Investment Thread

[Dr. Rosenrosen]

Been in that kind of mix since the 2000 crash.

I have a CFP advisor (not a paid fee / percentage) assigned to me through the company I have most of my holdings. He’s been trying to convince me of a few things:
1) I should pay the 1% and have someone manage my money
2) their most risky managed model is 70/30 stocks and bonds
3) my risk in a 100% stock/mutual fund (I listed what I have in the second post of this thread) is an exposure I should mitigate.

2017 was a good year in terms of financial growth. If nothing else, trying to be informed of options should I make a change (for the right reasons).

Not sure if this helps, thanks for the thought provoking questions.

I do think it's worth it. I used to question the value when I looked at my monthly statements and compared my guy's performance to the stock market. But he's achieving near the same return with FAR less risk in the portfolio - and helping protect me against nasty down side. My investment mix shifts ever so slightly from equities to fixed income each year as I move closer to my (hopeful) retirement. That's what you should expect for your 1% (or 1.5% as the case may be)... if they're good.

[Jeffrey]

Been in that kind of mix since the 2000 crash.

I have a CFP advisor (not a paid fee / percentage) assigned to me through the company I have most of my holdings. He’s been trying to convince me of a few things:
1) I should pay the 1% and have someone manage my money
2) their most risky managed model is 70/30 stocks and bonds
3) my risk in a 100% stock/mutual fund (I listed what I have in the second post of this thread) is an exposure I should mitigate.

2017 was a good year in terms of financial growth. If nothing else, trying to be informed of options should I make a change (for the right reasons).

Not sure if this helps, thanks for the thought provoking questions.

Thanks for pointing out the second post of this thread. I joined much later on.

Roughly, what percentage of your investments are in the Roth, Rollover IRA (is this a Traditional IRA?), 401k (is this a Roth 401k), and Norfolk Southern stock?

[Jeffrey]

But he's achieving near the same return with FAR less risk in the portfolio - and helping protect me against nasty down side.

How has he done that?

[fuse]

Thanks for pointing out the second post of this thread. I joined much later on.

Roughly, what percentage of your investments are in the Roth, Rollover IRA (is this a Traditional IRA?), 401k (is this a Roth 401k), and Norfolk Southern stock?

Other stock 2%
Roth 1%
Rollover IRA 85% (traditional not roth)
401k 7%
Corporate RSUs 5%

Yeah, the RSUs aren’t real until they mature.

[Jeffrey]

Other stock 2%
Roth 1%
Rollover IRA 85% (traditional not roth)
401k 7%
Corporate RSUs 5%

Yeah, the RSUs aren’t real until they mature.

As you know, having most of your investments in an IRA enables an advisor to suggest significant modifications without immediate tax consequences. Your advisor's opportunity would be different if 85% of your investments were in a 401k with very limited investment options.

However, maybe we can kick around some general ideas? We can move to PM or phone, if you prefer. Santa is already watching me and I need to up my game.

Have you ever done the math on converting some of your Traditional IRA to a Roth? Do you think you would be less exposed to unpredictable future personal tax rates by making a partial conversion?

[Jeffrey]

Rollover IRA:

FLBAX
FOCPX
FSCRX
FUSVX
HAINX

Isn't the first one (FLBAX) a bond fund?

[RPS]

Have you ever done the math on converting some of your Traditional IRA to a Roth? Do you think you would be less exposed to unpredictable future personal tax rates by making a partial conversion?

Assuming you have the cash to pay the tax on a conversion, this is a very interesting question. I expect taxes to be higher in the future and like the simplicity of being "done," so I like the Roth option (and am happy to have a Roth 401(k) option). You can hedge your bet, of course, and split Roth and conventional investments. My fear is that, at some point, income taxes will be frozen or reduced and a European-style VAT implemented, and my choice will turn out to have been the wrong one. But, in that case, I'd still be "done."

[Jeffrey]

Assuming you have the cash to pay the tax on a conversion, this is a very interesting question. I expect taxes to be higher in the future and like the simplicity of being "done," so I like the Roth option (and am happy to have a Roth 401(k) option). You can hedge your bet, of course, and split Roth and conventional investments.

Strongly agree! Note the very important need for the tax payment cash to come from elsewhere (not the IRA).

