... Creeper, do you have thoughts on real properties as a long-term investments?

... I alluded to in in a previous thread in your great post, and understandably the market varies from State to State. But years ago, dad once said "they ain't makin' any more" and that adage always struck me with a good deal of influence.

... It's a supply and demand thing the way I see it - how do you assess dirt and dwelling as far as investments are concerned?

Well your talking about buy real estate for future development purposes. This can be risky but my Grandmother married a guy who purchased nearly all the farms in a part of Kentucky. It hit big time- he sold the lots for $50K an acre and a half but owned so much that he eventually just turned it over to a holding company for the entire remainder of the amount.

You can't pull equity from land/property in a time of need unless there is a dwelling and the banks generally won't include the whole property but instead just a few acres for the value of the equity. You can't eat the dirt and growth on the property is very minimal at best maybe 2.5% without any real concrete foundation dwelling, plumbing, etc.

My advice- do something better with your investment dollars especially if you are counting on this money for retirement. It's nice to own land and it always goes up but sometimes so slowly that it doesn't outpace inflation so in essence you are losing money. Course then again talk to my grandmother's husband who never made it past the eight grade but is a multi millionair investing in property just as you described. Point- he got lucky as hell when the developers came in.  

Here are some basic portfolios that once you do your research properly for the mutual funds or bonds funds to fit these criteria, i.e. Morningstar ratings etc., check to see if the fund is in at least the top 25% percentile and contact a good advisor preferably ones mentioned about where to go from there to make sure that your proper selections are meeting your investment criteria based on risk tolerance, age, time until goal achievement etc.

Conservative;
30% Short Term Bonds
19% Cash, CDs, Money market
16% Intermediate Bonds
11% Large Cap Value
10% Long Term Bonds
5% International Equities
5% Large Cap Growth
4% High Yield Bonds



Moderate Conservative;
19% Short Term Bonds
14% Large Cap Value
13% Intermediate Bonds
12% Cash, CDs, Money Market
11% International Equities
8% Large Cap Growth
8% Long Term Bonds
6% Mid Cap Equities
3% Emerging Markets i.e. Science/Tech- medical mostly
3% High Yield Bonds
3% International Bonds
3% Small Cap Equities


Moderate;
19% Large Cap Value
13% International Equities
13% Short Term Bonds
12% Large Cap Growth
10% Intermediate Bonds
8% Mid Cap Equities
6% Long Term Bonds
5%  Cash, CDs, Money Market etc.
5% Small Cap Funds
3% High Yield Bonds
3% International Bonds


Moderate Aggressive;
22% Large Cap Value
18% International Equities
17% Large Cap Growth
10% Mid Cap Equities
8% Short Term Bonds
7% Intermediate Bonds
7% Small Cap Equities
4% Emerging Markets
4% Long Term Bonds
3% International Bonds


Aggressive;
24% Large Cap Value
23% International Equities
19% Large Cap Growth
13% Mid Cap Equities
11% Small Cap Value
5% Emerging Markets
5% Intermediate Term Bonds

Quoted: Well if any of this helped on this thread and if anyone has a specific question feel free to ask me, IM me or e-mail me at the address I listed earlier. Creeper

What's the name of the website you referred to earlier?  

My suggestion cut and copy the portfolio suggestions to a Word document because I'm not leaving these up to long.

Quoted: {snip}

Is this from the software you mentioned earlier, or just a commonly accepted spread?

Quoted: ... It's nice to own land and it always goes up but sometimes so slowly that it doesn't outpace inflation so in essence you are losing money.

... You seem to be our resident expert on investments here today, and I appreciate that. But I would have to respectfully disagree with this assessment of yours - especially west of the Mississippi.

Well I'm east of the Mississippi. Look not saying anything against buying land as it alwasy goes up but like I said- you can't eat the dirt, getting equity without a dwelling is difficult, and you may or may not get a good spot. It's like panning for gold, some parts of the stream are better than others.

Alright then- determine what type of investor you are, then only hold say 35% of your money to be invested toward property instead of bonds or cash. This way then you still haven't held to much in one area, or slow growth conservative area, and you have money growing elsewhere.

