Looking to Improve Knowledge re: finance/economics

[BLADEMDA]

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[BLADEMDA]

 

[BLADEMDA]

The best predictor of your investment returns going forward is your sector allocation. That is where you must work to develop the plan which accomplishes your goal.

 

[BLADEMDA]

 

[Mman]

Those of you out there without a MASTER PLAN for retirement need to get going on one. The most important parts of the plan are asset allocation (major), passive investing in your taxable accounts (major), passive investing in your retirement accounts (I chose active mutual fund managers for 50% of my retirement portfolio but I keep expenses, i.e. ER, below 1%), rebalancing at least once per year (minor) and tax loss harvesting (minor).

Don't forget the best retirement advice of all. Pay down high interest debt first and live within your means. Just because you make a fat 6 figure salary doesn't mean you need a mansion and a fleet of expensive vehicles and toys.

A dollar saved is more like $3-5 earned at retirement age.

 

[okayplayer]

Don't forget the best retirement advice of all. Pay down high interest debt first and live within your means. Just because you make a fat 6 figure salary doesn't mean you need a mansion and a fleet of expensive vehicles and toys.

A dollar saved is more like $3-5 earned at retirement age.

Trying to live this advice. It is a challenge for sure. Looking forward to the day I am not paying 9-10k/mo to pay off my wife and my student loans. Opens up a lot of options to us in terms of more money for investing, having fun, maybe taking a bit more vacation.

 

[BLADEMDA]

Trying to live this advice. It is a challenge for sure. Looking forward to the day I am not paying 9-10k/mo to pay off my wife and my student loans. Opens up a lot of options to us in terms of more money for investing, having fun, maybe taking a bit more vacation.

You have a good plan in place. Now you must execute

 

[BLADEMDA]

The main argument for investing in international securities is for diversification through exposure to different countries and economies, slightly different sector weightings, and foreign currencies. Using the Morningstar Moderate Target Risk Index (a global portfolio with a 60/40 mix of stocks and bonds) as a benchmark for the average investor, a target allocation to emerging-markets equities (including stocks from Taiwan and South Korea) would be 4.5% of the value of a 60/40 stock-bond portfolio, or about 8% of the equity portion of that portfolio. This 8% allocation is slightly below a market-capitalization-based weighting, as emerging-markets equities account for 10% of the global equity market, as represented by the MSCI All-Country World Investable Market Index. Regardless of how one measures market weight, these figures are all significantly below emerging markets' collective share of global GDP, which is approximately 35%. This figure provides some perspective on the asset class' long-term growth potential.


Investors who eschew emerging-markets funds in favor of broader international-equity funds generally have a very small allocation in emerging markets. According to Morningstar fund data, foreign large-blend funds have an average 8% allocation in emerging-markets equities, which is actually slightly lower than the 10% average during the last five years. This decline is partly due to emerging markets' relative underperformance during the last few years and a reluctance to rebalance, as emerging-markets equities continue to underperform and U.S. equities continue to outperform. Within the MSCI All-Country World ex USA Investable Market Index (a cap-weighted index of stocks from 45 countries, excluding the U.S.), emerging markets account for 20%.

 

[sleepallday]

I was wondering what some of you thought of allowing a wealth management firm handle your retirement accounts. I've been looking into personalcapital.com. Their fees are 0.89%. They seem to have a sound strategy. The company's founder is the ex-CEO of Intuit and paypal.

 

[BLADEMDA]

I was wondering what some of you thought of allowing a wealth management firm handle your retirement accounts. I've been looking into personalcapital.com. Their fees are 0.89%. They seem to have a sound strategy. The company's founder is the ex-CEO of Intuit and paypal.

I really like Personal Capital.com as they have great software for portfolio analysis. That said, why pay for ETFs plus 0.89% for fees? Can't you just build a portfolio using ETFs and Mutual Funds? Even active management won't cost the E.R. of the ETF plus 0.89%.

