Hey, I was surprised when I read it. I thought the probability of a PR junk bond paying off as about as close to zero as any.
Obviously, those who bought at the low point ($0.21 on the dollar of face value) presumably thought that the chance of paying off was non-zero.
Weāve had our finances reviewed via a service that is a perk from my employer. They donāt sell anything. They suggested for diversification we should consider putting a small amount (I think 5 or 10% of IRA funds?) into REIT funds.
I read this article a couple of days ago. Apologies if it has already been brought to your attention. I will post a couple of sentences from it that gave me food for thought. Basically the article says you need to run several different retirement scenarios because retirement plans do not usually work out exactly as planned.
regarding age of 61 āā¦That is, people who plan to retire earlier than that age tend to retire later, and those who plan to retire after 61 retire earlier than expected. Each planned retirement year (earlier or later) results in a half-year difference in actual retirement age. For example, people who plan to retire at age 69 likely will retire at 65ā¦ā
I thought this statement was weird because there was no context for how much a person has already saved āā¦For example, if you aim to work to age 69 and withdraw 4 percent annually, the amount of money you are saving now should be ratcheted up by 80 percentā¦ā
That is more than a little alarmist or am I missing a key concept?
I think the key concept is folks are assuming they can work as long as they wantāthe job will be there, their health will be OK, they will still be valued and they donāt save as much as they COULD because they figure they have so many, many years to save.
The article points out that savings rates of 3% (avg) are so low that even doubling them to 6% would help and also that being able to work as long as one wants or projects can be beyond oneās control, especially as projections are beyond 61 years of age.
We were very fortunate that H was able to work with same employer to the ripe old age of 70, as he desired. He mostly enjoyed his job and was valued and his work life coincided with major billsākidsā college & mortgage. For many reasons others canāt do this.
Absolutely true, but they forget/ignore the affect of compounding. In other words, gotta save a whole lot more (in pure dollars) in your late 50ās than you do in your 20ās. Of course, you are probably making more in the 50ās.
That was my plan until I got fired last year, six years earlier than plan. Fortunately, we eschewed vacations at the beach, and banked it instead, so weāll be ok if I donāt find another job.
I find it ironic and sad that while people are encouraged to save, the American economy is highly dependent on consumer spending and borrowing.
If everyone lived the āMillionaire Next Doorā lifestyle, the economy would tank.
SSSSSSHHHHHHHHHH!!! Some crazy consumer will hear you and then the rest of us will stop getting richer! 
@sherpa ; Consumer society doesnāt necessarily need to be for āstuffā. It can also be for services. We can support the arts, research, assistance in many forms. I wish we could steer away from stuff (thatās the other thread)
Do you use a Financial Advisor to help for retirement?
Other than savings, we will have no other retirement income besides SS, so our investments are crucial.
We currently have a FA, but are debating the cost vs. benefit. Fee is slightly less than 1% of assets under their care. Good news is that our portfolio grew over the last 7 years (as has most investors). Bad news is that their fee (and percentage) has also. They explain that the funds they can choose as a FA (which supposedly we cannot) have lower fees, so their performance is slightly better than a similar targeted mix of funds. I doubt that they are using Vanguard as a comparison. Iād like to compare their results with that of a portfolio invested in a similar Vanguard mix, over the last few years, but donāt know how to do that.
What we like: They are a āfiduciaryā (supposedly put our needs first). It is a medium sized firm, increasing the likelihood of smooth transitions should someone leave. We meet yearly (or as needed) to assess retirement goals, and any changes. We can do this ourselves online, but their analysis does appear thorough. They monitor our investments and adjust to maintain our preferred balance , so we can think about other things, and only occasionally review. They are always available to ask general questions.
What we donāt like: Fee has grown substantially. We have approximately 2/3 of our savings with them. The remainder is in a company 401k and bank accounts. We see no need to have this $$ with a FA, and pay a percentage, but they gently remind us that it would āsimplifyā our lives to have all accounts under one roof (and increase their take). That alone seems a conflict of interest. They do not assist with any legal issues (trusts, inheritance, etc.) or taxes, although will work with whoever we may choose. They suggested we work with our tax accountant when closer to retirement to evaluate which accounts should be tapped first for tax planning purposes, so that will be another expense.
Are there financial planners that charge an hourly advisor fee instead of a percentage (I have not found any locally)? It seems to me that we could invest with Vanguard, and perhaps request a quarterly review with an hourly planner for a lot less fee, and continue to work with our accountant for tax and withdrawal advice.
@kjofkw , I am as dumb as a sack of hammers. Nevertheless, I have managed a substantial portfolio pretty well. The last time I checked, our weighted average expense ratio was 8 basis points. If your FA charges 100 basis points right out of the gate, your funds would have to ācostā negative 92 basis points to break even.
The reason I āgetā for a FA is for those people who canāt resist getting greedy when things appear good, or who panic when things arenāt. Still, 100 basis points is a lot of friction to overcome.
