This is copied from another board that someone posted but I wrote this section:

What I meant by 85% of Americans not making it through retirement financially I was speaking about the government statistics of how many Americans drawing S.S. end up on Medicaid- which is wellfair and not something you ever want to end up esspecially if you are married.

Look I have helped people inside of ten years of retirement without a prayer by most standards get there by teaching them to be smarter with their money. Many times people fail to realize how quickly inflation and mainly medical costs and taxes will eat through their nestegg if they even have one. You have to pinpoint per every five years your projected expenses after retirement. Remember these expenses double every 20 years roughly but medical costs will generally triple in that time period. Know what it will cost you to maintain your standard of living, decrease certain expenses accordingly as you age (i.e. travel decreases) after retirement and still meet your financial obligations. Items that won't double out are your house, utilities, etc. as these tend to grow at a slower rate.

First thing, Pensions/STRS/403b- most of the time these have a non-compounding cost of living adjustment of around 3%, COLA, meaning while they may pay out say 85% of your salary at retirement they won't pay out 170% fifteen years after retirement which is the same amount when you started retirement. You have to hedge these monies with outside funds, Roth for instance, this year you can contribute $4000 into a Roth IRA account- good thing is that these are non-taxable at retirement and you can take distributions (only if invested for at least five years) at age 59 and half. The nice thing is a stream of income that is non-taxable, taxes always will increase but anything you hold in your Roth cannot be touched- plus if you never need you can use it for qualified education expenses for say grandchildren and what not otherwise it's there but you still have to take some distributions RMD after retirement.

401Ks- taxable, ordinary income. While 401k's tend to outpace inflation instead of some annuity type retirement accounts they are taxable. Once again max out, and subsidize with a Roth. Make sure both spouses are contributing as much as possible. If you can only afford to put the bare minimums away- then you need to seriously evaluate your financial position. 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.

The reason is because most company sponsered retirement plans suck- they are very limited in their offerings to only about ten to fifteen mutual funds and sometimes these mutual funds don't give you enough choices for proper asset allocation given your risk tolerance.


My advice to everyone who stumbles upon this- hire a financial advisor, not some local hillbilly working out of his local office or house, not some banker either, but a real financial advisor that works for a large national investment firm. They will have access to the software that you need to properly determine the best way for you to make it through retirement. Second they will save you more money in taxes and manage your assets then you ever thought possible. There are litterally hundreds of ways to invest your money, IRAs, Annuities, Life policies, etc. Do not go to an insurance guy and do not go to a brokeridge firm. Do not go to anyone pushing individual securities such as pushing one stock at a time or chasing returns.

Best firms in this order; Waddell & Reed, Lincoln Financial Advisors, Wacchovia, UBS, Morgan Stanley.

Firms that suck; Merryl Lynch especially, AXXA, Edward Jones, and any bank or insurance company.

I am saying this from working in the business feel free to e-mail me at [email protected] if you like- frankly I don't care if I offend anyone. Especially if you work for one of the ones I mentioned that suck because you know what you do, you are an insult to the financial planning industry, and the reasons I can say but won't do so on this board.

Creeper

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

Do you mean "Medicare" ?

[email protected]

tag

tag

Medicare never has been or ever will be Long Term Care. Medicare is simply supplemental insurance to be used for qualified medical expenses at retirement but DOES NOT COVER long term care. They will generally pay a percentage after the first 20 day stay in a facility but not greater than 100 days, during this time you have to pay out of pocket a percentage then after that 100th day you are on your own.  During that first 100 day stay most likely you will pay out of pocket about $8500, then after 100 days you pay about $5500 a month. Then you pay completely out of pocket which is where most people go bankrupt and turn to Medicaid for assistance. This is where you get screwed because Medicaid is wellfair. First you have to spend down your assets, if you are married, and the first spouse ends up in Medicaid in a facility the second spouse cannot have more than $90k in overall assets including the home and car. Which means Uncle Sam will put a lean on your property- once the first spouse dies or the second spouse ends up in Medicaid then Uncle Sam states you cannot own more than $3500 in assets. Generally this is when people start trying to gift money to relatives or give away their assets however Uncle Sam can do a three year look back period and will take your family to court for the cash value of these assets if gifted away during this time period plus penalties.

Also if you end up in a Medicaid patient and your wife ends up a Medicaid patient, you are not guaranteed to end up in the same facility. So now Uncle Sam has taken everything you own except perhaps a $1500 month annuitized income stream and seperates a married couple in the last few years of their life. You are given the first available bed within 50 miles.

