Author Topic: Getting our finances in order  (Read 3729 times)

Diogenes

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Getting our finances in order
« on: November 22, 2015, 07:53:37 PM »
My wife has always run the house hold books and I have looked after our investments. 
She has both a deferred compensation plan and a employer matched defined contributions plan.
I have traded jobs a couple of times and have rolled all my orphan IRA's into one account.
I have a traditional IRA and a Roth IRA with a local investment advisor with a well known investment company.

I did not pay as much attention as perhaps I should have when my investments for my Traditional IRA was selected. It is basically a managed account where they buy and sale mutual funds.  It is a 50% US Equity 13% Foreign Equity and the balance bonds, securities and REIT's.   Many of the funds they have chosen are not low cost funds and on top of that I am charge 1% for their expertise.

It is a moderate aggressive actively diversified account.

One year=-2.68%     Three year= 5.23%  Five year=5.63%  Since Inception is 2.25%  Those percentages are all NET.  They have never matched or outperformed their own blended benchmark.

So I decided to make my own portfolio.

I'm choosing to go with 50% US Equity, 10% Foreign Equity and 40% Bonds....all the the mutual funds are Vanguard except for one Fidelity.

Now the question is do I allow this person to implement the changes to my Traditional IRA or do I pull all of it and purchase direct? 

We have also opened up an online account with Betterment.  We have paid off all the credit cards and are going to put that money to better use.

Looking forward to the future......



Freedom2016

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Re: Getting our finances in order
« Reply #1 on: November 22, 2015, 08:01:52 PM »
You would still be paying them 1%, right?

Why would you ever want to do that?

Financial.Velociraptor

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Re: Getting our finances in order
« Reply #2 on: November 22, 2015, 08:11:36 PM »
You don't need an expensive advisor to index yourself.  Cut the cord and go solo.
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Diogenes

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Re: Getting our finances in order
« Reply #3 on: November 23, 2015, 11:04:52 AM »
Yeah, I am slowly coming around to that mentally.  My family has used this same advisor now for three generations.....but you are correct, it will cost me money to keep her.   

Interest Compound

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Re: Getting our finances in order
« Reply #4 on: November 23, 2015, 12:12:22 PM »
Yeah, I am slowly coming around to that mentally.  My family has used this same advisor now for three generations.....but you are correct, it will cost me money to keep her.   

Yes, but are you aware of how MUCH money it will cost to keep her?



https://personal.vanguard.com/us/insights/investingtruths/investing-truth-about-cost
Passive investing has a deep humility at its core--the aim is not to separate winners from losers, but rather to hold the entire market. Volatility is only temporary, but you can permanently cripple your portfolio trying to avoid it.

Diogenes

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Re: Getting our finances in order
« Reply #5 on: November 23, 2015, 05:40:57 PM »
Thanks IC, I needed a hard slap across the face.
That's why I come here.
It is now on my to do list.   

StockBeard

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Re: Getting our finances in order
« Reply #6 on: November 23, 2015, 06:42:21 PM »
That tool from Vanguard is awesome!

Diogenes

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Re: Getting our finances in order
« Reply #7 on: November 25, 2015, 03:45:37 PM »
That tool from Vanguard is awesome!

What tool is that?

StockBeard

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Re: Getting our finances in order
« Reply #8 on: November 25, 2015, 04:27:21 PM »
The one mentioned by Interest compound, 4 posts above this one.

TomTX

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Re: Getting our finances in order
« Reply #9 on: November 25, 2015, 06:53:41 PM »
"This person" is financially raping you. Get the fuck out. Like NOW. Use Vanguard as a benchmark. Your costs should be the same or better.

[MOD EDIT: We have a specific rule against such metaphors.  Please don't use them on our forums.  Thanks.]
« Last Edit: November 30, 2015, 02:23:23 PM by FrugalToque »
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Diogenes

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Re: Getting our finances in order
« Reply #10 on: November 30, 2015, 10:12:01 AM »
I will be moving my funds away from this advisor in the near future.  I want to be certain I have a clear picture of where I am headed with this. Hence my participation on this forum.

I have a ROIRA and a Roth with this advisor.  The ROIRA is the one that is an actively managed account.  It is a "moderately aggressive" account that has netted [three years 5.23], [Five Years 5.63] and [since inception 2.25%].   Even without the fees (gross) it has never beaten its "Blended Benchmark" which since inception is 4.98%. 

The Roth IRA is in two American Funds, ABALX and BALBX.  When I first got the American it was all in one of those two.  I got curious and transferred online from one class of shares to the other.   This got me a quick phone call from my advisor asking what I was doing and did I understand the tax risks I might be taking doing trading like that.  I replied it was an IRA and there should be no tax consequences as long as I left it in the IRA.  There may have been concerns I should have been aware of but the advisor did not bother to educate me.  Looking back on it I may have either had to pay some fees or may have cost the advisor some sales commission.

I am becoming a bit more savvy. 

I plan on taking my funds and moving them to other ROIRA's and Roth IRA. 

Right now I am looking at splitting  the ROIRA this way:
50%  +/- VTSAX   US Equity
10%+/-  VFWAX   International
40% +/- VBTLX    Bonds


The Roth IRA is in the American Balanced in two share classses, I'm not certain what I want to do there.   I may just transfer it straight to American  and decide later.

This is still in the conceptual stage.  I have always had a interest in mutual funds but my temperament would be suited to a few funds that I would rebalance quarterly.   

