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Author: Itsmutualman Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76078  
Subject: Want portfolio advice Date: 11/4/2010 1:36 PM
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My friend is retired and her money is managed by a bank. She has about $800,000 total. $150,000 is her money, the rest is in a trust. She wants to take her money from the bank and manage it, with my help.

I’m creating a portfolio for her. The currently allocation for the whole $800,000 is 55% stock funds and 45% bond funds. She wants to be conservative with her $150,000. I would like opinions on the portfolio I'm planning for her below. Thanks.

Sample Portfolio:
Stock Funds-(35%)

Large cap 12.5%

Large cap value 1.5%

Small cap 1.5%

Commodities Fund 1%

Real Estate Fund 1%

Foreign Large 12%

Foreign Emerging Market 5.5%


Bond Funds-(65%)


U.S. Bonds 29%

Foreign Bonds 21.5%

Inflation Protected Bonds 14.5%
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Author: gdett2 Big red star, 1000 posts Old School Fool Ticker Guide Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67674 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 1:50 PM
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12 different funds seems like a lot to me. Couldn't you drop to about 5 or 6 and still cover all the areas?

Gene
http://www.taylortel.net/~gdett2/

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67675 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 2:03 PM
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Bond funds are likely to be a bit of an issue sometime in the not-too-distant future. As interest rates rise, the value of the funds will decline, and you will lose principal. And that often causes retired folks to lose a lot of sleep when they see the value of their portfolio drop.

This is quite different from owning a bond directly. There, you will get paid for the face value of the bond. (Assuming no default, of course.)

I would give some serious thought to putting the bond portion of the portfolio directly into bonds rather than in a bond fund.

--Peter

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Author: Itsmutualman Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67677 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 3:56 PM
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Actually the portfolio only has 10 funds, not 12. I recently read two articles in Money Magazine recommending foreign bonds and emerging market funds because of the global economy, and the possibility of inflation and deflation. I have also read advice that one should invest in commodities and real estate for diversification. Do you disagree, or think an investor can have the same diversification with fewer funds?

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Author: Itsmutualman Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67678 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 4:00 PM
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I don't know much about investing in bonds, but it seems pretty involved to me. Since it's not my money, I don't want to have to help my friend buy and sell bonds all the time.

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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67679 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 4:19 PM
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I don't know much about investing in bonds, but it seems pretty involved to me. Since it's not my money, I don't want to have to help my friend buy and sell bonds all the time.



they *idea* is to buy half a dozen or so and hold to maturity .. at maturity, buy another one.

NOT a lot of buying and selling...


but picking the Good Ones can be involved.
(and taxes -can- be more involved than you might like_)

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Author: JLC Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67680 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 4:40 PM
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Read this short paper. I'm not saying follow the portfolio pattern but it will show/explain a little about different asset classes.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=962461

You have several allocations around 1%. In dealing with a portfolio of $150k, that means about $1.5k invested. Fees and spread on buy/sell will take a good chunk of the return away. IMHO, you can eliminate these and others to keep things simpler.

To stay within your model (and use ETFs) you could do the following.
Stocks: 15% IVV (US), 10% VEA (foreign), 10% VWO (emerging)
Bonds: 30% IEF (US), 20% IGOV (foreign), 15% TIPS

Personally, I'd do something like this

Stocks: 15% IVV, 15% VEA, 10% VWO
REITS: 10% VNQ, 10% WPS
Commodities: 10% USCI
Bonds: 10% IEF, 10% IGOV, 10% PCY

JLC

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Author: JLC Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67681 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 4:41 PM
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I don't know much about investing in bonds, but it seems pretty involved to me. Since it's not my money, I don't want to have to help my friend buy and sell bonds all the time.

It might be easier to ladder CDs. And the difference in interest rates right now aren't that much.

