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Investing/Strategies / Retirement Investing
|Subject: Re: Talk me out of a Financial Advisor||Date: 6/2/2013 8:22 AM|
|Author: TwoCybers||Number: 72356 of 76397|
Murray my feeling is different from the majority of responders - We elected to get a financial advisor and it was one of the smartest decisions we made.
My wife and I have no children or anyone else. I had handled out investments and at this point certainly am capable of doing so, should I choose. (Incidentally, the time to get a financial advisor is when you still are capable of doing the task - otherwise you really don't have a choice.)
We have some experience with family and friends in older age and unless a person has a sudden death, there will be periods of years when they will not be able to handle investments. Maybe some folks are so smart they can set something on auto-pilot for 10 or 20 years and the laws Congress passes next won't disturb the financial plans. I am not that smart.
There is no question 1% higher return is better - the question is do you really have the ability to attain the same returns as your financial planner. Many people assert they can.
When evaluating a financial planner, be certain to check past performance against benchmarks. Think about the benchmarks. Over the last 30 years interest rates have fallen - in some cases over 15%. That has driven great fixed income returns. Last time I checked it was very unlikely the return on a 30 year bond was expected to drop another 10% in the next 10 to 20 years.
For us personally, the greatest benefits from our decision to use a financial planner/advisor have been these two:
#1 I really don't worry about the ups and downs of the markets - we started in early 2008 and nothing since then have been as bad as the first 12 months. We did keep a "Paper Money" portfolio for a couple of years and I still watch carefully. Is everything thing what I would do no.
#2 Over the years I was running things, I made my share of errors -- like recognizing in late 1999 that I had made a ton of money, the market was in a bubble (my description), saying even if I just got savings account returns for 3 years, I would be ahead of my expectations and the fatal action - I'll just watch carefully and bail out in a hurry. We had paid off the mortgage, gotten a couple of new cars and a few other things to harvest cash, but I still keep most of the money in the market and lost too much. I happen to be 11 years older than my wife and while she has the intelligence to invest, I am of the view investing is like riding a bicycle - you have to make certain mistakes before you can travel smoothly down the street. Some mistakes in retirement, like running out of money, has very undesirable consequences.
The one item we do use as a care gauge of where we are is very simple. We track the trailer 12 months spending divided by current portfolio. This smoothes out annual stuff like insurance and property taxes. We keep our spending under 3.0% of our current portfolio - others will have different numbers.
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