Can’t you talk to Schwab and or Fidelity advisors for free?
I don’t like paying fees, but talking to an advisor can be helpful.
IMO, it’s like hiring a cleaning person. You can clean the house yourself but simpler to pay someone to get it off your mind. It’s not necessarily because you can’t do it yourself. I’ve been doing this for about two years. I sometimes miss having a FA to sweat it out instead of me.
@dstark, yes, but usually there’s a minimum asset level involved (there is at Vanguard anyway).
Ok. Thanks.
I understand the impulse: we have a housekeeper (converted from a nanny when we needed one), a landscaper, a trainer, a dog trainer, etc. I enjoy financial stuff as a hobby, but if it weren’t for that, I don’t think it would take more than 5 hours a year. LBYM. Invest in low-cost funds. Stay the course. Keep it simple.
LBYM? Sure, I did all that. You still have to balance and there are many ways to do that not to mention detaching your emotions is not always simple unless you are managing someone else’s money. Managing money is a chore to me.
Live below your means. Never seen that one before.
^Thank you. So many acronyms these days. I was on hold at schwab the other day. Half of the recorded message was made of acronyms, If you do ABC, expect to be EFG, FED announced HIJ… I had no idea what it was saying.
I apologize for that acronym. It’s such a mantra at Bogleheads, that I just don’t think twice. Someone there did point out that it could stand for Live BEYOND Your Means also 
I’ve talked with some Schwab advisors. They mostly have products they are interested in selling, so far. I have an appointment later this month for their “Intelligent Portfolio,” and we will decide whether we keep assets with them or move it all to Fidelity or Fidelity & Vanguard. My advisor strongly promoted “Windhaven,” even though I told her we were interested in passive index mutual funds. They tried us with another broker who was trying to get us to pick individual stocks. This is the third advisor they are trying us with. We may just leave some of our assets there and invest on our own. We do like that there are low cost index ETFs and mutual funds with Schwab, so we may just do those ourselves and ignore the noise.
The one problem we have with both Schwab and Vanguard is that they don’t have ONE DURABLE POWER OF ATTORNEY form and it’s a hassle to get them to figure that portion out. We want a durable power of attorney and Fidelity is the only brokerage that calls their form a Durable Power of Attorney (all in capitals and bold letters). The last thing we want is to have hassles over forms when one of us is doing poorly and we want the other or appointed durable power of attorney to be able to promptly act.
"Unfortunately, during the fiasco of 2008, Hannah’s parents were told by their broker to sit tight and not to sell; they were told that the losses they had were just paper losses. If I lose 50 percent of my money, well, that is a real loss to me. How about you?
And while their portfolio might be back to the amount it was six years ago before the crash, Hannah’s parents lost six years! That means any interest that they could have earned, let’s say 6 percent, has been lost every year. Now, what is 6 percent on a million, and another 6 percent, and another 6 percent, so on and so forth . . . well, a lot! Hannah’s folks are six years closer to retirement, and well behind where they could have been."
That doesn’t even make sense to me. Most people only lost money from 2008 to now if they sold back then. If they hung on and didn’t sell, like Hannah’s parents, they should be way up, on average. Yes, if you lose 50% and then sell, you have locked in that loss. But if you didn’t, the market is way up since then.
I didn’t mess up too much in 2008. I sold a bit, and for awhile all my contributions went to cash. Wish I hadn’t done that, as dollar cost averaging during that period would have been very profitable. My five year average is around 12%, and I’m fairly happy with that, but I don’t manage it much. It could have been much better if I would have just kept putting the money in.
I see four issues brought up with this story…
One is the time value of money. If your investments are worth the same as they were 6 years earlier, the advisor is saying you are a loser over the 6 year time span because the money did not work for you.
The second issue is asset allocation…
The third issue is market timing. Getting out or reallocating assets as the market moves…that works better if you aren’t fully invested in the asset that is declining in price the most or your allocation of that asset isn’t maxed out.
If you are 100 percent invested in stocks and the market drops, it is hard to invest more money in stocks. I guess you can buy more stocks on margin as stocks drop. I don’t recommend this for older folks.
Finally, the averages of returns among different asset classes do not present an accurate picture of your assets if you are in retirement and spending down your retirement assets.
Big declines in asset prices will hurt your portfolio even if averages say otherwise if… You have to sell assets in market downturns.
If you are going to live in retirement without selling your assets … You should be ok .
I’m suspicious of any FA who advises you to time the market after the fact. Let me see his audited results during 2008 showing he got his clients out of the market before the drop, and back in after it hit bottom.
I got the annual statement for a small universal life policy my parents got for me over 30 years ago. The insurance cost has gotten prohibitive, they are charging me at least 3x what the insurance cost of an equivalent term policy currently is. It’s not very competitive at all. The returns are not very good either, at around 4%. And it’s going to expire in 6 years unless I really up the payment.
It has a small cash value of around $5k, so I am thinking of surrendering it and taking the cash. I don’t really need the insurance any more.
Does anyone know how to calculate how much will be taxable? All I find online is that it is based on the “policy basis”, but I don’t see any info on how to calculate that.
I agree about the fa looking back.
Notrichenough, you are going to recieve $5,000?
That’s the current surrender value.
Well… Then how much can the tax be?
The financial planner I know best spends a lot of time working with clients and helping them understand where there money is going (spending) and how that does/doesn’t align with their goals. Getting people on a budget that works seems to be key to putting them in a position to have or increase investments. Add to that keeping them from doing stupid (like early withdrawals from 401K or IRA plans) and I suspect that she’s worth every penny of her fees. None of this is rocket science, but the degree to which people ignore those basics makes me wonder whether I’m overestimating what most people are capable of doing on their own.
Well… worst case is 100% of it is taxable as ordinary income.
But I apparently (should) have some sort of basis that will lower the income. Hopefully the insurance company tracks it.
Yes…
“One is the time value of money. If your investments are worth the same as they were 6 years earlier, the advisor is saying you are a loser over the 6 year time span because the money did not work for you.”
I suppose so. Then again, I was making the assumption of what the person was invested in…ie a heavily stock weighted portfolio, and that may not be what an elderly person might be invested in. I think most people would have been doing pretty well if they had a portfolio full of equities, if they left everything in and just kept dollar cost averaging in, and not moving anything out. But of course, the sky was falling, people were thinking about buying gold (and bullets) and hiding it under their beds. I’m sure it was hard for most to keep money in the market. I work with many people who pulled it all out, and are still waiting for a big crash to reinvest it. And waiting, and waiting…