JLC

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Author: gdett2 Big red star, 1000 posts Old School Fool Ticker Guide Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67682 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 5:04 PM
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My concerns are:

1. Since you are doing this for a friend, are you going to become that person's "investment advisor" on a permanent basis?

2. Are you going to be the person monitorring the funds and making the buy/sell decisions?

3. Is the friend going to learn enough to take over managing their finances?

4. The operative point being how long will this person be a friend if the markets take another 10 or 20% roll down the hill and do you want to be responsible, possibly in court?

If the person does not know what all these investments are tied to and the risks associated with each, they should not manage them.

Will it be easier for them to learn about 4 sectors or 10?

Making money makes fast friends. Losing money doesn't.

Gene
http://www.taylortel.net/~gdett2/

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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67683 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 5:55 PM
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One of my favorite quotes is;

“Good judgment comes from experience, experience comes from bad judgment”.

Attributed to several different people.


I think the best thing that you could do would be to help her find a fee only financial advisor that already has “good judgment” that charges by the hour to help her get her situation in order.

Without knowing things like her age, objectives, tax situation, and risk tolerance it is pretty much impossible to know what a good portfolio is. In addition how the money is currently invested now makes a big difference. Even if it is not in an ideal investment now, the tax consequences of moving the money around may be more than the advantages of setting up an ideal portfolio.

You do have way too many funds listed. Individual stocks may be a bit different but if you can’t justify putting at least 5% (or even 10%) of your portfolio into a mutual fund, then it really doesn’t make sense to buy it since, even if it performs spectacularly, it won’t significantly affect the total portfolio. For example if one of the funds that you listed with 1% ($8,000) outperforms the market by 10%, then that would add an extra $800 to the portfolio. Nice enough, but it would not significantly affect the entire portfolio.

Depending on which mutual fund company is used, there may also be a special lower cost version of the mutual fund that you get when you have or $50k or $100K in one mutual fund so keeping the money in fewer larger funds can save some money each year.

The foreign bonds may or may not be a good idea, but the taxes on these can be complex. Be sure to know understand how they are taxed.

For what it is worth, because of the risk of inflation or rising interest rates, I am underweighting long term bonds.

Greg

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Author: Itsmutualman Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67684 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 7:55 PM
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Without knowing things like her age, objectives, tax situation, and risk tolerance it is pretty much impossible to know what a good portfolio is.

She is in her late 70's. Her risk tolerance is not too high. She was worried when all her portfolios went down in the last year. The money she would be managing is 19% of the money she lives off of.

In addition how the money is currently invested now makes a big difference. Even if it is not in an ideal investment now, the tax consequences of moving the money around may be more than the advantages of setting up an ideal portfolio.

It might be better to continue to pay the bank to manage her money? The funds they have her in are not so great. The funds have average to above average fees.

You do have way too many funds listed. Individual stocks may be a bit different but if you can’t justify putting at least 5% (or even 10%) of your portfolio into a mutual fund, then it really doesn’t make sense to buy it...

I suppose ten funds may be too many. I'm not sure what funds to take out. I read that foreign bonds, emerging market funds, commodity and real estate funds were good diversification for today's changing economy.

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Author: Itsmutualman Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67685 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 8:21 PM
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Fees and spread on buy/sell will take a good chunk of the return away.

Does that mean that fees cost more if small amounts of money is invested in various funds?

To stay within your model (and use ETFs) you could do the following.
Stocks: 15% IVV (US), 10% VEA (foreign), 10% VWO (emerging)
Bonds: 30% IEF (US), 20% IGOV (foreign), 15% TIPS

You think small cap and value funds, real estate and commodities are less important for diversification and should be left out?

Personally, I'd do something like this

Stocks: 15% IVV, 15% VEA, 10% VWO
REITS: 10% VNQ, 10% WPS
Commodities: 10% USCI
Bonds: 10% IEF, 10% IGOV, 10% PCY

70% stocks seems high for a retiree in her late 70's. She wants to be conservative with her money. The other $650,000 managed by the bank is invested a bit more aggressively.

