Bowsite.com

You can bet on it.

Matt

KPC is correct, you need to answer the questions he posted. Age is definitely a big one and also your taxable income in retirement and currently. Also are you currently in a high tax state and retiring in a low tax state. There are calculators you can use on the web that can help you decide. Me personally, I have a blend of both but switched over years ago to just a traditional 401K.

Taxes (and the CPI) have no place but to go up long term...

What will be your taxable income (bracket) in retirement compared to now?

No offense to the poster, but an increase in the CPI (which is sure to happen), is of no relevance to the question.

None.

But had I said that 12 or 15 yrs ago, I would have been 100% right.

So, what's your point..?

But, electoral history shows in 10 yrs from now, we will have a democrat in the Whitehouse and likely one house in congress will be democrat. Taxes will go up in that case and with a rising debt, taxes will go up.

I hope I am wrong...

As an FA and planning for the future, you should always assume cost of living to increase and the devaluation of today's dollar to happen. This includes tax rates to rise. No, I DO NOT think that is the only relavent factor - that is where you incorrectly assumed, I might add.

Hiring a "finance guy" who thinks otherwise is foolish...

"As an FA and planning for the future, you should always assume cost of living to increase and the devaluation of today's dollar to happen."

Which we always do. Always!

So just what does a rise in the cost of living have to do with whether or not a person should convert into or out of a Roth?

Answer: ABSOLUTELY NOTHING!

That you seem to think otherwise is simply evidence that you shouldn't get anywhere near following your own 'financial advice.'

He's buying dinner for everyone at the seminar at a fancy pants restaurant called Andiamo's...

I'm nervous about the whole retirement thing as far as the money goes. It should be interesting.

My advice is to ask yourself what you actually learned from the seminar, not what you realized you don't know yet. It's not rocket science.

Matt

My question on this is why, if an FA has been successful in helping clients succeed financially, he then needs to put up a bunch of money to buy free dinners for people.

In my experience, the best advisors spend NO money to attract new clients because their existing clients not only give them more business, but also continually refer potential new clients to them.

I meant no disrespect to your profession. The fact remains that most "seminars" are intended to drum up business for those who sponsor the seminar, not to educate the attendees on the subject of the seminar.

I stand by my advice for BB to ask himself what he actually learned at this seminar. The fact that BB is attending the seminar indicates he already knows he needs to be educated. If the seminar only reinforces that BB needs to pay the sponsor for that education, and nothing else, which most of them do, then I'd be skeptical.

Matt

There's a vast difference between taking and acting upon "free advice" versus doing your own research to educate yourself, then acting upon what you've learned.

I've never questioned the value of a professional FA for some people. Many folks simply aren't inclined to educated themselves on financial matters, and would rather hire someone to do it for them. But, just like there are DIY hunters who don't need a outfitter and a guide to be successful, there are investors who don't need a FA to be successful. Whether or not BB is one of those types only he can determine.

Matt

But I am the guy who cringes at the ups and downs of investing.... I'd rather have peace of mind and know my principle isn't going to tank with the market. I'm the crazy miser who stashes cash in a coffee can (really).......

My hope is to learn if there is a safe place to have my money where I can sift out enough for a monthly house payment and have very little risk of my principle tanking if the market crashes.

One of our retirees made the grave mistake of taking all his money out of his DROP account when the economy took a dump... then he was left with a fraction of what he started with.

My DROP account will be my primary thing I have to decide what to do with. Most of the guys tell me they are leaving it with the city in the DROP account when they retire.......

This FA has discussed our DROP account with the lady at the city that handles all our retirement stuff so he's up to speed on it...

Hmm, yet, on another thread you said this...

"When I get a new client one of the first things I explain to them is that whether you are an advisor or not, everyone has the same access to investment advise. It ain't rocket science."

So which is it?

Matt

Honestly, I can't answer any of those questions off the top. But, I bet with a few hours of research I could. And I wouldn't have to spend a dime to do it either.

In fact, I encourage BB to ask those same questions at his seminar, and carefully record the answers to share with us. That will tell us if the seminar was to truly educate the attendees, or just solicit their business.