This is how most people go bankrupt- which all Medicaid patients are, bankrupt, they have turned over all assets to the government and financially are not making it through the last years of their life as they want in their terms.

My advice prepair today- you don't need a new car every three years, your wife doesn't need a new living room set every five years, what you do need is make sure you are sound for retirement.

However 85% end up bankrupt, end up Medicaid recipiants without any choice of how or where their care will be given and weather or not they will end up in the same facility as their spouse.  

Here is how you pay your 401K without taking a hit on your income. Take fewer deductions, your paycheck will increase, now offest these few deductions by increasing your 401k contribution. Any monies in your 401k are less monies that you are being taxed on.  If you don't have a qualified plan then traditional IRA- which is a tax deduction up to $4k invested. Also  any monies in a Roth- non- taxed at retirement. Guarantee that by the time you reach retirement income taxes will have increased but it doesn't matter especially the more money you have in your Roth.

If you have kids and want them to go to college do fund their education expenses at that time out of pocket or ever pay for them during the time they are in school. Get them to get studen loans at deferred interest till graduation, then pay the minimum monthly payment on the loans over a twenty year period using your IRA money. There is no penalty for drawing the IRA money for qualified education expenses and you get a tax write off for the interest on the student loans- which is usually only about 3.5%, probably the lowest interest rate you can ever find with a tax write off. To many idiots try to pay for their kids education expenses right away when you can have your IRA growing tax deferred at 6.5% or more then pulling off the bare minimum to pay the student loan payment and still get a tax break. Win, win, win all around.

If your kids are under 14, use a 529, which most states will give you a tax break each year you contribute, this is on top of the IRA money that you are putting away that can also be used for qualified education expenses- however I cannot stress enough using the student loand and minimum payment method. Cheapest money you can ever find. If the kids are over 14 then consider a UGMA, Uniform Gift to Minor Act- allowing you to gift money to your child after age fourteen, it grows tax deffered, but is only taxable at the childs tax rate at age 18 or whenever they go to college. You make more money than your kid so obviously you want this money taxed at their rate and not yours.

If you haven't properly invested and are nearing retirement then I suggest doing an interest only mortgage. You never ever ever want to pay off your house. This is why, your home no matter what appreciates at 3.5% or 5% or greater, if you never pay off the principle then no matter what your home is building equity. The beer and cigarettes rule applies- take the money you saved on your mortgage by paying only the interest and invest that money into an IRA and max the 401k in that order. You will cut your mortgage payment to 1/3rd, maintain a tax write off for the interest, and be able to invest the difference toward a higher bearing account which will be paid out to you such as an Roth at retirement tax free.

It amazes me talking to my coworkers to see how financially clueless they are. I have a BA in finance but so many of them are saving little if anything torwards their retirement.

I am NASD licensed and have E&O for those in the know. Feel free to e-mail me at [email protected]

Will write more as I think about it or if you have a specific question then fire away. I miss working in the business but to many today don't care about retirement. Sad thing is thirty years ago most families were single income and made it through retirement today most families are duel income and won't make it.  

Quoted: My advice to everyone who stumbles upon this- hire a financial advisor, not some local hillbilly working out of his local office or house, not some banker either, but a real financial advisor that works for a large national investment firm.

Agreed.  Most of them are glorified salesmen.  As soon as I find one who can outperform me, I'll hire him.  Oh, and he also needs to show me a financial statement proving his net worth is more than mine.

Best firms in this order; Waddell & Reed, Lincoln Financial Advisors, Wacchovia, UBS, Morgan Stanley. Firms that suck; Merryl Lynch especially, AXXA, Edward Jones, and any bank or insurance company.

Agreed, and I'd put T. Rowe Price and Schwab in the first category.  Don't care for UBS but that's just my preference.

Especially if you work for one of the ones I mentioned that suck because you know what you do, you are an insult to the financial planning industry, and the reasons I can say but won't do so on this board. Creeper

Please do say.  If it's true it's not slander/libel.


I think people should also realize that contrary to what Money magazine and most advisors would have us believe, there are more than 3 investments in the entire world (stock, bonds, mutual funds).  I can name about 25 off the top of my head.  Most wealth in this country was made by building businesses and owning real estate, not in the "middle-class" hardon the 401(k).  