I haven't read the paper you recommended yet.

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Author: DrTarr Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67687 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 10:00 PM
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In what is pretty much a set and forget portfolio 10 funds would not be to much - IF there is such a thing as set and forget. So to Watty's point a fee only advisor who can really determine her utility - risk tolerance is a good investment. From the quote "She was worried when all her portfolios went down in the last year." Are you ready for her to be upset with you if they all go down this year?????


Right now - ETF's vs. Bonds vs. CD's
As P pointed out, there is expectation of rising interest rates and being in bond etf's does not appear to be the best as rates rise the value of the etf will go down, and since the fund is large enough that there are always bonds rolling over, sure the yield and value will come up but it does not quite make up for the loss in value because the duration doesn't ever really decrease. The bond fund never "matures" so you won't get all the principal back. So, I might shy away from ETF.

Bonds - are good and can be easily purchased direct (treasury direct) but again if/as the rates rise the bonds will suffer a decrease in their "current value" which as the mature will appear to come back. It was really just a "paper" loss. But if you are in the bonds when the there is a significant rise, you can't sell the bond without a chunk taken out as loss and so the opportunity of gathering higher rates would be passing by.

With a CD, you can usually break the CD and if the bank charges, it usually is a smaller realtive cost - 1-3 months interest and then you can get the higher yielding CD or at that time a bond.

So - you might consider 10K in 1 / 2 / 3 / 4 yr CD. which is about half
what you were looking into for Fixed Income.

Past that, I agree on diversifying and foreign bonds can provide some better returns. A little harder to purchase directly so unless you can put some CD's in a foreign bank an ETF here might be a good choice.

Then finish of the fixed income end with some inflation protection securities. But would try to buy direct..


The 1% in Commodities and Real Estate... The point that was made amount the small amount is this - think about the cost of buying the ETF- Say it is 100 bucks (yes this is high but makes the point clearer) So if you buy $1000, you spent 10% of your money to get in and will spend a large chunk to get out relative to the value of the asset. Now if you buy $10,000, you are only spending 1% of the money to get in.. So think in terms of percent. and try to keep it below a reasonable value, say target .1%. So buy $10,000 and see if you can get a discount broker that costs 9.99 per trade.

Also 1% is not really diversification - you are probably already 1% into RE and Commodities just by owning Large Cap.. Factories are on land, timber companies own land, housing developers own land, oil companies own reserves, gold producers own gold.... so you can either consider that your diversification or as JLC put out - go with 10% in some ETF's

In fact JLC's suggested portfolio allocation is pretty good - and if you are looking for diversification that has it. You saw it as 70% stocks.. But look at the four "asset classes"

40% "Stocks"
20% Real Estate
10% Commodities
30% Fixed Income

And then factor in how the bank has the rest..Looks more like about 52% in stocks..

These aren't specific allocation suggestions you are getting here - only ideas to ponder - without full disclosure on your friends situation, and it is more than age and how pretty she is!!! And knowing how the "bank" has the funds allocated it would not be prudent

Another big point is: You say this is 19% of the money she is living off of: Does that mean she has a defined pension, social security, mana from heaven.. which also factors in. IF she is living off $40,000 a year and is only taking out $7,600 great googly moogly <1% withdrawal rate, she should be set...At $800,000 a rumor, which some call a theory, is that you can take out 4% per year and the portfolio will last 30 years for sure.. So lets use 3.0% and be conservative:

$800,000 * 0.03 = $24,000 before tax man. $17-18 after tax. IF she is living on more than $92,000 a year I might be a little more nervous about her situation.......

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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67688 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 10:11 PM
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....She is in her late 70's. Her risk tolerance is not too high. She was worried when all her portfolios went down in the last year. The money she would be managing is 19% of the money she lives off of.....