@kjofkw If I understand you correctly, your FA makes money not only by charging you approximately 1% of assets, but they also get fees (commission?) on investments they purchase for you. So, on a hypothetical $1,000,000 in assets, they get an annual fee of $10,000. Then if your assets do well, and double in value to $2mm, their 1% fee will now be $20,000 per year - and you are saying that isnāt enough for them, now they are charging more? like 1.25% and itās because the commission products they buy for you earn them less money? I donāt like that approach/rationale at all! [And as a side note, Fidelity just announced new funds with ZERO fees (so expense ratio is zero), and zero minimums, so that is the industry direction, ie lower fees]
Absolutely not. Dartboards have beaten FAās.
Net of the their fees and taxes?
Ask your FA for a complete list of all funds and current dollar amount in each. You can look them up on Morningstar and find their target benchmark, major stock holdings, risk, etc. For example, one fund my momās FA recommended was AB Discovery Growth.
http://performance.morningstar.com/fund/ratings-risk.action?t=CHCLX®ion=usa&culture=en-US
Fidelity even lists comparable funds that it offers:
https://fundresearch.fidelity.com/mutual-funds/summary/018636100
Alternatively, you could post your list of funds on the Bogleheads.org website and theyāll provide plenty of free advice on what Vanguard (and Fidelity and Schwab) funds would be comparable.
Then you could look them up and see what the results would have been over the past xx years if you had invested in similar funds yourself.
And this is key āIF YOU HAD INVESTED IN SIMLAR FUNDS YOURSELFā
Would you have? Would you have chosen better investments? Would you have put it all in Money Market Funds to keep from having to make a decision? Would you have chased the latest hot stock or sector?
If you can/will educate yourself enough to come up with a plan, and if you have the discipline and emotional stability to stick with it, and if you and your spouse can agree not to blame whoever is managing the money if the market goes sour and your account values drop, then you can certainly do this yourself. But not everybody fits that description, probably much less than half the population, maybe less than 10%.
For the other 50-90%, a competent and honest financial advisor might be worthwhile, even though s/he will cost you a bundle over time. The key then is to make sure your FA is at least competent and honest, and I donāt know how to do that. There are a lot of sharks out there.
My DH as a financial advisor - me. I have bogleheads.
I am not very trusting of financial advisors. Perhaps if it was someone I knew or someone that had been highly recommended by a friend, I would be comfortable with him or her.
If I did have an FA, I would prefer it to be advice paid on an hourly basis, not based upon how much I had invested with them. I would never have someone manage my money who was also getting commissions based upon what product they sold me. I canāt believe that they could keep the fiduciary relationship as the top priority in that case, though they could always rationalize it.
We have a friend manage a portion of our money for a 0.75% annual fee, but he trades stocks constantly with that money and does extremely well. He really works for it, and doesnāt just plant it in a mutual fund and take a cut from it. He does not advise us otherwise, but I kind of wish he would, because he is very smart and extremely ethical.
I canāt imagine a fund that has lower fees than Vanguards funds. I would be highly suspicious of someone who claimed they could access lower fees. Vanguard will also manage your money for a very low cost, if youād like it to be managed.
@kjofkw, do you mind telling us what funds they are? I am curious, and someone might be able to help you compare them to Vanguard funds. I am a big supporter of Vanguard (a non profit) and have never had them push a single thing. I think you might be right to consider moving your funds there and just rebalancing them when you need to.
I think a better description for Vanguard is mutually-owned, similar to a mutually-owned insurance company. I wouldnāt call it non-profit.
@busdriver: Thanks. Will doā¦ but may take a few days until I get to it. @NJres: NO, they donāt double charge. Our fee with them is strictly a percentage of the funds under their care. They do not charge again to buy/sell/trade. No commissions. Obviously if we do well, they do better as well, so that should be a win-win. They only invest in various funds (no direct stocks), and while we COULD do that ourselves, Iām guessing neither of us want to do the research necessary to pick and choose. We would probably just go with a Vanguard Target or Index mix.
Iām typically decent at financial matters, but have to admit as I age, I want to spend my time on other things, which is why an hourly advisor seems appealing for occasional questions and review. I am also noticing I donāt have the patience I once had. Maybe a lot more wisdom, hopefully, but not quite as quick or sharp. ;-( I assume this just gets worse, which is another concern about managing ourselves as we move into retirement.
If you can get a decent FA at a reasonable fee, I donāt see anything wrong with working with a FA. I also manage my own money. It is a chore.
Iāve admitted it before, but since 2008 I have fidelity manage my accounts. I hate paying that 1%, but Iām too lazy to do the research. I meet regularly with my advisers and go over retirement planning, social security, budget, etc. when I know Iām having a 2 hour meeting to discuss down sizing or not, I do my homework. Without these meetings, Iād revert to,pure laziness.
Iām find with managing my Vanguard and a few stocks, which I hold forever.