The only thing I have to ask to get their attention is to ask how they plan on paying for a nursing home if they need it.  My wife's monthly expenses in a nursing home is $3,300/month.  It doesn't take long to watch your life saving disappear.z

Honest to God, I have my BA in Finance and Corp Management, worked in Banking for years but didn't really learn how to do this stuff properly till I did it for a living. Cool thing was that I trained under a division manager who was promoted just after I was licensed to the V.P. of Investments for the entire company- a company who's proprietary mutual funds were in excess of $40 billion under management not including the non-proprietary or insurance side. The guy I learned from looked like an old dog but he survived over thirty years in the business and luckily I got to train every day with him for nearly a year before starting my own practice. It's weird to go to a conference and walk up to the VP of such a large company and get a hug and a handshake when the CEO's, CFO's are sitting there looking at me, this young kid like what the hell?    

Zoom- I know what you mean. I hope you make it through and feel free to e-mail me, maybe I can think of something that might help.

The sad thing is many people associate LTC with older generations, however my mother is married to a gentleman whose previous wife took eleven years to die of cancer- pretty much bankrupting him once she required around the clock care, and she was only in her forties when she passed.  

Quoted: It's weird to go to a conference and walk up to the VP of such a large company and get a hug and a handshake when the CEO's, CFO's are sitting there looking at me, this young kid like what the hell?

That training in priceless.

Oh yeah; taggage.

PeteCO if your savey enough to do it on your own then that is great!!! Watch your capital gains, watch the turnover ratios, as you well know and realestate- well in my estimation and from industry insiders it's the next tech bubble to burst. But that is just my opinion. I do however believe there will alway be a need. I can think of tons of ways to invest but then we get into speculation- which is scary for someone who may not understand or can stand a huge loss.

Does the market outpace inflation- yes. Can you make money even when the market goes down, yes. When is the best time to invest- anytime. What is the best way to invest- consistantly, monthly, and evenly. My ideal market would be one that continually drops every month, down, down, down, every month, and I keep sinking the same amount away every month, but I keep losing money, down, down, then right before retirement it goes back up- why, look how many shares I'm holding now.

If you invest large sums into single investments one time you are losing out big time. Just my advice.

Quoted: PeteCO if your savey enough to do it on your own then that is great!!! Watch your capital gains, watch the turnover ratios, as you well know and realestate- well in my estimation and from industry insiders it's the next tech bubble to burst. But that is just my opinion. I do however believe there will alway be a need. I can think of tons of ways to invest but then we get into speculation- which is scary for someone who may not understand or can stand a huge loss. Does the market outpace inflation- yes. Can you make money even when the market goes down, yes. When is the best time to invest- anytime. What is the best way to invest- consistantly, monthly, and evenly. My ideal market would be one that continually drops every month, down, down, down, every month, and I keep sinking the same amount away every month, but I keep losing money, down, down, then right before retirement it goes back up- why, look how many shares I'm holding now. If you invest large sums into single investments one time you are losing out big time. Just my advice.

Yeah I have bought some discount notes which is definitely not for the passive or beginner investor.  Risk can be managed to some extent, but when you do mess up it can be bloody.

great info....

would you mind if I copy/pasted the info to my comp for later reference? Not currently working but I hope to start saving as soon as I start working again.

I never read investment rags because these are populated by articles disguised as advice.

There are methods that are proven. I just wish I could have sunk $50,000 in the market during black monday- lost my ass, then held on because I would own my own island.

Do not chase returns- most annoying commercials- Fidelity playing the Blondie song, watching these sick 45% returns, idiots clammering on the phone to sink their money in, losing their ass, calling their brokers, I just lost my ass- why because you invested into something on the upside, look at how far it can fall. Then the broker, oh waite I have another one for you- I got one you'll make a killing off of, it's doing over 27%, idiot pulls his money (permanent loss) invests once again on the upside, loses his ass, broker calls- oh waite, I got another one for you....stupid idiots. Merryll who?? Yah I said it.

Invest consistantly, don't chase returns, put together a good portfolio, fixed assets, large cap any (guess what industry always comes back in the US, we are the world producer), mid cap any, small cap any, then some real estate but not all, then a good mix of some overseas funds why because the Euro is kicking our ass and the former comm bloc states are making big swings for the fences even in the long haul. Also we import more steel, rubber, manufacturing staples than we can ever export even in goods no matter what. It's cheaper to buy the supply so the supply is where you look to invest.  

