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| Big Stack |
You didn't put any background info in your OP. You just talked about selling out of your equities because you thought the market might be turning. Given the background info you've now given, I would agree that selling down some equities might be a good idea, if it's to move your porfolio from a pre-retirement growth phase to a in retirement income generation phase. If that's the idea, I'd agree. But if you're looking to just park the money out of equities until you think it's time to move back into equities, the chances of getting the timing right out of anything but shear luck is not good.
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Armed and Gregarious |
Well, I should have waited to post that until I had time to go into greater detail. The reality is CFP's might establish a fiduciary duty to their clients, or they might not. Further, they aren't required to inform a client when they are not acting as a fiduciary. https://www.investmentnews.com...r-financial-advisers . . . "One concern with the proposed standards is that after holding out all CFPs as trusted advisers for 10 years, the board has still not provided CFPs guidance in avoiding and mitigating conflicts," Knut Rostad, president of the Institute for the Fiduciary Standard, wrote in a March 26 update about the organization's work. . . . . . The board also excised a "rebuttable presumption" that CFPs always provide financial planning services, to allow leeway for CFP-client relationships that don't involve planning. "Deleted, this means an investor should not presume a CFP to be a fiduciary — after many years of CFP Board telling investors the opposite," Mr. Rostad wrote. More importantly, even if they do have a "fiduciary duty" to their clients, enforcement is only based on complaints, meaning there is no pro-active effort to ensure compliance. If there is a complaint, cases are "adjudicated through an "internal peer review process." https://www.fa-mag.com/news/in...sed-again-37570.html . . . The new standards are “a mess for the consumer [and will lead to] advertising by advisors that is not honest and is a step short of fraudulent,” said Rick Kahler, a member of the institute and president of Kahler Financial Group in Rapid City, S.D. . . . . . The institute said, “The standards do not presumptively equate the CFP mark with fiduciary conduct, do not urge CFPs to avoid conflicts over disclosing them, do not provide guidance on mitigating conflicts, do not require certain written disclosures and communications and do not address enforcement. . . . . . CFP Standards should “require CFPs to be clear and transparent about all fees and conflicts in writing [and should require] material conflict disclosures, informed consent statements, and engagement agreements be in writing.” The standards also should “set out basic enforcement approaches,” the institute said. . . . . . Cheryl R. Holland, an institute member, president of Abacus Planning Group in Columbia, S.C., and a CFP, said, “We have a fiduciary duty on behalf of our clients that is not achieved under these standards. We are not yet a profession like doctors, lawyers or journalists. We are still an industry [and that does not change] under the new standards.” If you think the current system is actually enough to ensure Certified Financial Planners actually care more about what's best for their clients, rather than what generates the most income for the planner, you are very naive. ___________________________________________ "He was never hindered by any dogma, except the Constitution." - Ty Ross speaking of his grandfather General Barry Goldwater "War is the remedy that our enemies have chosen, and I say let us give them all they want." - William Tecumseh Sherman | |||
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Hoping for better pharmaceuticals |
CFP My CFP earns 1.2% of what my investments are worth. Thus growing my portfolio $1,000,000 makes him more money. He can buy and sale all day long and cost me nothing and he makes nothing more by doing so. Big difference from investment advisers that charge to buy and sale at your expense (I've been there and cost me dearly). My CFP is well worth the cost considering my investment portfolio. Getting shot is no achievement. Hitting your enemy is. NRA Endowment Member . NRA instructor | |||
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| Armed and Gregarious |
Is he getting paid based on total assets under management, or the gain from the previous year? If it's just the gain, is it the after tax gain? If it's total assets under management, why should he get paid if you don't make money, or worse yet, lose money? If it's payment just on gains from the previous year, but it's not after tax gains, then he has no incentive to minimize taxation, only to generate income regardless of how much it costs you in taxes. I'm guessing the former, not the latter, is his method of compensation, which means he gets paid whether your assets grow, or not. Meaning his fees are a huge drag on your ability to grow your assets. If you are paying 1.2% to a financial planner, that means you have to earn 1.2% more than you could on your own, just to break even on his expense, and he must earn you more than 1.2% over what you could do on your own, to truly make hiring him worth the cost. Is he really consistently beating the benchmark indexes by 1.2%, and doing it when comparing the return AFTER taxes and fees? https://www.forbes.com/sites/w...advice/#133e51a61333 In the field of finance, the term "alpha" identifies how a fund manager can combine securities into a portfolio that provides excess returns to investors above the appropriate related benchmark index for those investments on a risk-adjusted basis. In simple terms, achieving alpha means earning more money than expected. This generally is achieved through either timing market trends correctly or picking winning individual securities. If a fund manager charges a fee of 1% of assets under management, but then produces alpha of 2%, the fund owner enjoys an overall net gain of 1%. After fees, they’ve earned 1% more than they would have had they invested directly in the benchmark index. In practice, it is very difficult to achieve alpha from market timing and security selection, which explains the rise of indexing. Low cost index funds generally perform better than the majority of actively managed funds seeking alpha, at least after accounting for management fees. (Side note: many investors don’t even realize they’re paying fees on mutual funds since they don’t appear on portfolio statements. It’s important to look for the expense ratio and any loads which are being charged at the time of purchase or sale.) After fees, alpha is often negative for actively managed funds. Those who understand this point can dramatically simplify their portfolio by filling it with well-diversified low-cost index funds. If you really have $1M in assets, did he really do enough for you last year to get paid $12K? https://www.forbes.com/sites/b...cost-1/#9691f8c706b9 ___________________________________________ "He was never hindered by any dogma, except the Constitution." - Ty Ross speaking of his grandfather General Barry Goldwater "War is the remedy that our enemies have chosen, and I say let us give them all they want." - William Tecumseh Sherman | |||