Read the bible; first asset allocation was done nearly 4,000 years ago. 1/3rd in Land, 1/3rd in Reserve, and 1/3rd in Business.

That is the most basic asset allocation you can get but as basic as it is it pretty much holds true. 1/3rd  you live on, 1/3rd to fall back on, and 1/3rd making more for you.

Simple.

Quoted: What makes you think the Roth will STILL be tax free down the road? Can you name any other tax rate/law that has remained unchanged for 30 years?

I would like to see this possibility discussed some more.  I have a 401k and a Roth, but am not yet maxing the Roth, just because it is easier to manage money when I don't notice it leaving my checking account.  The enforced discipline of a 401k has helped me accumulate a nice stash since I started saving for retirement at age 25.  Bottom line, is a Roth really worth paying more taxes now, when we know the .gov will be looking for other possible sources of income once SS starts to take a dump?

Quoted: I got all the way to the point where it was listed that Waddell & Reed were among the best.  I suggest you check with the NASD and order a profile on this firm.  They have been hit with the two LARGEST fines I have *EVER* seen.  One was due to the way they badmouthed a former financial advisor to all of his clients, and intentionally screwed his form U-4 preventing him from getting further employment (over $20 million IIRC), and one recently, which had to do with unfair business practices of some sort. edited:  Bottom line...if you're investing, it's YOUR money.  It behooves you to MAKE SURE the firm with which you do business is reputable and has a good track history, right down to the individual broker/advisor.  Second, make absolutely sure you understand the investments in which you put your money!!!!!!!!!!!!!!!!  I cannot emphasize that enough.  Also, I am no longer in that industry.  I saw too many people lose their asses because they listened to their brokers, or their advisors, or analysts, or what have you. Well you obviously have read a prospectus. First any company operating in invesments will have the occasional bad apple, as will any company for that matter. If you really want to compair look at the other firms, how many doing late trading, how many pushing returns against NASD regs etc. even household names clearly depicting returns on their commercials then in fine print may not accurately reflect individual investments yet clearly pushing a return- huge no no with the regs.   W&R got in trouble for the first one because the person they bad mouthed ( I am assuming not an advisor but former officer) was in fact crooked and let go accordingly, however they couldn't back it up all the way, i.e. he covered thy six before leaving, and from what I do know the jerk had the audicity to sue them because it ruined his career in the industry. Second has to do with an insurance company that they have been in a dispute with for years, this company wants some kind of royalties but they were no longer operating with this company since they went public about five years ago out from under the blood sucking insurance company that was above them. I do know that since they are out from under this parent insurance company W&R has grown by leaps and bounds- the insurance company wasn't to happy about that because they had pretty much sucked all profits they could from W&R but somewhere there is a still a contract in affect at some level but W&R is getting out of it. Look I know what is out there, I know you can say just about every company in America has been sued at some level but I also know the facts more so than what I am saying here or allowed to say. I just know as an individual, who has worked in the industry for some time, has seen what outside advisors have done wrongly to clientele, and knows a bit about other institutions because of close friends I can say without a doubt W&R runs the best practice bar none.

I am the only person I have ever personally met, including in the industry, that will sit down and read a prospectus cover to cover prior to spending any of my hard-earned money!  This includes brokers and clients!

Regarding W&R and Stephen Sawtelle, the guy who left, he was in fact an advisor.   From what I understood, he left because of a disagreement of some sort regarding them treating him unfairly pay-wise.  I could be wrong about that; it's been a few years now, and I haven't given it much thought since then.  W&R then called ALL of his clients and told them he had ripped them off, and that they should pursue action against him, when in fact he had done no such thing.  They also retaliatorily screwed his U-4.  If he was in fact in the wrong, W&R would most likely NOT have been assessed $20+ MILLION in fines!   The funny part is, when this all happened, I had just interviewed with them for an advisor position.  Literally that day.  I called the guy back and asked him for his take on the situation, and he told me it didn't matter to the company, and it wouldn't affect how they did business.  My jaw dropped at that.  How can a $20+ million dollar fine NOT affect how you do business? All I could think was...I don't work for people who flat refuse to learn an expensive lesson regarding treating their advisors right.  

Quoted:




Is this from the software you mentioned earlier, or just a commonly accepted spread?