Quoted: So only contribute to company match, then max out a Roth, anything left- put more toward your 401k. Creeper

... Quite true. Additionally, I've begun planning exactly where I want to retire so I've added vacation/mountain-home real estate to my portfolio - my rationale is I need a place to live anyway, why not pay for it now while I can afford it and money is cheap. Likewise, by time I'm ready for my gold watch; our new home will be completely free and clear - another nice little nest-egg to put way for a rainy day.

Welcome all to Creeper's Corner, would love to hear some feedback from some others, PeteCO what are you into, maybe someone else has some information.

good stuff  bump

My advice, don't invest into the larger funds. The reason if you pull a Morningstar rating but then check the styles analysis most funds perform as adverties; a large cap, is a large cap, is a large cap, however a mutual fund is limited to investing only 5% into anyone company, if the fund becomes to big then the fund manager runs out of good companies to invest into, they start investing into lesser quality companies, eventually the fund starts performing as an index fund- violating it's prospectus and violating your investment asset allocation needs. I.e. Fidelity's Magellen Fund- became so big, they had to shut the doors to investors because it no longer performed the way it was supposed to.

Also watch the turnover ratio's inside the fund- this is how often the individual securities are being traded, if the ratio is to high then the fund is creating tons of short term capital gains- which you don't want.

Finally a good portfolio should only need adjusting every few years if set up properly. Speculative investing such as what PeteCO is into is an area you only play with what you willing to lose. Think of speculative or chasing returns or finding undervalued securities as going to Vegas- you know that the same big dogs always end up in poker tournaments, why because though it is a game of chance you have to know the rules and have a good feel for what you are up against. This is what I think of when I think of speculative investments.

Get an advisor first, get a broker for your play money or open an online trading account but only for your play money.

Creeper.    

Question for you concerning education; I am currently putting away $200 a month to help fund my childrens educations when they reach college age. They are three and two years old so I have quite a way to go with this. This amount I know will not fully fund them both but I figured it would help when my wife and I are both approaching retirement.

Would I be better served to invest this money in a Roth account then have them take student loans when they attend college?

Thanks.

State based Pensions, same as STRS for teachers, or most other governement/company pensions. Generally have fixed COLA adjustments which will not outpace inflation. Nice for the first few years but you end up in a pinch the last few. These are usually annuity based, pre-determined payout, very little increase over time. You need something else to supplement your income in the long run- that is the bottom line. Like I earlier it might pay 85% of your last years salary the first year, then do a fixed 3% adjustment the second year and every year after or every few years, however the 3% is non-compounding and is only adjusted to the original amount of the payout of the pension.

Example year one 2500/month with 3% fixed COLA, year two goes up $75, however year three it goes up another $75, year four another $75, and eventually the increases are like nothing because inflation is compounding and inflation.

However inflation if at the same 3% goes up up $75 the first year, goes up $77.25 in year two, goes up     $79.58 in year three, then goes up $81.95 in year four. So while your 3% fixed COLA has gone up $300 in four years, inflation has gone up $313.78 in the same time period. Inflation is increasing compounding each year not fixed on the original principle.

Now calculate increases in medical and health care costs, decreases in medicare coverage as you age, increases everywhere that are dictated by inflation and you have a problem- your money for retirement is not growing at a rate enough to outpace inflation let alone the other costs associated with retirement that increase at rates nearly triple inflation.

I have met and worked with hundreds of "financial advisors" including many with the firms you recommended. I have yet to meet one that knows s**t about investing. They push what they are told by the home office. None can pick stocks or mutual funds.

If they were smart, they would be managing their own millions instead of other peoples' money.

Most are no better than car salesmen

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?

Thanks for the info.

Quoted: My advice, don't invest into the larger funds. The reason if you pull a Morningstar rating but then check the styles analysis most funds perform as adverties; a large cap, is a large cap, is a large cap, however a mutual fund is limited to investing only 5% into anyone company, if the fund becomes to big then the fund manager runs out of good companies to invest into, they start investing into lesser quality companies, eventually the fund starts performing as an index fund- violating it's prospectus and violating your investment asset allocation needs. I.e. Fidelity's Magellen Fund- became so big, they had to shut the doors to investors because it no longer performed the way it was supposed to. Also watch the turnover ratio's inside the fund- this is how often the individual securities are being traded, if the ratio is to high then the fund is creating tons of short term capital gains- which you don't want. Finally a good portfolio should only need adjusting every few years if set up properly. Speculative investing such as what PeteCO is into is an area you only play with what you willing to lose. Think of speculative or chasing returns or finding undervalued securities as going to Vegas- you know that the same big dogs always end up in poker tournaments, why because though it is a game of chance you have to know the rules and have a good feel for what you are up against. This is what I think of when I think of speculative investments. Get an advisor first, get a broker for your play money or open an online trading account but only for your play money. Creeper.

