Hey guys. Pretty new to the blog and forum but learning a ton. Here's my deal:
When Pantswife and I got married five years ago, we hired an Ameriprise financial planner who was a casual friend/acquaintance. He helped set up some investments and savings for retirement. We consult with him twice a year but haven't made any major changes since we started. It was mostly a "set and forget" kind of thing because we both know next to nothing about investing. I've recently become motivated to learn more about it myself and I now believe that we may be better off with options different from what we've been doing with Ameriprise. Here is our current situation:
Us: Early 30's, two kids, number 3 due early 2014
Annual gross income: $91K ($85K through my job and $6K through a small side venture my wife has)
low interest emergency savings account: $19.5K ($6.5K of this will be eaten up next year through childbirth expenses)
Roth IRA 1: $52.6K, maxed every year
Roth IRA 2: $19K, not currently contributing anything
Brokerage account: $27.2K (this was rolled over from a 401K I had at an old job. I don't actually know/understand how Ameriprise has invested it or what options I have to change it)
Variable Universal Life Insurance Policy (VUL) #1: $9.8K
VUL #2: $7K
Home mortgage: $156K principal balance at 3.5%. With current home value, we have about $55K in equity.
Other debt: none
I should also mention that my job provides no benefits, so all retirement investing is up to us (as well as health insurance).
I'm pretty clueless about most of this stuff, so I'm open to any and all suggestions, but my main questions are as follows:
1. The VUL seems like a pretty poor investment, but I'm basing that mostly on criticism I have read regarding VULs in general. I'm not sure what to look for in the details of my specific VUL to know if it's better than average. What I do know is that the two policies are currently valued at $16.8K and if I cancelled them now, I would "surrender" $3.6K of that, leaving me with $13.2K (and the monthly $250 contribution) to invest elsewhere. The combined value of the policies is currently only $750 greater than what we have contributed to them over 5 years because I think most of what we have contributed has gone toward the premium. Is it worth the loss to get out of this now? I'm all about "failing fast", so if it's a bad investment, I want out now while losses are minimal.
2. Should I ditch my financial planner? I am not yet prepared to cut ties completely, but would consider moving in that direction as I learn how to invest on my own. The annual fee is reasonable, but I don't really know what kind of fees and commissions are built into our investments. This is, of course, a bit awkward since we have a personal relationship with the guy, but we can bite the bullet and have that uncomfortable one-time conversation if it will allow us to be in a better financial situation. On the other hand, maybe he could be an asset if I was a little more educated and got him to help invest more strategically. Would there be more and better investment options available (vs. going on my own) if using the financial planner and his firm to their full potential?
Sorry for the long-windedness. I'm trying to learn as much as possible here and find that providing more information often yields more specific advice. Thanks in advance!
-Pantsforsale
(does not actually sell pants)