PeteCO, no- those are basic asset allocation models barrowed from somewhere for developing portfolios. Please delete your thread because I have to delete my post with those asset allocation because they are borrowed. Just copy the post for your own records but please delete that, I'll keep mine up for the time being. I was talking about earlier Efficient Frontier analysis, it is a way of reducing the risk but gaining the optimum return out of a portfolio, the software is extremely precise but you can pay an advisor to run various scenarios. For instance the asset allocation models I present are basics, from there you can litterly change a few variables on your portfolio and design literally thousands of different portfolios that still meet the investors needs. However you can't do this without running a complete analysis, history analysis, etc.  

Remember everywhere you hold your money is part of your overall portfolio- I generally do not include the home you live in because you really should avoid tapping that resource unless necessary and is only there to fall back on in extreme circumstances.

... Example, go here:

www.azcentral.com/class/marketplace/homevaluesspring05/homevalues.php

... and type in some zip codes. For this exercise, try my fiancé’s (85296) whom we just sold her house. Take note of the appreciation over a 5 year period - and 2005 (not yet reported) again doubled the net growth of the previous year.

... Name one non-aggressive investment that yields that kind of return.

jbombelli, the company treats their advisors far better than 90% in the business- not to mention probably some of the higher payouts in the industry passed to the advisors since they don't have to advertise as much because of low client turnover. In the long run they build a better book than anyone long term.

My point- $20 million as far as that advisor- he is one, from what I heard he deserved it, there is a lot more there not printed in your prospectus but you hold onto that. Just curious who did you end up with??

Sorry bro' you missed a great opportunity to work for probably the best in the industry.

What's that website you referenced earlier?

Quoted: First Winston, If you lived near me and were a client- I would investigate everything first for you in order to make a decision. However I am flying blind without knowing specifics, areas, etc. as you know. In general-land makes for a slow growth investment. ... Example, go here: www.azcentral.com/class/marketplace/homevaluesspring05/homevalues.php ... and type in some zip codes. For this exercise, try my fiancé’s (85296) whom we just sold her house. Take note of the appreciation over a 5 year period - and 2005 (not yet reported) again doubled the net growth of the previous year. ... Name one non-aggressive investment that yields that kind of return.

An average return of 6.5% is probably optimistic. Valuations are pretty lofty right now, and interest rates are low.

The last five years have been great for real estate, but Stein's Law applies: something that can't go on forever eventually stops. There's no way that those sorts of returns can be maintained. The coastal real estate markets in particular seem bubbly. When middle class houses are going for $800K it doesn't seem like there's much upside.

Quoted: jbombelli, the company treats their advisors far better than 90% in the business- not to mention probably some of the higher payouts in the industry passed to the advisors since they don't have to advertise as much because of low client turnover. In the long run they build a better book than anyone long term. My point- $20 million to get out from under a contract of a company that was keeping the company from becoming all that it could be is a small fine. As far as that advisor- he is one, from what I heard he deserved it, there is a lot more there not printed in your prospectus but you hold onto that. Just curious who did you end up with?? Are they truly doing what is best for their clients- I can say W&R does without a doubt. My family invests there, even members who work for the other churn and burn outfits invest with them. Sorry bro' you missed a great opportunity to work for probably the best in the industry. I know what else is out there, I have had plenty of clients screwed over by other companies, mainly the big ones that you see on TV, and I can say thank God I don't work for those companies.

The $20+million I mentioned was the fine assessed for treating that advisor the way they did.  It was entirely punitive in nature.  The recent fine involving the insurance company was a separate issue, and also very hefty, fine-wise, from what I understand.  

As far as working for W&R, I probably did miss out on a golden opportunity.  I just got tired of clients that second-guessed me, and wouldn't take advice that wasn't parroted by the analysts on CNBC, and would blame me when their stupid decisions went south.  I learned to hate analysts AND CNBC!