You need to check on how much is in stocks and how much is in bonds right now. The (questionable) rule of thumb is that the stock percentage should be 100 minus her age, so a bit more that 20% in stocks for her would be the generic answer. There could very well be compelling reasons to have greatly different allocations but she has a high percentage of stock for no clear reason then that could be the problem.


...It might be better to continue to pay the bank to manage her money? The funds they have her in are not so great. The funds have average to above average fees...

If it has been invested for a long time in the same thing then the money might be mostly capital gains that will be taxed when it is sold. If she moves the money around and generates $400K in capital gains then she could owe $60K in capital gains tax, maybe more next year if the rates go up. It could take a long time to save enough in fees to make paying that $60K now worthwhile. Of course if they are real dogs, then it could be easy to justify paying the taxes. The important thing is that you need to know the tax impact so you can decide if it is worth the tax cost.

I’m not sure how the trust would affect this but an additional factor is that in a regular account if she keeps it and it goes to her estate someday then the capital gains may never be taxed and her kids(or whoever) could sell the stocks without having to pay the capital gains tax.


...I suppose ten funds may be too many. I'm not sure what funds to take out. I read that foreign bonds, emerging market funds, commodity and real estate funds were good diversification for today's changing economy....

There isn’t any magic number but for each fund you should be able to write down why your are buying it (not just to make money!) and why it is different than the other investments. The big question is will she be able to handle it in ten years if you are not around. Putting the majority of the money in something like the Vanguard Target Retirment Income Fund would cover a lot of diversification;

https://personal.vanguard.com/us/funds/snapshot?FundId=0308&...

For example if she put 80% of the money into that fund, then 10% could be put into two other funds to give a bit more diversification if she wanted and had a good reason select those funds. This would just be three mutual funds and a cash account. It is very likely that if the dividends are put into the cash account then she would rarely need to sell any of the mutual funds. In ten years if you are not around then even if the money was never rebalanced, the asset allocation would likely never get too far out of whack.

Greg

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Author: Itsmutualman Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67690 of 76078
Subject: Re: Want portfolio advice Date: 11/4/2010 11:56 PM
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"You need to check on how much is in stocks and how much is in bonds right now".

Of the $800,000 (all of the money the bank manages for her) 55% is stock funds and 45% bond funds. I don't think she'd be able to keep up with inflation if she went a lot lower in the percentage of stocks.

"There isn’t any magic number but for each fund you should be able to write down why your are buying it"

I suggested the particular types of funds because the were recommended in Money Magazine and books like "Mutual Funds for Dummies", and by people like Jane Bryant Quinn.

"Putting the majority of the money in something like the Vanguard Target Retirment Income Fund would cover a lot of diversification"

I'm not sure I trust those target funds. I've heard some did worse than average in the financial crisis. I think it might be better to have more control of the portfolio.

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Author: Rayvt Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67691 of 76078
Subject: Re: Want portfolio advice Date: 11/5/2010 12:17 AM
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Without knowing things like her age, objectives, tax situation, and risk tolerance it is pretty much impossible to know what a good portfolio is.

She is in her late 70's. Her risk tolerance is not too high. She was worried when all her portfolios went down in the last year. The money she would be managing is 19% of the money she lives off of.
...
I'm not sure what funds to take out. I read that foreign bonds, emerging market funds, commodity and real estate funds were good diversification for today's changing economy.


So, you are intending to manage somebody else's money--somebody with a low risk-tolerance at that--and your expertise is what you read??

Are you nuts???!!!

Look, when you are interviewing Investment Advisors, the most important question to ask is, "Show me your investments & trades for the last 10 years. How have you done compared to the overall market?"

Since you are helping this lady, then take her side, speak for her, and ask this of your proposed advisor--yourself. If you haven't been investing successfully for at least 10 years, you have NO BUSINESS managing her investments for her. Instead, help her choose an investment advisor. A QUALIFIED advisor, not just someone who has read Money Magazine and Smart Money magazine.

