition wisely.

I thought I read somewhere that I would be required to pay taxes but could I not just pay taxes out of the balance of the IRA?

Not sure on the timing, but I'm also not sure why you'd be motivated to move the money.  There's no real reason to move the money, unless you like paying taxes.  Tax deferment up front is significantly better for wealth accumulation than tax free after the tax man gets his cut.  You will also likely get the chance down the line to move the monies from IRA to Roth at a low rate when you retire.

 

[slackjawedyokel]

Not sure on the timing, but I'm also not sure why you'd be motivated to move the money.  There's no real reason to move the money, unless you like paying taxes.  Tax deferment up front is significantly better for wealth accumulation than tax free after the tax man gets his cut.  You will also likely get the chance down the line to move the monies from IRA to Roth at a low rate when you retire.

Good points. Taxes are probably not decreasing over time so taxes now may be better than later at a higher rate. Age of distribution another factor. With transfer to kids some day another factor. Since I am planning on an early retirement (50ish or sooner) i want penalty-free access to my money up to the contribution amount right away.. 

 

[Sand]

Good points. Taxes are probably not decreasing over time so taxes now may be better than later at a higher rate. Age of distribution another factor. With transfer to kids some day another factor. Since I am planning on an early retirement (50ish or sooner) i want penalty-free access to my money up to the contribution amount right away.. 

If you want it right away that may decide what you do.  If you can survive for a few years without those funds you can do things like 72(t) distributions or slowly converting traditional to a Roth tax free (or very low tax).

 

[KCitons]

I think it was mentioned in this thread, but now I can't find it. 

How do you account for a mortgage that is paid off in your retirement calculations. I am looking to reallocate and not sure how this factors. (if at all)

 

[Binky The Doormat]

I think it was mentioned in this thread, but now I can't find it. 

How do you account for a mortgage that is paid off in your retirement calculations. I am looking to reallocate and not sure how this factors. (if at all)




 

You can choose to claim as an asset within your net worth calculation.  Unless you plan on selling it, I wouldn't claim it for the income calculation though.   

And count as real estate of course.