However, I work for myself now.  I left securities entirely;  I run a small chemical company.  I am much happier now.  I don't make as much as I might have had I stayed in the industry, but I have much less hassle to deal with now.

jbombelli, sounds exactly what I went through. I got to a point where the clients thought they knew more than me yet they got their information from following the Wall Street Journal or other news then questioning every little thing to a point it became a problem when they second guess everything even when sometimes it was the worse decision they could make but then I had to follow their wishes. Even worse were the ones who constantly were chasing returns, constantly driven by a day trader mindset- when the reality is that brokers are in the business for a reason, advisors are different. Churn and burn is not my style, long term, capital preservation with growth is.

Honestly though I don't believe I could ever sit here and write down everything I learned, or even talk about everything I learned in even a few days of talking. It would litterly take months to dispell the knowledge completely because of the in depth expertise that were passed onto me. Something I am very greatful for. However clients sometimes wanted to know to much, get to much detailed and even after you told them everything you can, breaking it down into layman's terms it still didn't wasn't to their satisfaction.

My last client I ever met with I sat down with him probably over twelve times, each time him telling me how to do my job, going back and forth, until finally I just said- "When you go to a doctor and you need surgery badly, it is fine to learn all that you can about the procedure, about your ailment, but you don't have the doctor tell you everything he is going to do and everything he has ever learned about everything in medicine then continually question him, and at the end tell him you are going to perform the surgery yourself even at the point of it being detrimental to your health."

It got old- because everyone has to learn for themselves what works or doesn't work as you saw on this board. Who cares about trusting an advisor who has access to millions of dollars of software, access to teams of analysts who assist the investment managers, has access to industry specific information on a daily basis, works with people who have averages of over twenty years in the business, works with the top advisors in the field who have access to the top money managers in other fund companies, trained with only the best, and a solid foundation of and knowledge of estate planning, tax strategies, business to business strategies, retirement strategies, wealth forcasting strategies, market trends, sector trends, spent years in banking, years in finance, years as an advisor- but hey everyone thinks they can do better at your job than you. So I left, never looked back, let the masses continue to go down the road to eventual financial loss. They don't care about proven techniques, or scientific measures to adjust risk, to adjust return, to optimize a portfolio. They just like this fund over here because their brother bought it- or they want to buy this stock over here because their buddy made a killing on it. Then they order me to put the money there and have the nerve to get angry when it doesn't go as planned for them.  

The story never changes- the masses continue to go into retirement without much an idea of what they even need to get through retirement barring anything major happens and even then they don't make it, 85% don't make it.

I got tired of trying to save them and the 15% that do make it- well they all have advisors you can guarantee that much. Best line I ever heard, "we were going to start investing but Joe needed a new Ford F250 and that pretty much is what we had to start putting away". Course their house was paid off, they didn't have much debt, but they needed to put away $1500 a month to get through retirement, and they justified not being able to do anything because they buy a $250/month truck. I said good luck, nice purchase, huge depreciating expensive asset, and your ten years from retirement with $100K in your 401K. And people wonder why.

 

On this board I don't mind giving advice- it's nice to be able to help people or at least get someone to start thinking about their future or where they see themselves down the road. I am not getting paid, the advice is very generalized but if it gets the ball rolling for someone and that person pursues their goal, starts them in the right direction or gives them an idea then great.

Bottom line- know where you are today, know where you need to be, and start planning- because though you may not plan for the future, you still have to live it anyway.

Creeper

tag

Quoted: Bottom line- know where you are today, know where you need to be, and start planning- because though you may not plan for the future, you still have to live it anyway. Creeper

OH SHIT!  

tag for the future

tag

Bottom line, is a Roth really worth paying more taxes now, when we know the .gov will be looking for other possible sources of income once SS starts to take a dump?

If everyone feels that that is the case, and acts accordingly, then it will be a self fulfilling prophecy.

If many people take advantage of the Roth, politicians will understand that Roth owners are also voters.

Sort of like with Social Security.  Politicians realize that more SS recipients vote than do minors.  

We are living in interesting times.  I do believe that we will see much inter-generational stress in the next few years.

btt

tag

My investments would fall into your description for a moderate portfolio.I max out my 401K each year, trying to talk the wife into the same. She isn't much of a saver. I will be in a position at the first of the year to contribute the max in an Roth IRA.

My home has doubled in value over the last two years. We will probably retire to a more moderatly priced area and plan to use the equity in our home to buy our retirement place outright. We could do that now but I am only 45 and the resort that doubled my home investment is less than 10% completed. I bought into the market when it was significantly under-valued.