Not sure I'd classify what I do right along with speculative investments.  Tax leins earn a guaranteed 12%-25% for example, and aren't speculative despite their high returns.  Most of the discount notes I have purchased were secured by property.  Granted, if the payor defaulted you have to know how to handle this situation, but once you do, you have the risk controlled.  The risk/return relationship isn't linear, and the key (I think) is to find the "risk efficient" investments.  This is the difference between an active investor and a passive portfolio investor, and there is certainly nothing wrong with the passive investor who wants their money to grow but doesn't want to be involved daily.

I also buy some real estate with some quite wealthy partners, and resell it (creating new notes) to sub-prime buyers, which is probably the riskiest thing I am into considering the housing bubble (if it does exist).  Also, I do have my fair share of net worth in securities, and most of my net worth is tied up in 3 businesses, one of which I control, 2 of them friends own with me owning a minority interest.  

I learned long ago to buy cars cash so my only debt is my home.  Because of this, I luckily require very little $$ per month and because my wife works my income could drop to zero and we'd be fine.

Creeper is 100% correct - good financial habits will change your life.

Quoted: Thanks for being so generous, creeper.

No kidding !

What is the "other board" that you posted this from?

Quoted:
Question for you concerning education; I am currently putting away $200 a month to help fund my childrens educations when they reach college age. They are three and two years old so I have quite a way to go with this. This amount I know will not fully fund them both but I figured it would help when my wife and I are both approaching retirement.

Would I be better served to invest this money in a Roth account then have them take student loans when they attend college?


Ok most college tuition costs rise about an average of 9.5% per year, private colleges even more, so use first the rule of 72 divided by 9.5% and you get tuition costs DOUBLING every 7.5 years- to triple you education costs for kids so young. So you need to find out what the amount is you are going to need when they go to college- call local schools, ask them last years tuition costs, then this years- you get the idea to pinpoint what to plan for. Second where are investing that $200 a month, check into a Coverdell account these have limits per year to invest but problem is they are used to cover expenses when the child reaches college age. A 529 is another way to go but not all states are the same, cut and paste the link as needed;

www.savingforcollege.com

Check this link out- you get a good idea first if you are in a state that allows you to take a tax break for the 529 however some states do not allow this, but do not specifically invest into the 529 because of the tax break- sometimes the internal costs or lack of proper management are greater costs than the minimal tax break you get.

If you have an IRA you can pull the money to pay for qualified education expenses as mentioned earlier but you don't want pay directly once the kid reaches college- use student loans which carry the lowest tax deductable interest on any loan available. Make the payments using your IRA and stetch those payments as long as you possibly can- and let your kids help out with the payments as well.

You need to worry about your own retirement before you can worry about education expenes to be quite honest- I know you want what is best for your children but invest that money into IRA's so they don't have to bale you out at retirement which is a hell of alot more expensive than any 3.5% student loan rate they may have to pay.

It's really your call but my advice the Roth allows you to pull money for qualified education expenses if you need to- however it sounds like you need the money more.

Oh yah I just did a plan for a friend not to long ago- his kids education expenses were $9500 today per year, her expenses were going to be about $168,000 at age 18. He maxes out a Roth but only plans on supplementing about 40% of her education expenses. Your parents can also gift $11,000 a year per family member tax free- have them help with educating the kids and they get a tax break as well. Once the kids reach age 14 then UGMA as mentioned above.

Hope this helps.

Creeper  
Thanks.

All I need is some money and  I would be all set.

PeteCo you can buy software to test Efficient Frontier analysis on your portfolio, Ibbotson (spelling) Associates based out of Canada does most financial planning software in the industry today. There are ways to hedge against risk and obtain a greater return but something I won't talk about except with close friends or investors such as yourself that do have a greater understanding.


Alaman you have worked with brokers or advisors acting like brokers- a true advisor doesn't need to pick specific funds to get you to your goals as long as they can meet your long term goals by designing a portfolio given your risk tolerance. You need to talk with an advisor not pushing returns, not pushing, the next great thing, and talk to that advisor about what exactly you need to meet your objective. The idea being a good advisor greatly underestimates their returns but can still achieve your objectives even with your criteria. Sounds like you have been with some real jerks- pushing products or returns.  