Matt

You keep disparaging Kevin's and my profession, saying "it's not rocket science" and thereby implying anyone could successfully handle their own investing.

Yet on another thread a couple of weeks ago, when I asked you a couple of very basic questions about your investments, you had no idea what I was asking about, let alone have the answers.

As Kevin alluded to above, you could also pull your own teeth. Just tie a strong cord around a doorknob, tie the other end of the cord to a vice-grip, clamp the vice-grip on the offending tooth, then slam the door shut.

I mean, c'mon! "It's not rocket science! "

I haven't disparaged your profession. In fact, I used the same words to describe financial advice as Kevin did...."it ain't rocket science".

My simple philosophy has always been “what one man can do, another man can do too, if he’s inclined to research, learn, and educate himself.

A few examples. I restored my old CJ from the frame up, including rebuilding and swapping in a new engine and transmission, new suspension, and repairing and repainting the tub. Prior to that, my auto mechanics experience amounted to knowing how to change the oil. My final product isn’t Concours d'Elegance, and I know I could do the next one better and more quickly, but I’m proud of the results, and most people who see it say “WOW!”.

I also taught myself how to do taxidermy and to tie my own fly-fishing flies for the same sense of satisfaction of doing something myself. Now, I’d stack my mounts and flies up against virtually any “professional’s” work.

I didn’t pay a dime for anyone to advise me on any of those endeavors. Instead, I spent hours of my time researching, learning, and practicing them myself.

Now, I suppose one could legitimately argue the learning curve on those examples isn’t as steep, nor as important, as financial planning. But, that doesn’t mean the DIY approach isn’t possible or prudent, if one is inclined. Many people aren’t.

Matt

I really want to move out of the city and hopefully have deer hunting out my back door when I retire.....

Numerous studies show that the more financially successful people are, the more likely they are to hire a financial advisor.

Why do you suppose that is?

I fully expect it to be a seminar where he explains in detail how it would be to my benefit to hire him to manage my retirement accounts.....

I'm guessing they'd rather spend their time earning than investing. And that's fine, if that's their preference. Most people would rather pay someone to change the oil in their cars, too. I'd rather do it myself and save the labor and overhead costs to have a shop do it. Neither approach is right or wrong.

Matt

Exactly.

The goal of a good seminar should be to teach, discuss various situations, common problems, and to open your mind to potential issues and options you'd never thought about.

No seminar could possibly teach everything every attendee could need to know because everyone is different - different experiences, different goals, different objectives and different concerns.

Over my many years in the business, I've often had potential clients tell me in our first interview that they already know what they want to do.

My response is on the order of, "I'm sure that's the case. But I would suggest that until you know what all of the options are that are available to you, you may not know what you want to do. It's my job to get to know you and then help you understand what those options are and the positive and negative sides of those options."

I've had people almost jump out of their seats in agreement when they hear that.

I also frequently tell potential clients, "Most investment portfolios that people bring to me to look at are a compilation of good ideas, accumulated over time, that collectively make no sense what-so-ever."

On more than one occasion, I have had people laugh and tell me, "YES! That's exactly what we have!"

Yes, Kevin, I realize that, and I probably could do it on my own. In fact, I do exactly that with a much smaller portfolio of equities. I might add, that my smaller self-managed portfolio has out-performed all my mutual fund accounts on a percentage basis over the last 20 years. I choose not to manage the larger sums in our mutual funds because that would cut into my hunting, fishing, and skiing time too much. I'm stubbornly self-sufficient, but I'm not stupid. ;-)

Anyway, thanks for the discussion. It sounds like this seminar is exactly what BB needs and/or desires. I hope it works out for him.

Matt

"I might add, that my smaller self-managed portfolio has out-performed all my mutual fund accounts on a percentage basis over the last 20 years."

Compared to what?

Unless your asset allocations and the amount of risk you are taking in your two portfolios are identical, your comparison is of little value.