Maybe hold her hand and walk her through discussions with Vanguard or Fidelity. They have expertise. From what I can see, you don't.

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Author: Rayvt Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67692 of 76078
Subject: Re: Want portfolio advice Date: 11/5/2010 12:39 AM
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I suggested the particular types of funds because the were recommended in Money Magazine and books like "Mutual Funds for Dummies", and by people like Jane Bryant Quinn.

Vanguard Target Retirment Income Fund ...

I'm not sure I trust those target funds. I've heard some did worse than average in the financial crisis.


Yes, you are nuts to want to manage her investments for her. And she is nuts if she has you do it.

Here's my suggestion.
Contact http://www.fisherinvestments.com/ Talk to them, see if they have a local rep who can come out and talk face-to-face.

http://en.wikipedia.org/wiki/Kenneth_Fisher

Some cut-and-pastes:
Fisher Investments oversees over $38 billion (as of 3/31/10) and is one of the world’s largest independent investment advisory firms.

CEO Ken Fisher has been a professional investor for over 35 years and is globally recognized as a financial guru. He has written Forbes' Portfolio Strategy column for over 25 years, authored 6 books, including 3 New York Times best sellers,

Fisher Investments Private Client Group manages assets for more than 20,000 individuals in the US. As a client, you will receive an investment portfolio suitable for your situation,

BTW, their annual fee is pretty small, about 1.25%

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Author: JLC Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67693 of 76078
Subject: Re: Want portfolio advice Date: 11/5/2010 8:38 AM
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Does that mean that fees cost more if small amounts of money is invested in various funds?

Some funds/ETFs if you get above a certain amount charge lesser/no fees.

You think small cap and value funds, real estate and commodities are less important for diversification and should be left out?

IMHO, breaking down to small cap/value/mid size/etc is too much. Keep things simple and do a total market fund/ETF.

If you're wanting to stay very conservative, I'd drop REITs and commodities. They can be volitile. But read the paper and you'll get an idea of how OVER THE LONG TERM they can add value and lessen volatility.

70% stocks seems high for a retiree in her late 70's.

What's her family history. She could still live another 20 years. My grandmother's "last wish" was to live long enough to see me graduate high school when she was 76. Well, she saw me graduate college, medical school, finish residency training, and get established in private practice. She died at 98.

If your friend has a family history of living to late 90s, you'll have to think differently than if everyone is dead at 67.

JLC

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Author: ResNullius Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67694 of 76078
Subject: Re: Want portfolio advice Date: 11/5/2010 9:10 AM
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So, you are intending to manage somebody else's money--somebody with a low risk-tolerance at that--and your expertise is what you read??

Are you nuts???!!!

Look, when you are interviewing Investment Advisors, the most important question to ask is, "Show me your investments & trades for the last 10 years. How have you done compared to the overall market?"

Since you are helping this lady, then take her side, speak for her, and ask this of your proposed advisor--yourself. If you haven't been investing successfully for at least 10 years, you have NO BUSINESS managing her investments for her. Instead, help her choose an investment advisor. A QUALIFIED advisor, not just someone who has read Money Magazine and Smart Money magazine.

Maybe hold her hand and walk her through discussions with Vanguard or Fidelity. They have expertise. From what I can see, you don't.


Listen and hear.

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67695 of 76078
Subject: Re: Want portfolio advice Date: 11/5/2010 10:12 AM
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I suggested the particular types of funds because the were recommended in Money Magazine

Money Magazine is a pretty good place to get stock ideas. The only better places are anywhere else, including the receptionist at the Dentists' office. I'm being serious here.

and books like "Mutual Funds for Dummies", and by people like Jane Bryant Quinn. ...
I'm not sure I trust those target funds. I've heard some did worse than average in the financial crisis.


You need to think about professional money management. You are flying by the seat of your pants, and you don't have any pants.
 