For convenience I would like all of my funds with Vanguard.  Most folks here seem to think well of this group.  This may come more into play when I figure out my Roth IRA.  I like ABALX....



elaine amj

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Re: Getting our finances in order
« Reply #11 on: November 30, 2015, 10:32:16 AM »
Good luck. This is where I am at too - except my DH still insists the fees must be "worth it". And so far he does not want to think about it. I did get him to read some of the arguments on here, but he made it a few posts and then basically said he didn't believe it. I did like the infographic though and just emailed it to him :) He did promise he would sit down with me so I could show him the difference in fees....but "some time from now, maybe after Christmas". *sigh*

I have liquidated a small amount so far, moving it to low cost index funds. Many more different accounts to shift over. For my mental health, I'm biting them off one at a time. The big problem I am going to have is any outstanding Deferred Sales Charges - DH is not going to like paying those...

Props to you to for putting in the time and effort to get things in order!
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Diogenes

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Re: Getting our finances in order
« Reply #12 on: November 30, 2015, 11:39:48 AM »
Thanks Elaine...

I have pretty much picked my own MF when involved with company benefits.  I would sit down with folks and look them up in Morningstar.
We allowed our advisor to pick and choose our employer sponsored funds when we rolled all of my orphaned funds together. 
The choices she made were solid and many were ones I had picked myself, she just selected a broader assortment.

Wife is very onboard with this.  She runs the books in the family and has become a YNAB software enthusiast.  It is really helping us budget our money much more effectively.

Good luck on the DH, I'm sure he'll come around in time.  Some guys have this thing about loyalty to friends and advisers that takes them awhile to adjust their sails.  This can be a very good thing, all things considered.

Best wishes,

Diogenes

TwoBits

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Re: Getting our finances in order
« Reply #13 on: November 30, 2015, 11:59:26 AM »
Another good expense ratio calculator to compare the costs:

http://www.begintoinvest.com/expense-ratio-calculator/

Diogenes

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Re: Getting our finances in order
« Reply #14 on: November 30, 2015, 12:40:02 PM »
What I would really like to find is Mutual Fund comparison chart that factors in all the fees.  Maybe the one I'm using does that but I cannot find definite answer to that question.

Never mind, I already had a place book marked. 

http://apps.finra.org/fundanalyzer/1/fa.aspx


« Last Edit: November 30, 2015, 01:17:31 PM by Diogenes »

elaine amj

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Re: Getting our finances in order
« Reply #15 on: December 03, 2015, 10:13:43 AM »
Ooo...I like that. I am going to play around with it
 I am also a recent YNAB convert. 2 months so far.
My journal: http://forum.mrmoneymustache.com/journals/realigning-spending-to-match-our-future-goals-a-canadian-journey/

Camp Mustache Canada 2017 was everything I dreamed of and more. Super excited that Camp Mustache Canada 2018 is now a thing!

Diogenes

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Re: Getting our finances in order
« Reply #16 on: February 12, 2018, 10:06:34 AM »
UPDATE: 

Since the last post in 2015 this is what I have done.

We sold the boat and property at the lake.

I transferred our accounts from Ameriprise to Vanguard and also set up some Roth IRA's with VG.
We opened a taxable account at Betterment for our emergency savings.

I posted our investment info to the Bogelhead Forum  and threw myself at their mercy.
Following their advice I treated our investments as one family and balanced accordingly.  My wife and I are at a 40/60 Asset Allocation.

My wife's investment pretty much make up our bond allocation.  She had one good choice of a MF that had a low expense ratio and we put most of our bond money there. 

We adjusted our Vanguard selection to get it to the 40% equity, we have index funds for the broad market and some global.

We currently owe only on a new car which is at 0% interest.  We think our future will take us to Colorado and wanted a good foul weather vehicle for this.  We went with a Subaru Outback pretty much loaded.   If we get stuck in a snow bank  and starve we can eat the leather seats.

Although I received much good advice from this forum and the Bogelhead forum I wanted a Certified Financial Planner to go through everything with a critical eye.   I'm a much better electrician than an financial analyst.   We used a local CFP that agreed to do it for hour fee only but were very disappointed in the product he gave us.  He basically took all the data I gave him, dumped it into his RetireUp software and hit print.   

We looked around, using Garrett Planning Network and found a CFP in Carrollton, Texas that appealed to us.  He is only an hourly fee for services and offers no products to purchase.   He was a very good fit for us.  He pointed out some things we should be doing different and some tax situation to be aware of.

Wife is going to retire at age 58 in about 4 months, I am working part time only driving for a buddy when he needs equipment delivered.
We plan on hitting the road in our fifth wheel and truck and spending about 75% of our time on the road.  May do some work camping or Habitat For Humanity work camps.   Wife has some possibilities teaching software and going genealogy for hire.

My son will live at home.  He is working fulltime and doing college part time but that will change.  He plans on going to school full time and working part time so he can get his degree sooner and not have the stress he has where he works in conjunction with the stress of school.

Daughter is getting married soon and has moved to Colorado. (Remember the Subaru?  That's the reason)

So in about  four months time the only debt we will have will be the car, which we have been paying off in record time.   We will need to buy our own health insurance for a few months and then see what shakes out with the ACA.

I plan on doing a bit more lurking here to cut expenses.  Food is our biggest.  I love to cook but don't cook simple, I need to change that habit.   Wife and I are not picky eaters so we can be flexible in our choices. 

I wish to thank all of you that encouraged me to move my investments, I am doing so much better now.  Even with the recent "corrections" to the stock market.

Best wishes,

Diogenes