As you know, most mutual funds are invested in a collection of equities in whatever sector of the economy the fund is targeted at. With a bit of research, anyone can learn which companies those funds are invested in and what percentage of the fund is allocated to each company. I make a point of checking that data on our collection of mutual funds almost daily.

I've noticed over the years that the top 2-3 equities held in each of our mutual funds, and the percentage of those holdings, often stays roughly the same for months at a time. So, I base my self-managed fund on those same equities and percentages.

For example, I have a Blue Chip Growth mutual fund that has the top 23% of its holdings in Amazon (8.85%), Facebook (5.26%), Microsoft (4.51%), and Google (4.35%). So, I maintain holdings in those same companies at roughly the same percentages in my self-managed account. I do the same thing with the other 3 mutual funds we have in different sectors. So, basically my self-managed fund is a mirror of the top 25% of holdings in our 4 mutual fund accounts. I just cherry pick the top few companies over 4 sectors instead of focusing on just one sector.

That strategy has outperformed each of my sector-targeted mutual funds consistently over the years.

Matt

That would mean your self-directed portfolio is not nearly as diversified as is your mutual funds portfolio.

Hence, that also means it's highly likely you are taking far more risk in your self-directed portfolio than you are in your mutual fund portfolio.

Which brings me back to the questions I asked you a couple of weeks ago:

1. What is your risk-adjusted return on your portfolio? and;

2. Are you being rewarded for the risk you're taking?

Then, again, What is your time-weighted, dollar-weighted rate-of-return?

1. I've never calculated the risk-adjusted return on my portfolio because, frankly, I don't care to. I figure if my portfolio is a mirror of the top 25% of my 4 top-rated mutual funds, then I'm taking an acceptable risk, especially considering my portfolio has a much smaller total amount than my mutual funds.

2. Yes I am being rewarded for my risk, since the percentage of return has been greater than in my mutual funds over the same periods.

As for time and money-weighted rate of returns, I'll leave that for you "professionals" to calculate. I've been pleased with the returns in all of my equity funds, and they stack up nicely compared to returns in other similar funds over the same periods. That's all I need to know.

Matt

"2. Yes I am being rewarded for my risk, since the percentage of return has been greater than in my mutual funds over the same periods."

Yet you admit you have no clue if you are being rewarded for the risk you are taking.

If you are taking twice the risk of your benchmark, then you need to be getting TWICE the returns in order to be compensated for the extra risk. If you are taking 50% more risk, you should be getting 50% more returns

Simply getting better returns means nothing by itself.

Did you get twice the returns? 50% more?

Don't know, do you?

Just one more piece of evidence as to why do-it-yourselfers should never be do-it-yourselfers.

Here are the percentages of returns from a few major indexes over the last year, per my link.

DJIA - 25.20%

NASDAQ - 24.50%

US broad market - 18.10%

Highest Sector Return - US Technology at 32.29%

My self-managed portfolio - 45%

Can I pat myself on the back for doing something right with my self-managed portfolio, considering it has outperformed any of those major indexes consistently of the last year, as well as much longer periods?

Matt

Sorry, but by your own admission, you are NOT invested according to ANY of those indecies, nor, it seems, do you even remotely have a clue about what I'm asking you.

KPC,

Why would I include all the emissions crap on my Lamborghini if I didn't have to? I didn't say I did all the research. I just figured out whose research to copy. Isn't capitalism a wonderful thing?

;-)

Matt

You know I have great respect for you, but you are totally screwing this up!

I've answered all your questions to the extent I'm willing to over a public forum. If you want additional information, you know how to contact me privately.

Matt

Touche'.

It's always a pleasure, my friend.

Matt

You've totally avoided answering my questions as you are seemingly admitting.

I can only take your asking me to take my questions 'private' as an admission you do not want to address them in public because you can not.

You assume wrong. I'm happy to discuss my financial situation with you privately. I won't discuss it, specifically, over the internet. Capeesh?

Matt

NO!

I am not asking you to disclose private information.

I am simply asking you to answer a few simple questions, which obviously you cannot do because you haven't got a clue as to how to answer them.

OK. you're right. Thanks for chatting.

Matt