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| Armed and Gregarious |
Nice link. That's a site solely dedicated to advocating for the use of certified financial planners. Did you really expect them to point out the flaws in the system? ___________________________________________ "He was never hindered by any dogma, except the Constitution." - Ty Ross speaking of his grandfather General Barry Goldwater "War is the remedy that our enemies have chosen, and I say let us give them all they want." - William Tecumseh Sherman | |||
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| Hoping for better pharmaceuticals |
It seems you are more determined to debate and denounce the use of an investment professional because of your belief their advice only benefits themselves and not the investor. Since you have not consulted a CFP, you lack a bearing on the depths of their guidance and investment services, costs and benefits. I know the benefits of using my CFP and maybe his firm is unique but without question it has been financially rewarding for me and not debatable. Getting shot is no achievement. Hitting your enemy is. NRA Endowment Member . NRA instructor | |||
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| Armed and Gregarious |
Lack a bearing? Not sure what you're babbling about there. Regardless, I don't have to give my money to a certified financial planner to obtain the knowledge necessary to learn the truth about the industry. Also, I've consulted a few, did the math, and knew that at best they were worthless, and some were outright frauds, and therefore didn't waste my money with them. Regardless, I'm not the only one critical of Certified Financial Planners, as I've provided information other than my own opinion, and not from a clearly biased site, created solely for the benefit of financial planners, which is the only thing you've provided, other than your own opinion. ___________________________________________ "He was never hindered by any dogma, except the Constitution." - Ty Ross speaking of his grandfather General Barry Goldwater "War is the remedy that our enemies have chosen, and I say let us give them all they want." - William Tecumseh Sherman | |||
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| Victim of Life's Circumstances  |
Dogs of the dow theory is a good way to get your feet wet. I'm a month shy of 68 and I bought my first stock, based on a couple recomendations from a Merril Lynch broker, back in 1964 at age 13. I've been an investor ever since, using modified DOD before Motley Fool named it. Stick with blue chips and buy those paying the highest dividend. pick 10 or 12 or 20 and rebalance once a year or whenever your gut says it's time. ________________________ God spelled backwards is dog | |||
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Member |
I am at age 67 and we are about 38 percent in stocks, which I am very comfortable with. I have no idea what stocks will return in the future but I would bet that I will see at least one major bear market in my future. With the next major bear market it is very possible we would not be able to recover losses in our lifetime if heavily invested in stocks but every one's situation is different as is their amount they have invested, their needs, their goals, their anticipated expenses, and their tolerance for risk. Problem with being in retirement age is we can make plans but risk of a major health crisis is pretty high that can drastically alter everything. I have never used any for of financial planner, certified or otherwise, and probably never will. They often make a lot of money on very high fees alone of their company's products. Even a large percentage professional managers of active investment mutual funds fail to beat SP500 index over time and those that do don't beat it by much. I wold much rather invest in date targeted funds than use a financial planner or simply invest in a Total Stock Market fund or ETF such as Vanguard VTI, which is extremely low expense ratio of .04%, at the allocation percentage I am comfortable at my age and the rest in bonds, bond funds, money market funds, and CDs. https://investor.vanguard.com/etf/profile/VTI | |||
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| Member |
I would subscribe to your newsletter  I am about 15 years behind you --- can't disagree with anything you said have a lot of money at Vanguard also ETA: the other nice thing about your position is the ability to have cash on-hand to buy into the market after a major drop ------------------------------------------- Proverbs 27:17 - As iron sharpens iron, so one man sharpens another. | |||
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| Green grass and high tides  |
Similar here to. I am willing to lose less during the bear and make less during the bull at this point. I am wondering out loud if at 59-1/2 if you drew out the 4% out every year how realistic over a 25 year period would make that 4% back on average every year, hence maintain your portfolio principal? I like the formula that BBMW brought up about subtracting your age from 100 that number is the percentage of stocks (equities) your portfolio should have. I realize everyones situation in unique. I am also a fan of learning as much as you can and use resources and tools available to help yourself... JAllen and I disagreed that an expert is needed when one undertakes a broad variety of tasks. He consistently advocated experts are needed. Me, not so much. Certainly seeking out proper council is wise advice in general. And I not saying it isn't. But I think a big part of a man's value is his independence and ability to figure things out for himself. Even if it comes (and it does) through trial and error. "Practice like you want to play in the game" | |||
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| Lawyers, Guns and Money  |
Nothing wrong with using Vanguard VTI or other ETFs to keep expenses low, even if you ARE paying for advice on the account. As pointed out above, not that many fund managers attain alpha over a long period of time. Some people need advice and benefit from it. Some people don't. So... some advice is "overpriced" but some is worth every penny. "Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." -- Justice Janice Rogers Brown "The United States government is the largest criminal enterprise on earth." -rduckwor | |||
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| Member |
Reading between the lines. The OP is clearly uncomfortable when the stock market dips. There is no substitute for restful sleep. The answer is not timing the market, but moving some of the stock positions into more conservative investments. Do this gradually, sort of reverse dollar cost averaging. | |||
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