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Author: Itsmutualman Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67696 of 76078
Subject: Re: Want portfolio advice Date: 11/5/2010 10:20 AM
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DrTarr wrote: "The point that was made amount the small amount is this - think about the cost of buying the ETF- Say it is 100 bucks (yes this is high but makes the point clearer) So if you buy $1000, you spent 10% of your money to get in and will spend a large chunk to get out relative to the value of the asset. Now if you buy $10,000, you are only spending 1% of the money to get in.."

Sorry I don't get it. $1000 is 10% of my money and $10,000 is only 1%? How is $10,000 be a smaller percent of my money than $1000. I don't know what money/figure you're referring to.

"So think in terms of percent. and try to keep it below a reasonable value, say target .1%. So buy $10,000 and see if you can get a discount broker that costs 9.99 per trade".

I don't know too much about ETFs You're talking about ETF's that charge commission on trades? Would there be less problems (costs) using an index fund instead?

"These aren't specific allocation suggestions you are getting here - only ideas to ponder - without full disclosure on your friends situation, and it is more than age and how pretty she is!!!"

You want more info about her? Like what?

"And knowing how the "bank" has the funds allocated it would not be prudent"

I don't understand that statement. It wouldn't be prudent for me to give more info about her bank account?


"You say this is 19% of the money she is living off of: Does that mean she has a defined pension, social security"

The $150,000 I want to help her invest on her own is 19% of the $800,000 managed by the bank. She does get social security and she also has around $70,000 in a savings account.

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Author: Itsmutualman Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67697 of 76078
Subject: Re: Want portfolio advice Date: 11/5/2010 10:46 AM
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"Yes, you are nuts to want to manage her investments for her. And she is nuts if she has you do it".

Thanks for such friendly advice. My friend's money already is managed by the bank, so I don't see much reason to take it to another manager.

I have been investing on my own for over ten years. I know a bit about investing, but I don't watch my funds very closely. I am pretty far from retirement, so I there are details about things I don't know about and haven't had to deal with yet.

Many of the financial experts I have read and head say most people can manage their own money. They say you can set up a portfolio that needs little adjustment over the years. Since I have been investing I haven't seen the funds and portfolio allocations recommended by writers change very much. Although since the recession I have read about some new suggestions.

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Author: Itsmutualman Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67698 of 76078
Subject: Re: Want portfolio advice Date: 11/5/2010 11:47 AM
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Goofyhoofy wrote: "Money Magazine is a pretty good place to get stock ideas. The only better places are anywhere else, including the receptionist at the Dentists' office. I'm being serious here".

Where do you recommend getting investing advice? Do you recommend anyone investing without a professional?

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Author: tjscott0 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67699 of 76078
Subject: Re: Want portfolio advice Date: 11/5/2010 11:53 AM
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You should ask yourself how your friendship fair if you lose her a portion of her money. What about a lawsuit brought against you if you lost her some money? I'm not saying she would win; but it would cost you some legal fees.

If you decide to proceed anyway--check out these lazy index portfolios.
http://www.marketwatch.com/story/lazy-portfolio-winners-and-...

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67700 of 76078
Subject: Re: Want portfolio advice Date: 11/5/2010 12:03 PM
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Many of the financial experts I have read and head say most people can manage their own money.

This wouldn't be YOUR money to manage. It's HER money. If she wants to manage her own money, more power to her. If she wants someone else to manage her money for her, she should look to either a family member or a professional.

Having 'a friend' manage an elderly person's money is an open invitation to lawsuits from the family.

AJ

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Author: vaking One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67701 of 76078
Subject: Re: Want portfolio advice Date: 11/5/2010 12:16 PM
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Money Magazine is a pretty good place to get stock ideas. The only better places are anywhere else, including the receptionist at the Dentists' office. I'm being serious here.

So if I read Money Magazine at the Dentist's office I'm good?

