Retirement Planning - Lessons Learned

[Carl_NH]

I thought Fishers percentage fee went down as assets went up.

Yes, it does, I haven't gotten deep into the details yet - just looking, but Fisher estimated @ $1M investment would be $12K per year or 1.2%, and their starting investment is $500K.

Their pitch is theoretically a $1M investment can provide income of $80-90K annually including fees and not touch the principal.

 

[KennyG]

Relative to investment advisers and actively managed funds:

This has been studied in detail. In any given year, only 10 to 20% of actively managed portfolios will outperform the comparable index funds. This seems to be mostly a matter of luck, because when you look at the 5 to 10 year performance, the number of successful managed funds goes even lower.

I have followed the advice of investment professionals three times in my life, for a limited portion of assets. Each time it's worked out poorly in comparison to my own index investing. As a result, I don't even consider using an advisor. If you know nothing about investing, it may be worthwhile, but make sure you go with an advisor who will put you into low overhead cost investments.

 

[RickB]

I self manage a widely diverse portfolio that is 60/40 equities/fixed income. A couple years ago I spent a lot of time with an Edward R Jones rep to see if I should let an advisor handle the investing. He could not convince me that he could do better after fees than I do myself. Schwab is my brokerage but the funds I own are by no means all Schwab funds.

 

[JethroB]

I would say, for me, Vanguard is more of a manager than actively advising. They basically plug you into their computer model that fits your profile based on your age, goals, risk comfort level, etc. My cost is 0.30%. A little painful but worthwhile to me. Tweaks are done with my approval or request. The advisor will tactfully try to keep me on track.

Withdrawals are online and done via direct deposit to my local bank account. That takes a couple of days. Same day wires are available in an emergency. My advisor keeps the money market spending fund topped up to a balance I chose. If I have a large expense coming up I give the advisor a call.

 

[JethroB]

I do not know anyone that would sign up for 3% unless the advisor was Warren Buffet. 3% of net would be one thing but 3% of assets is $30,000 per million per year. That is a lot. I have my money mostly in Vanguard, Fidelity and T Rowe Price and will consolidate it at some point. How has Vanguard been in ease of distributions, speed, etc.?
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Yeah, this 3% firm is really catering to multi million dollar clients with complex needs. Or trust fund babies who don't know the value of a dollar. :laughing:

 

[goeduck]

I would say, for me, Vanguard is more of a manager than actively advising. They basically plug you into their computer model that fits your profile based on your age, goals, risk comfort level, etc. My cost is 0.30%. A little painful but worthwhile to me. Tweaks are done with my approval or request. The advisor will tactfully try to keep me on track.

Withdrawals are online and done via direct deposit to my local bank account. That takes a couple of days. Same day wires are available in an emergency. My advisor keeps the money market spending fund topped up to a balance I chose. If I have a large expense coming up I give the advisor a call.

0.3% is not bad, I could live with that.

 

[goeduck]

. We had two accounts - one Vanguard and one Ameriprise, invested the same in each for 5 years, and over that time the fee difference and management netted 25K more in the Vanguard portfolio in same period so we consolidated all into Vanguard.

Besides my T Rowe, Vanguard and Fidelity accounts my wife has an Ameriprise account. I am the least impressed with Ameriprise.

Another factor that I have to think through is a modest pension from my current employer. It was closed in 2014 and can only be cashed out when you leave the company. So I have to decide to take distributions or cash. I am thinking cash but it would depend on a few things. What have others done with private company pensions?

 

[3Ts]

What have others done with private company pensions?

Be careful here. What applies to others may not apply to you, everyone's situation is different, but I'm sure you know that.

My pension had many options. I took a fixed amount for life. No increases for inflation and income stops when I die (wife gets nothing from it). Wife also does not have a pension from her job. So, why this route? First, I retired early (57) and we needed a few extra dollars beyond our savings until I could withdraw from my 401k. This maximized the amount I'd get early on with a reasonable risk. Second, my 401k will provide enough funds for her to continue to live comfortably after I die and she won't need the defined benefit pension funds. So far the 401k has been meeting our goals.

 

[tallyho8]

Coming from a father and grandparents that lived through the Depression it was made very real to me at a young age when Grandma would point out all the neighbors by name and profession that lost their homes in the 1930's...

She was a cash and carry person... each market day started at the bank and everything was paid for in cash... thought credit was the path to ruin to her last breath.

That said she did have a modest mortgage and paid it off ahead of schedule... her outlook was you need a place to live so a mortgage done right would set you up at the end of the day compared to paying rent...

Guess I was one of those exceptions... being around a lot of older people the common theme was Real Estate... my horizon often was the time frame of owning free and clear...

That why I bought my first fixer at 22 and still have it today... condemnation hearing already scheduled but was able to make the deal and in 10 days the place was safe... amazing how a 30 yard dumpster, cutting back the overgrowth, some new window glass and paint can change things...

Your story is very similar to mine. My father taught me that real estate was the way to go as he saw so many people who lost everything in the depression except those who wisely owned real estate. He was very thrifty and told me never to spend money on boats, swimming pools, drugs or fast women. Though real estate is not for everyone. You must have some sense of real estate repairs and buying in areas of growth, not decline.

I bought my first fixer at 28 in 1973 for $15,000 and spent $5000 on repairs doing the work in my spare time. I still have it today though I have sold 3 other properties in recent years as they became headaches after I retired. I paid the first one off in 5 years spending only about $2000 on interest and realty costs. I lived there 3 years and have now rented it out for 45 years. I averaged $8000 a year profit on it (in 2021 dollars) after paying the taxes, insurance and maintenance costs and will probably be selling it in the next few years for at least $199,000. Figuring that $22,000 in 1973 is equivalent to $129,000 today, that's a profit of $70,000 on the sale and $360,000 in rent, total $430,000. The other 3 properties were comparable though I owned them for fewer years.

After interest rates on CDs fell to next to nothing I started doing a little investing in the stock market but only on my own hunches such as my last purchase was Carnival cruise stocks in April @ just under $8 and I sold them in December at almost $24, tripling my investment. I have a few other stocks that have increased in value pretty well but good hunches are few and far between.

I would recommend a young person with skills buying a Duplex fixer-upper in an area of growth and stable politics, for their first home.

 

[Hay Dude]

I do not know anyone that would sign up for 3% unless the advisor was Warren Buffet. 3% of net would be one thing but 3% of assets is $30,000 per million per year. That is a lot. I have my money mostly in Vanguard, Fidelity and T Rowe Price and will consolidate it at some point. How has Vanguard been in ease of distributions, speed, etc.?
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I have never felt like I waited long for a response by mail. One account has an RMD and the check arrives in 2 days.