No. of Recommendations: 0
I'm investing my mother's retirement assets this week. Most are in a taxable account, and most is in Vanguard, with the cash in ING. My dilemma is whether or not to open a Scottrade account and put a portion of her equity allocation in individual stocks.

The benefits of this would be:

1. Could selectively sell the losers for a capital loss.
2. Might be able to beat the market. Maybe TMF is right and high CFC stocks outperform. Their "Stocks for Mom" series this week is a tempting place to start.

The main problems are taxes and transaction costs. What happens when one of my stock picks goes up 100% and is now overvalued? I guess I have to sell and pay cap gains and commissions, as well as the bid-ask spread. I'd have to beat the market pretty handily to outperform a buy and hold strategy, where cap gains can be deferred forever.

Any thoughts would be welcome (another Scottrade alternative is BRKB).

Nick
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No. of Recommendations: 2
Nick,

If it's your mother's retirement money, make sure the investments will provide secure income for her. I'd put it all into a few Vanguard index funds, their Balanced Fund, or one of their LifeStrategey Funds, and set enough aside in cash (MMF, CDs, short-term bonds) to meet her needs for at least 5 years. You should be able to explain to your mother the purpose and advantage of each investment, and you should be very careful. If you want to play investment wizard, do it with your own money. Open a Scottrade account for yourself, not for her.

db

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No. of Recommendations: 6
2. Might be able to beat the market. Maybe TMF is right and high CFC stocks outperform. Their "Stocks for Mom" series this week is a tempting place to start.

First of all, be aware that consistently beating the market requires *considerable* effort, knowledge, and discipline, which is why so few people manage to do it. TMF has the bad habit of making it seem much easier than it is. While I definitely believe that it is possible to beat the market consistently (which is why I'm starting my own investment advisor business), I also feel that very few people are willing to make the huge commitment that it requires. Most people aren't even willing to make the commitment to even learn accounting, the language of business, much less make the effort to read the annual reports and all of the other SEC disclosures.

Secondly, I wouldn't put too much faith in what TMF tells you with respect to investing. TMF is too much into the "investment strategy du jour." They try something, sell it to unsuspecting victims, and then change the strategy when it becomes clear that it isn't working.

IMHO, either get an investment advisor who is willing to put in the considerable effort that it takes to beat the market, or invest in index funds. I personally think the investment advisor is the way to go, because there are certain pitfalls that you need to avoid. For example, you would want to avoid bond funds because they can be as risky as stock funds. If interest rates rise, prices will decline.

You might think that I'm suggesting you get an investment advisor because I'm biased, but it's really because I have seen way too many people whose portfolios have been decimated. An intelligent investment advisor would have steered them away from these problems.

The big problem is that I don't really know how to tell a novice investor how to determine who is a good investment advisor and who is not. Whereas I can tell when an advisor knows what he is talking about, I don't know how to teach a novice to be able to determine this. It is definitely a challenge.
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No. of Recommendations: 4
I've been managing my father's assets since 1999 because of medical issues. When he moved up to be near us, and requested me to manage his affairs, his portfolio was entirely stocks, and a few individual California muni bonds. He had a full service broker who had been churning his account at an absolutely shameful rate.

I moved his account to Schwab, since he had enough assets that I could get some hand-holding from them when needed. His biggest problem was that he was about 35% invested in IBM, where he'd worked for 40 years.

Since then I've been aiming cut down his IBM percentage as fast as possible, with an eye on his cap gains. I've been moving those assets primarily to the Schwab 1000 fund, the Schwab ST bond index fund, Vanguard REIT index, Vanguard Calif muni fund, and a few stable, dividend paying issues like XOM.

The first quarter of every year is pretty exhausting for me. First I have to do my wife's and my taxes, then his. This Spring was complicated by increased medical issues, trips to the emergency room, and moving him to a place where he can get a higher level of medical care. For the last month it's been evenings and weekends physically moving, and disposing of his stuff.

I have, over the last 6+ years, very much enjoyed learning about finances, but I'm currently at a point where I definately do not have the extra time or energy to follow individual companies closely enough for peace of mind, let alone trying to beat the market.

When I came upon Bernstein's "Four Pillars of Investing," last fall, it was a real breath of fresh air, above all, for the time such an approach can free up.

I am not, nor do I expect to soon be, 100% invested in index funds. I hold, and will continue to hold, several managed funds, eg, Dodge and Cox Balanced (DODBX), and a few conservative, dividend paying individual stocks.

But above all, both in my accounts, and my father's account, it is a great relief that such simplification can save me a ton of time, as well as probably get as good or better returns that would have been possible by more frequently stirring the pot.
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No. of Recommendations: 2
U need to be VERY careful in investing ur mom's retirement. I love mom <MY MOM> too but u don't want 2 create any hardship n ur relationship due 2 money problems. That's why I have a rule: I don't dip my pen in family ink.

REMEMBER: as a custodian, guardian, etc...u need 2 look at SUITABILITY & PRUDENCE when it comes to how u choose ur investments. Just because YOU are willing to take on more risk or a particular investment DOESN'T mean it's best for mom. And don't forget liability issues when u take it on urself.

<I had a 'friend' more like an idiot who's retired parents trusted. 70yrs old & he puts them in 40% Intl, 60% Aggressive Growth funds {some non-diversified}. Needless to say when the StkMkt train wreck came so did their funds! Lost half. Do u think Mom& Pop were happy! It ruined their relationship & good ol'd folks had 2 take a cut n pay. Last I knew what was going on...Dad was ready to disown let alone sue son's @#$!> Avoid getting urself into that. DO UR HOMEWORK, READ, Seek advice...

What r u investing for?
Time Frame?
Any special needs?
Any special restraints or requests by dear old mom?
Liquidity issues, etc?

You have been given some good advice from the previous respondees. Not only should u get a copy of
Bernstein's "Four Pillars of investing" but also
Ron Yolles "Getting Started in Retirement Planning"
***Yolles deals with investing psychology & strategies to make a retirement income last & grow.

One hint: People retirement's funds CANNOT take large deviations & large withdrawal rates in their money pools. ESPECIALLY in the 1st years of their retirement. Killer to having an income u can't alive or keeping their living standard the same over time. Check both books out.

also, check out the following website:

http://home.golden.net/~pjponzo/gummy_stuff.htm

Retired prof who has done some great work on retirement, withdrawal rates, etc. Wealth of information.

Good luck. Be wise & care. Your mom will love u for it.








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No. of Recommendations: 9
U need to be VERY careful in investing ur mom's retirement. I love mom <MY MOM> too but u don't want 2 create any hardship n ur relationship due 2 money problems.

Could you please try to refrain from using single letters or numbers to replace whole words?

I got set to read your post and couldn't get past this line because I had to work to hard to decode what you wrote. I assume you wrote this message because you had some really good ideas on the topic that you wanted to share. The problem is that I (and I know I'm not alone on this) couldn't understand your content. I was fixated on the phonetic spellings you used.

Now the teacher in me is about to come out, but here goes....

The whole point of communication is to express an idea to someone else. Personally I think that making myself known is worth typing a few extra characters.

Please consider typing your posts in standard English.

billyturtle
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I had to work to hard to decode what you wrote.

Replace "to" with "too"

billyturtle
instant karma's gonna get 'ya
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