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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67702 of 76078
Subject: Re: Want portfolio advice Date: 11/5/2010 12:26 PM
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So if I read Money Magazine at the Dentist's office I'm good?

Only if there are free coffee coupons inside the magazine.

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Author: Itsmutualman Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67703 of 76078
Subject: Re: Want portfolio advice Date: 11/5/2010 3:03 PM
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tiscott0 wrote: "You should ask yourself how your friendship fair if you lose her a portion of her money."

Alright, my "friend" is actually not my friend. She really is a family member. I was trying to make this confidential and anonymous. Does that make it better?

I was thinking I wouldn't really have to manage her money. I thought I could just help her set up her portfolio, tell her which funds to buy. After that, it might not require much maintenance.

"If you decide to proceed anyway--check out these lazy index portfolios.
http://www.marketwatch.com/story/lazy-portfolio-winners-and-...

This article give information similar to what I've read over the years in places like Money Magazine and people like John Bogle. Index funds beat most actively managed funds. It doesn't seem to me like you necessarily need to pay someone to set up a portfolio and manage it. But maybe I should check with the dentist's receptionist or Jim Cramer.

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Author: hirundo Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67704 of 76078
Subject: Re: Want portfolio advice Date: 11/6/2010 1:20 AM
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itsmutualman -

Like a couple others in this thread, I urge you to pay for some time with an experienced fee-only financial planner. Both for the actual learning that will occur, and for the peace of mind that comes from having made use of an unbiased professional.

When you (or you and your relative) begin meeting with a planner, you will want to have already assembled all pertinent documents including a budget and a copy of the most recent monthly portfolio status report from the bank. This report will show the cost basis and current market value for each of the individual assets the bank is administering in trust for your relative. (If it doesn't, that's a big warning flag about the quality of service from this particular institution.) As mentioned in this thread, the capital gain / tax circumstances are sometimes an overwhelming factor when deciding whether to keep money where it is, or how best to go about shifting it to elsewhere, if you decide to do that.

In a similar thread you began here in July, at

http://boards.fool.com/in-danger-of-running-out-of-money-286...

you wrote: "I don't know how to help her. I find it difficult to calculate a budget."

This speaks directly to why you should not accept a leading role as a financial adviser, nor should your relative be keen to have you as a sole financial adviser. In the specific circumstances you have described, I believe that without professional involvement, you are "hunting bear with a popgun".

There is some possibility that a relative, at 78, has unwittingly begun losing some of their previous capacity for handling their financial affairs in a coherent way. This was the subject of a recent article at:

http://www.nytimes.com/2010/10/31/health/healthspecial/31fin... .

Thus, your greatest service to your relative may be somewhat broader in scope than a simple one-time setup of a portfolio, it may include health-related planning and assistance .

It has been a few years since I checked, but it may still be possible to purchase long-term-care insurance for someone who is 78 years old. This might or might not be a sensible choice for your relative. It was a great choice for one of my aunts, who suffered a stroke very shortly after her children took out an LTC policy for her. They needed every penny of the benefits.

hirundo

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Author: Follydolly Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67714 of 76078
Subject: Re: Want portfolio advice Date: 11/9/2010 6:22 PM
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CEO Ken Fisher has been a professional investor for over 35 years and is globally recognized as a financial guru. He has written Forbes' Portfolio Strategy column for over 25 years, authored 6 books, including 3 New York Times best sellers,


I had a Fisher salesman come to my home (after they kept phoning me) and give me a run down of what they would do for me. Personally, I was not too happy. I made it clear how old I am and that I was not ready to take on a lot of risk. They would have me sell all my present investments (50/50). It seemed to me that everyone gets the same portfolio. Also, Fisher does just as badly as everyone else when the market "crashes".

I stayed with my current investment mgr who charges much less in fees and is local. You should be able to negotiate fees. Fisher does not negotiate, no matter how much you have to invest. But Fisher just does not "get it" and keeps calling me.

Birgit

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