Have you looked at Wealthfront? Rick Ferri? FPL Capital? Evanson asset management?
https://www.wealthfront.com/

http://portfoliosolutions.com/


http://www.evansonasset.com/

http://www.fplcapital.com/

 

[BLADEMDA]

I was wondering what some of you thought of allowing a wealth management firm handle your retirement accounts. I've been looking into personalcapital.com. Their fees are 0.89%. They seem to have a sound strategy. The company's founder is the ex-CEO of Intuit and paypal.

http://www.fplcapital.com/dfa/dfa-target/target-folio-60

Right off the shelf

 

[deleted50478]

I was wondering what some of you thought of allowing a wealth management firm handle your retirement accounts. I've been looking into personalcapital.com. Their fees are 0.89%. They seem to have a sound strategy. The company's founder is the ex-CEO of Intuit and paypal.

0.89% is a lot of money and more than they're (or anyone) is worth unless you are a billionaire and need alternative investments.

 

[Mman]

I was wondering what some of you thought of allowing a wealth management firm handle your retirement accounts. I've been looking into personalcapital.com. Their fees are 0.89%. They seem to have a sound strategy. The company's founder is the ex-CEO of Intuit and paypal.

I use personal capital to track my investments, but would never use them to make my investments. You can link your accounts to them and they will track your expense ratio and see how it compares. They tracked mine to 0.23% with my current funds. So if I pay them 0.89% + whatever funds they choose I'm losing something like 1% per year by using them. No thanks.

But I do like how their software can track my actual returns over time without counting new deposited cash as part of the return.

 

[HalO'Thane]

Does real estate investing fit into anyone's portfolio? I am not referring to REIT's; but instead to actually owning commercial and residential properties, either alone or in a partnership. My eventual goal is to become involved in this for two reasons: 1. A potential way to diversify one's portfolio as the real estate market doesn't always move in parallel with the stock market. 2. It is a useful way to generate income during retirement. I was hoping to gain insight from anyone who has had experience regarding this.

 

[Mman]

Does real estate investing fit into anyone's portfolio? I am not referring to REIT's; but instead to actually owning commercial and residential properties, either alone or in a partnership. My eventual goal is to become involved in this for two reasons: 1. A potential way to diversify one's portfolio as the real estate market doesn't always move in parallel with the stock market. 2. It is a useful way to generate income during retirement. I was hoping to gain insight from anyone who has had experience regarding this.

I don't yet but have several colleagues that do. They have purchased beach homes and use them as rental properties. It takes a bit of hands on work to get started and maintain, but can be a nice asset long term. In general their rental income on an annual basis is slightly greater than their mortgage. So it's a minor net positive on a year to year basis, but in the end they own the home as an asset.

 

[fakin' the funk]

My knowledge of economics and finance is poor, and would like to start learning more. I've start looking at white coat investor which seems like a good starting place. Are there any manageable introductory books that people would recommend? What do people tend to read on daily/weekly basis, ex WSJ, economist, etc?

Most recommendations here are more about investing.

I really liked Personal Finance For Dummies as a starting point for all things financial, including the basics of investing, but also home ownership, managing debt, different types of insurance, consumer stuff, etc.

 

[6svette]

Read, learn, educate yourself. But at the end of the day there are 2 simple rules you have to follow:
1) Don't try to time the market.
2) Don't pick individual stocks.

What to do:
1) Once a month, same time every month, use a cheap online broker account to invest in VOO (vangaurd s&p 500 index fund). Preferably invest the same amount each month. Put away as much of it as you can before you spend it.
2) Dont ever sell the stocks, and even in a down market you keep buying every month. Never change that strategy.

Do this for 30 years and you'll have a nest egg worth millions. When you get closer to retirement you can start converting those stocks to bonds.

If you follow this strategy, do not get a financial advisor... especially one that charges percentage points on commission. The 2 percent they take now, would be potential millions in 30 years.