Am I on the right track using my retirement/pension and social security benefit for the basis of the "cash" portion of my portfolio?

Much of what you are saying is familiar to me. Problem is, I am distrustfull of much of the advice I get from "pay" sources. I always wonder why they are still working a 9-5er if they have it figured. Selling something???

Your advice and sharing here is greatly appreciated.  I have started to rethink...

Tag

Quoted: Well figuring I already got some e-mails here is how I suggest doing things. First breakdown all expenses in today's dollars on a monthly basis. Seperate each one of these expenses, mortgage, food, utilities, clothing, gifts, everything you spend money on even gun purchases. Some might be annual expenses, or semi-annual such as auto insurance. Break these down on a monthly level. This gives you a good idea of where your money is going. Then figure which of these expenses you will continue to have at retirement, which ones will double, and which ones will stay the same, and which ones that will increase. Say your mortgage is paid off but you still have taxes etc. these generally don't go up to much but the price of groceries will double out every 20 years. Now figure to die at around age 95-100; though family history comes into play of course but get an idea of how much you will truly need at retirement. Now you have your expenses calculated through retirement including your vacation expenses and you adjusted for inflation it is time to figure how much you actually need to retire. Calculate extremely conservative on an overall 401k portfolio with a 6.5% return, use the rule of 72 which means 72 divided by 6.5% means your investment will double every eleven years. So you have 75K now, you will have close to 150 in eleven years barring you do proper asset allocation in your 401k. Do not chase returns, make sure you have a good mix and do your research on what is the proper portfolio for you. Remember a large cap fund is a large cap fun is a large cap fun- meaning most overall as long as they are meeting say a styles analysis will perform overall during a ten year period about the same. Even if you have some lame ducks in your 401k you can take advantage of the cyclical trends in the market by dollar cost averaging- meaning you consistantly investing every single month. If you chase returns chances are you will invest when the returns are the highest and then switch when they drop- meaning your constantly losing money. Make sure you reflect your investment criteria in your IRA. No load doesn't mean least expensive by the way. I recommend A share class with all mutual funds for investments over ten years- they are the cheapest in the long run. Purchase Long term care insurance- this will protect your "ass"ets and you will eventually need it no matter how healthy you are today, the average stay in a facility or requirement of LTC is about 2.5 years- which is where most people go bankrupt. However I would suggest getting one that has a cash value guarantee return of premium and a death benefit- one of the better ones is Lincoln MoneyGuard. Any money you put in is guaranteed, you build up a cash value, and if you never use it you can pull the monies or leave it as a death benefit for your estate. Basically get an advisor- I cannot stress this enough, you might pay a small fee to work with this person but a good one will help you invest without ever costing any real monies out of pocket. I.e. you can either pay uncle sam in taxes or get smart and pay yourself through proper tax deffered investments. E-mail me with questions; I am unbiased, I no longer work as a financial consultant, but did so for years and someone on here had questions that started this whole thing on another thread. Creeper

________________________________

Sound advice!  Particularly:

1) "Now figure to die at around age 95-100"

--Good way to ensure you don't outlive your money reserves.

2) Your previous post to max-out a 401-k beyond whatever an employer matches

...Max it out to $14-k (2005) and $15-k (2006).  The tax-deferred plan can't be beat.

3) "Basically get an advisor"

...My own company is going public next year...shares will no longer be held by the company's investment-arm, and people are going nuts as they never have felt the need for an advisor!!



Ed

--

Quoted: 401Ks  I always tend to tell my clients max out only the amount the company will match. The rest put toward a Roth- then anything left over, and damn you better be good a getting blood from a stone, put toward your 401k. So only contribute to company match, then max out a Roth, anything left- put more toward your 401k. Creeper

You are generalizing way too much with the above statment. Many people can't contribue to Roths and should put the maximum allowed by the IRS into a 401(k) even if it exceeds the ER match.

Anyone in this catagory should ask for and read the plan document for your company 401(k) to find out if they allow you to contribute the maximum allowed by the IRS & if the plan has not been updated to incluce the increased levels for 401(k) contributions start asking questions.