My fear is that, at some point, income taxes will be frozen or reduced and a European-style VAT implemented, and my choice will turn out to have been the wrong one. But, in that case, I'd still be "done."

I'm more concerned about Roth tax law changes. However, I'm betting we will be grandfathered.

[RPS]

I'm more concerned about Roth tax law changes. However, I'm betting we will be grandfathered.

Either way -- knock wood.

[OldPhiKap]

I likely think Bitcoin could be a whole thread unto itself (and blockchain another).

http://forums.dukebasketballreport.c...hlight=bitcoin

(Title has been changed a few times over the years)

[Jeffrey]

Either way -- knock wood.

No, I'm tired of hitting myself on the head.

[Jeffrey]

http://forums.dukebasketballreport.c...hlight=bitcoin

(Title has been changed a few times over the years)

Now, all this thread needs are guns. We have lawyers and money.

[Reisen]

What a good advisor/financial planner can do is seek to lower your risk profile without lowering expected returns, more closely match your investment portfolio with your goals and life plan, suggest financial planning options to make your financial life more efficient and productive, and help you stick with your plan when the markets aren't being cooperative. It shouldn't be a surprise, then, that the Vanguard study I linked above (and link again here) is focused on precisely the sorts of things that can add real value for consumers and comes to the conclusion that such advice is worth (not "costs" or "should cost") roughly three percent per year.

First, I want to thank both Jeffrey and RPS for their contributions in this thread. Great stuff! A couple of thoughts / questions for the whole board:

- I'm amazed no one has mentioned finch startups and roboadvisors like Betterment or Wealthfront. Anyone have any thoughts on those they would like to share? My understanding is they will do stuff like tax loss harvesting.

- How about any talk of real estate funds, commodity funds, etc? I have REIT funds as part of my portfolio, and have considered using realty shares.

- Any thoughts on peer to peer lending? I'm thinking stuff like Prosper.

- RPS, can you explain what you mean when you write "suggest financial planning options to make your financial life more efficient and productive"?

- My FiL has a large portfolio with a wealth manager. I agree with others that I feel she is more likely to motivate him to take action (buy, sell) than to stay the course and stick with his investments. This may be simply her giving him what he wants, but I wonder sometimes if she's not just justifying the (I suspect massive) fees he pays her.

- FWIW, I'm a counterpoint to the whole "people don't stay the course" argument (I recognize I may be an anomaly). I set a plan and stay the course, no matter what. For 15 years, I've continued to invest in equities (including international funds) and real estate, and have never owned bonds. The vast majority is in index funds, with a very few individual stocks and managed funds. Rather, I focus my time and attention on investment property and maximizing my contributions to our various investments (along with some balancing). I constantly have my friends, father, and father-in-law trying to give me advice or tips, but pretty much ignore it. I am 100% convinced that I can't time the market, so I don't even try. That said, I'm lucky enough that we have a decent-sized defined-benefit pension as part of our retirement strategy.

[Jeffrey]

First, I want to thank both Jeffrey and RPS for their contributions in this thread.

Thank you for joining us. I think fuse had a great idea starting this thread. IMO, this thread has great potential, if we can get many more active participants. We could even expand to more money topics (budgeting, money savings ideas, borrowing, etc.).

I need to go make some money, but I'll take a shot at a couple of your questions tomorrow.

[RPS]

First, I want to thank both Jeffrey and RPS for their contributions in this thread. Great stuff!

I appreciate the kind words.

I'm amazed no one has mentioned finch startups and roboadvisors like Betterment or Wealthfront. Anyone have any thoughts on those they would like to share? My understanding is they will do stuff like tax loss harvesting.

I know several of the leaders of Betterment and I think they are trying to do the right thing the right way. Especially for younger people, that's a fine choice. But digital "hand-holding" isn't easy.

How about any talk of real estate funds, commodity funds, etc? I have REIT funds as part of my portfolio, and have considered using realty shares.

I own REIT funds but not commodity funds. Outside of timber, commodities don't generally produce cash flow, so buying them is speculation as whether or not they will go up in price. I often tell people that gold looks pretty but does nothing.

Any thoughts on peer to peer lending? I'm thinking stuff like Prosper.

