Hi Bill! They could be as long as they are properly allocated and diversified. If you're paying somebody to manage your money, you should completely understand what that person is doing and why. If your advisor can't or wont open up a dialog with you, it's time to find another advisor.
It depend on whether you are in a high or low tax bracket. Many advisors will recommend using a global approach to portfolio design and for high income tax payers place the tax efficient funds in the taxable account and tax-inefficient funds in the solo 401k.
Good morning Bill, can we assume you are regularly apprised of the performance of your funds, they are connected with your stated goals (which have included identified timelines, resources), and you are pleased with this? If that's true, then a question would be, do the existing funds serve well in both taxable and tax-deferred accounts? You can always have a fee-only advisor do a review of your portfolio to discuss this in detail.
Bill, advisors have different approaches, but I prefer to take a holistic approach and invest considering the tax implications of where you hold your assets. Some assets work better in pre-tax accounts, some have benefits in taxable accounts, and Roth assets also can have a place. Holding stocks in taxable accounts give you the benefits of tax losses, long-term capital gains rates, and dividends.
Hassan, sorry to hear about your back pain. If you have any doubt whether your portfolio is suited to your personal needs and goals, make an appointment with a fee only advisor to have them give it a look. Happy holidays to you as well.
Have a happy New Year Hassan!
Congratulations to you Amari both on your upcoming graduation and your sensible approach to investing. A good book (possibly at your library) is Four Pillars of Investing by William Bernstein. Also google the Callan Investment Chart of Returns that in 2 pages makes the case for diversification.
Amari, your stocks should be invested for goals 7-10 years out, diversified very broadly (ideally through market-based funds like index funds). For money you need in the coming years for school, I would look at online savings accounts rather than bond funds. If you use a bond fund, I would stay with short-term funds since there is the expectation that rates will rise.
Generally investing in stocks is too risky if you need to use the money in the next 5 or 10 years. The potential growth is enticing but the stock market is volatile and you could wind up losing savings that you need in the very near future. I would stick with a savings account or a very low risk bond fund.
For any investment service you select make sure you know exactly what you are paying in fees. That includes what you pay the advisor and what you pay to buy, sell or own mutual funds. Also consider what you are getting for those fees - often you can hire a professional that will provide both investment management and comprehensive financial planning for the same cost you pay another provider for investment management only.
Hi Bill. I'm not familiar with Personal Capital but you should first and foremost understand how and how much your advisor is paid. Secondly, you want to be sure that you "connect" with your advisor and that you like, respect, and trust the person who will be working with you and that advisor should understand you and your needs and goals.
Bill, I can’t say anything specific or negative about their approach specifically, but in general with the current group of online investment firms I find their philosophies to be somewhat odd and often times purposefully driven towards showing higher short-term performance. The approaches are often not holistic, not considering many tax strategies, and your experience with a ‘personal’ advisor is going to be short; turnover of staff is high. As someone that did some consulting for an online advisor about 4-5 years ago. I think the model is going to be taken over by larger players, and meanwhile small advisors today have better tools, more experience, and many will charge the same or better. Better to find someone that knows you and your goals IMHO.
Oops, hit send too quick - Lee, are you working with an advisor? The reason I ask is it's perfectly normal to have these concerns (we hear them daily) and we work through them with clients. We go back to the plan (you have one, yes?) and see if the current portfolio suits our long term goals and we do not generally make changes in response to markets. I know other advisors may do things differently which is why I'm explaining my philosophy. I don't know (ever) what markets will do until they've done them and we look back. That's why we don't react to market conditions. We do change investments when there is a compelling reason to do so in the client's specific situation. Hope this helps.
Lee, I prefer to stay short-term, safe and stable with bonds. Boring in other words. In general I would find the risk of owning a convertible bond fund to be an uncompensated risk versus owning stocks. I always imagine what if next year is 2008, do I have bonds that people want.
Bill, check out NAPFA's website for fee only advisors. I think you'll get more personal attention and can find something near or better that rate.
Lee, I can't speak to the quality or suitability of your particular funds but I will say that I am not too influenced by the best and worst lists with respect to investments. Warren Buffett makes an investment on the assumption that they could close the market the next day and not reopen it for 5 years. I try to buy things that will suit me for the long term.
Happy Holidays to you and yours, Bill. Consider a new years resolution to find an advisor with whom you feel great about sharing your dreams and having them work as a fiduciary on your behalf.
Hi Lee, In my opinion, the fear of rising interest rates and the effect on bond prices is over blown. Yes, bond prices will probably fall but stock prices will probably fall more. Bonds provide income to your portfolio (not much these days) and they help make your overall portfolio less volatile. As interest is paid to the bonds held in your funds and as bonds in your funds mature, the proceeds will be reinvested in new bonds at more current rates. Eventually, the funds will reach equilibrium. As Bonnie says, develop a plan and stick with it
Hi Mark. Most experienced advisors are trained to work with same sex couples and some advisors specialize in them. They also have connections to estate planning lawyers who can help you.Go to www.napfa.org and search in your area. Even if an advisor does not advertise that he works with same sex couples, it doesn't mean that he doesn't. It's worth calling them. These days, your situation is not all that unusual.
Mark, you are right that you could accomplish a lot of your goals by getting the proper estate documents put in place - wills, financial and health care powers of attorney, living wills. There are some financial benefits that only apply to spouses - legal right to a survivor benefit from a pension, estate tax portability, Social Security spousal and survivor benefits. Those are things you might want to consider as you think about your options.
Good luck you to you Mark and Happy Holidays to you and yours.
Gary, if you were not already there, I would not enter the high yield area right now. High yields will get hammered when interest rates go up. What concerns me a little about your question is that it appears that you are trying to time the market and that's bad idea. Your asset allocation will drive 90% of your investment return. Asset allocations should change when your life circumstances change not in reaction to or in anticipation of what any of us sees in the market place.
Hi Gary. I would only use high yield bonds in limited quantity. The bond portion of your portfolio is meant to provide stability and high yield bonds are more risky. If your portfolio can tolerate more risk, I'd rather own more stocks than high yield bonds.
DavidWB, sorry you missed that loophole in Social Security. It was bound to be fixed at some point, as an advisor, I was disappointed with the swiftness! However, it's almost always best to wait to 70 under the current rules if you can, but advisors have excellent tools to give you a specific claiming strategy for your household. This is "doing the math" to determine what's best for you, vs. rule of thumb that may leave $$ on the table. See your advisor for this report.
David, You are one of many who are disappointed about the "file and suspend" strategy going away. The best strategy for you right now is to wait as long as you can before filing. For every year you wait, you get an 8% increase in your benefit. There are other factors to consider like your health and cash flow needs but if you can hold off, you should.
There are several reasons it can be advantageous to delay the higher-earning spouse's Social Security benefits until age 70. You get an 8% increase in benefits each year you delay past full retirement age which is particularly good if you have longevity in your family history. When the first spouse passes away, the survivor gets to continue to the larger of the Social Security benefits. If you delay your own benefit it would enable your wife to continue to get a bigger payment in the event that you die first.
Emerging markets can add additional diversification to your portfolio, but not without adding significant risk. Traditionally, you will not want to target a large percentage of your assets to emerging markets, but a small allocation can add value.