@notrichenough Yes, the life insurance company tracks basis (premiums paid less any rebates, refunds, etc) and will issue you a 1099 in the year you dispose of the policy.
@Madison85 - Thanks. Do you know if it is treated as ordinary income or dividend/interest income?
Hmmm, I think it is a 1099-R and it is ordinary income for the excess over basis.
We only have some of our retirement money with our FA because H is still working and we cannot move money from that active 401(k). However we can see from meetings how much our financial picture is changing over time with the two pots of money. The FA was able to divest a lot more of our money into safe and good yielding places (for example we were able to get some annuities that the Ins co is going to not continue to offer because they are not making enough money off of the product while we are). Lowering our risk while stabilizing our ROI was very important to us at age 58.
It is not a black and white issue, is it good or not good to have a paid FA. When one of you says a paid FA (non-fee based) is expensive, again cost/benefit. If they cannot provide you advice that has a good bottom line impact for youā¦
Just like not all funds can do as well as others. Even when invested in the same sector (for example technology or REIT).
However the one thing that is important is that you understand your investments. Cannot put your head in the sand as Hannahās parents had done.
My ex-brother in law forged my sisterās signature on the form for doing futures trading (since her signature was on-file, the broker should have checked because the signature was clearly forged) - the $80,000 in losses did get moved to his side of the divorce, but the broker could have lost his license for proceeding with ex-BILās trades when it was a joint account w/o permission of the other account holder. Every once in a while this broker is at a function where my sister is there with her new husband, and he kind of hides.
āLowering our risk while stabilizing our ROI was very important to us at age 58.ā - Sounds like the right way to go.
Yes we feel very fortunate to have found the right kind of advisor. We have gone to two client dinners, and sat with like minded people. I do sleep better at night and glad H understands more of the way our money in retirement will work. Beating stage III cancer also has me sleeping better at night.
There are things one can control and things one cannot control. Having information for good decision making to try to avoid the āpitfallsā.
So much is written now in many good publications to empower people to learn what they need to learn in their financial decision-making.
āLowering risk while stabilizing return,ā is a good aspiration, @SOSconcern. Iām wondering how to best evaluate how risky my portfolio is.
I know the beta on my investment portfolio, but that (.73) just seems to indicate that it is less subject to market movement than the S&P 500 would be. (The S&P defines a beta of 1.0) Since my returns average around the S&P 500 (some years a little better, rarely more than a point below), I think my risk-adjusted return is āgoodā ā but is it good enough? Iām not sure how to think about that. But if most of the stuff in my portfolio heads the same way in a big downturn, then Iām not sure Iāve done a whole lot to lower my risk. It used to be that balancing stocks and bonds was a good solution, since those tended to head in opposite directions, but that seems to be less true today, and I still canāt seem to make myself buy individual bonds at the offered interest rates. Blech. I do have a high yield bond fund, but Iād say that it is probably more risky than many things, though it has performed well over the past five years.
@arabrab, a high yield bond fund should probably be counted as equities when determining asset allocation. Btw, it is not necessary that stocks and bonds move in opposite directions (ie, correlation of -1); it is sufficient if there is a moderate lack of correlation.
Is anyone willing to share their current asset allocation between stocks/bonds/cash? I calculate this every January and was surprised at how lopsided things had become this year due to outperformance of stocks. We ended the year about 70/20/10.
55% stock / 35% bonds / 10% cash
For our age, weāre probably overweighted on stocks, but since both of us will receive pensions, we feel itās within the realm of prudence.
So I admittedly donāt know what Iām doing, however, our allocation is about 85/0/15, though the 15 isnāt really cash, itās part money market, part high investment grade bonds. However, overall, our entire net worth is about 1/3 in real estate.
We have significant assets tied up in real estate as well, plus a pension with COLA that pays for all our annual expenses. We have about 40% stock, 10% bonds and 50% cash, tho we will be investing it in index fundsāstock and bond.
We are 50% equities and 50% bonds and cash, and we rebalance every quarter with our Schwab boys. I feel comfortable that my allocation is correct for right now (Iām 66 and DH is 64). If you want to include real estate, I guess we are actually 1/3 RE, 1/3 stocks, and 1/3 bonds/cash. But I generally donāt count RE, since we have to live somewhere and itās not liquid.
We are at 55/45, on a glide path from 60/40 to 50/50, where I expect we will stay. The 45% bonds includes some small amount of cash ā we start in February with bonus cash, invest some, pay taxes with some, and let it go down gradually during the year. Next February, rinse and repeat.
Pensions are a fixed income substitute.
Soā¦pensions are a substitute for bondsā¦if you wish.
āSoā¦pensions are a substitute for bondsā¦if you wish.ā
I wonder what kind of formula you would use for that. We seem to be pretty heavily weighted in equities compared to people our age, and we are still waiting for a market dip to invest even more in equities.
Like VeryHappy, we donāt count our home as an asset. It may be an asset for our hopefully distant estate but as VH says, you have to live somewhere.
BTW, Iām not sure Iām comfortable receiving financial comments from someone who looks like heās behind bars. Itās like weāre speaking with Bernie Madoff or something. Can anyone vouch for you, dstark? Or maybe you need a file smuggled in inside a cake?
The formula is what makes you comfortable and covers your needs and wants.
There is a lot of cushion in these formulas.
I know somebody who is 100 percent in munis. He has enough assets, can generate enough income and he doesnāt want to pay attention.
Then there are people who are 100 percent in equities. They can afford potential losses and donāt care about market gyrations.
Most people are somewhere in between.
We have enough assets an our real estate doesnāt inclue our house, just rental properties for which we collect rent and report said rent (minus depreciation and expenses) on our taxes. We will likely go to 45/45/10%, I think. I know we are pretty conservative because our pension is guaranteed for Hās lifetime and at a lower rate for mine as well. We are fortunate it has some COLA built in. Have had some bad financial advisors over the years and are slowly doing things ourvselves.
Hayden, if you only knew. 