Outside my expertise (to the extent I have any).

RPS, can you explain what you mean when you write "suggest financial planning options to make your financial life more efficient and productive"?

Stuff like this (more here). Conventional wisdom says to spend from accounts in this order during retirement: RMDs, taxable, tax-deferred, and tax-exempt accounts. But that order isn't always optimal.

FWIW, I'm a counterpoint to the whole "people don't stay the course" argument (I recognize I may be an anomaly). I set a plan and stay the course, no matter what. For 15 years, I've continued to invest in equities (including international funds) and real estate, and have never owned bonds. The vast majority is in index funds, with a very few individual stocks and managed funds. Rather, I focus my time and attention on investment property and maximizing my contributions to our various investments (along with some balancing). I constantly have my friends, father, and father-in-law trying to give me advice or tips, but pretty much ignore it. I am 100% convinced that I can't time the market, so I don't even try. That said, I'm lucky enough that we have a decent-sized defined-benefit pension as part of our retirement strategy.

That's good. Very good. But you got started at a good time (post internet bubble) and the GFC, while painful on a percentage basis, didn't likely cost you a lot of dollars (because you were early in your saving/investing career). The rub will come when you have a significant portfolio and the market tanks. Sticking to your plan then won't be nearly so easy.

[fuse]

Isn't the first one (FLBAX) a bond fund?

It is- the amount of that fund is pretty tiny and an overall very small percentage of the total 1-2%.

[fuse]

First, I want to thank both Jeffrey and RPS for their contributions in this thread. Great stuff! A couple of thoughts / questions for the whole board:

- I'm amazed no one has mentioned finch startups and roboadvisors like Betterment or Wealthfront. Anyone have any thoughts on those they would like to share? My understanding is they will do stuff like tax loss harvesting.

- How about any talk of real estate funds, commodity funds, etc? I have REIT funds as part of my portfolio, and have considered using realty shares.

- Any thoughts on peer to peer lending? I'm thinking stuff like Prosper.

- RPS, can you explain what you mean when you write "suggest financial planning options to make your financial life more efficient and productive"?

- My FiL has a large portfolio with a wealth manager. I agree with others that I feel she is more likely to motivate him to take action (buy, sell) than to stay the course and stick with his investments. This may be simply her giving him what he wants, but I wonder sometimes if she's not just justifying the (I suspect massive) fees he pays her.

- FWIW, I'm a counterpoint to the whole "people don't stay the course" argument (I recognize I may be an anomaly). I set a plan and stay the course, no matter what. For 15 years, I've continued to invest in equities (including international funds) and real estate, and have never owned bonds. The vast majority is in index funds, with a very few individual stocks and managed funds. Rather, I focus my time and attention on investment property and maximizing my contributions to our various investments (along with some balancing). I constantly have my friends, father, and father-in-law trying to give me advice or tips, but pretty much ignore it. I am 100% convinced that I can't time the market, so I don't even try. That said, I'm lucky enough that we have a decent-sized defined-benefit pension as part of our retirement strategy.

Seconded on the thanks to Jeffrey and RPS.

I’ve looked into roboadvisors including the ones you mentioned. Been gun shy to make that change even though all the articles I read seem to indicate quants are taking over finance.

[fuse]

Anyone using the Personal Capital website/app?

[Reisen]

Anyone using the Personal Capital website/app?

I've heard good things. I view it as an alternative to Mint, which I've been using for many years (I like that Mint was started by a Duke dorm mate of mine, Aaron Patzer). I will admit Mint was better before it was bought by Intuit.

[Jeffrey]

It is- the amount of that fund is pretty tiny and an overall very small percentage of the total 1-2%.

Great, let's discuss.

You've owned a bond fund and elected to invest a very small percentage into it. Why?

You've owned stock funds during 2008 & 2009 and prudently did not liquidate, correct? You know that over an extended period of time (such as the 20-25 years until you retire and the 30+ years you will hopefully live in retirement) stocks will most likely earn the best returns, correct?

Do you believe interest rates will increase (maybe, substantially) during the next 24 months? If so, would now be a good time to invest in a bond fund?

If you would prefer an alternative to stocks, then my next post may address a better option.