Everything else in equity investing is fairy dust.

Great advice.

As a lowly med student with no income and some savings in a taxable account right now, is there a point where I should transfer it to an IRA/another more tax efficient account?

 

[BLADEMDA]

Great advice.

As a lowly med student with no income and some savings in a taxable account right now, is there a point where I should transfer it to an IRA/another more tax efficient account?

Once you start working as a Resident try to fund a Roth IRA or tax deductible IRA if you can't afford the Roth.

 

[dmk5n]

Does real estate investing fit into anyone's portfolio? I am not referring to REIT's; but instead to actually owning commercial and residential properties, either alone or in a partnership. My eventual goal is to become involved in this for two reasons: 1. A potential way to diversify one's portfolio as the real estate market doesn't always move in parallel with the stock market. 2. It is a useful way to generate income during retirement. I was hoping to gain insight from anyone who has had experience regarding this.

FWIW Regarding Real estate investing...recommend reading "What every real estate investor needs to know about cash flow..." Frank Gallinelli. Author crunches the numbers and discusses how income property makes money with cash flow, appreciation, loan amortization, and as a tax shelter.

 

[dmk5n]

I was wondering what some of you thought of allowing a wealth management firm handle your retirement accounts. I've been looking into personalcapital.com. Their fees are 0.89%. They seem to have a sound strategy. The company's founder is the ex-CEO of Intuit and paypal.

Those in the finance industry are very numbers savvy and understand compound interest very well...
The assets under management model (AUM) is a just a slow transfer of wealth...

e.g. find an online financial calculator. enter current assets at $100,000. Enter rate of return at -1% (typical advisor fee under the AUM model). Keep contributions at zero (for sake of illustration) Look at the number after 40 years...
33% of the portfolio value is GONE.

 

[johncunningham]

I'll play. I am 10 ish years out of med school. Have been dollar cost averaging into low cost index funds the whole time. I am 70/30 US/International. I use fidelity FSEVX and FSGDX in my 401k and Vanguard Total Market in taxable. I am closing in on 40, and still no bonds. I have decided that the idea of holding enough cash "so that I can sleep" (which for me is about ten percent of net worth) and paying down my mortgage makes more sense than bonds right now.

In addition, I have a written investment policy statement. It tells me that at 40 I should start adding some bonds/fixed income. At first (ten ish years ago) thought that a written IPS was kind of a joke, but I realize now that it is a worthwhile endeavor. I visit every year on January 1 ish. It helps me to see where I've been and where I'm headed.

The other thing I would highly reccomend is that you keep a short journal. I do this annually when I look over all my accounts. It helps to look back and see how happy/sad/content I am at various times in life. Market cycles happen. People misjudge their risk tolerance and it helps to look back at the words I was putting to paper in 2008, 2009.

My plan is very simple, requires me to buy shares each month (automatically) and requires me to rebalance annually.

This gets said a lot, but also, make sure you are adequately insured, and don't forget about college savings if you have or are planning on kids. I was fortunate to start seriously saving in 529s in 2008, 2009, and since... I have unrealized and likely never taxable gains that are greater than my contributions. Largely serendipity, but by having the money in a tax deferred account, I feel like it is a win over just pouring it all into taxable.

Another nice thing to do is to make goals and revisit them. I do this annually. Some are short term, some are long term. The one that I am closing in on "allows" me to buy a "nice" car when my networth equals "x". Its funny, because as I get close to this goal, I find that I probably will wait a little longer, and continue to drive the starter car I bought when I finished residency. It cost $19,000 brand new and still runs like a top. I can't see junking it and spending more money for a car I don't actually need.

My last thought... Time in the market matters. The amount you save, and the earlier you save matters more than anything else. The best time to start saving is yesterday. The next best time is today. Steady contributions with low cost and some diversification will take you further than you can imagine.

John

 

[pgg]

That is a great post. Totally agree on having a written IPS.