Quoted: Quoted: Question for you concerning education; I am currently putting away $200 a month to help fund my childrens educations when they reach college age. They are three and two years old so I have quite a way to go with this. This amount I know will not fully fund them both but I figured it would help when my wife and I are both approaching retirement. Would I be better served to invest this money in a Roth account then have them take student loans when they attend college? Ok most college tuition costs rise about an average of 9.5% per year, private colleges even more, so use first the rule of 72 divided by 9.5% and you get tuition costs DOUBLING every 7.5 years- to triple you education costs for kids so young. So you need to find out what the amount is you are going to need when they go to college- call local schools, ask them last years tuition costs, then this years- you get the idea to pinpoint what to plan for. Second where are investing that $200 a month, check into a Coverdell account these have limits per year to invest but problem is they are used to cover expenses when the child reaches college age. A 529 is another way to go but not all states are the same, cut and paste the link as needed; www.savingforcollege.com Check this link out- you get a good idea first if you are in a state that allows you to take a tax break for the 529 however some states do not allow this, but do not specifically invest into the 529 because of the tax break- sometimes the internal costs or lack of proper management are greater costs than the minimal tax break you get. If you have an IRA you can pull the money to pay for qualified education expenses as mentioned earlier but you don't want pay directly once the kid reaches college- use student loans which carry the lowest tax deductable interest on any loan available. Make the payments using your IRA and stetch those payments as long as you possibly can- and let your kids help out with the payments as well. You need to worry about your own retirement before you can worry about education expenes to be quite honest- I know you want what is best for your children but invest that money into IRA's so they don't have to bale you out at retirement which is a hell of alot more expensive than any 3.5% student loan rate they may have to pay. It's really your call but my advice the Roth allows you to pull money for qualified education expenses if you need to- however it sounds like you need the money more. Oh yah I just did a plan for a friend not to long ago- his kids education expenses were $9500 today per year, her expenses were going to be about $168,000 at age 18. He maxes out a Roth but only plans on supplementing about 40% of her education expenses. Your parents can also gift $11,000 a year per family member tax free- have them help with educating the kids and they get a tax break as well. Once the kids reach age 14 then UGMA as mentioned above. Hope this helps. Creeper   Thanks.

Awesome thanks!

I am investing the money in a state sponsored plan that locks the price of tuition credits.

GET

They invest my money and granted make the profit on the return but I in turn lock into a set rate for college tuition credits today. This allows me to generate more money for their tuition than I would be able to come up with when they reach college age but at the same time locks my money into their plan with no return on investment should I need to back out or something happen to either of my children. I can however apply the funds to other children in my family if I should so desire.

I can back out at any time and recieve a refund of what I have invested as capital but minus the interest of course. Also the credits are good at any state accredited school so they are not limited to colleges within my state and could also attend approved Voc schools etc if they desire.

It does sound like a Roth would be a better option for us though in that the money would be able to be used for retirement etc in the event either of our other investments did not reach the returns we anticipate.

Thanks again for the information, it is definately something to ponder over.

O.K., I'm 26 years old.  I have about 15,000 in the bank under a savings account @ 3%.  I am thinking of opening a roth IRA for future/retirement money.   What should I do?  Any help would be apreciated.

Alaman another thing- any advisor picking stocks is not an advisor. Why put all your eggs into one basket when you can spread it out over hundreds in the same dollar amount investeted by going with mutual funds plus having the investment purchase partial shares etc.

Sorry you worked with some lame dicks in the industry. I suggested Waddell & Reed because they have the longest client retention ratio in the industry, an average client stays there about 20 years, where as most other firms including the ones I feel are OK stay with those companies for only about 2.5 years. Why- different approach, not based on returns, not based on the next big one to hit, and not product based but instead goal based long term strategies that do account for inflation, taxes, and medical.  

Most companies that sell individual securities will have the home office purchase say 10,000 shares of XYZ stock- they call all their advisors and say you are now in charge of 500 shares that you must get your clients to purchase, the broker/advisor doesn't care if it is the right investment for the client they only care if the client will purchase or not. This is why the turnover ratio is so high at most places when the investor wises up and goes to another churn and burn house.

www.waddell.com

They don't advertise all that often for a reason, yet they have been in the business for nearly seventy years, have some of the oldest mutual funds in the industry, and are growing at a rate nearly three times their competition- why because they do what is best for the client at all times no matter what.

tag

Quoted: PeteCo you can buy software to test Efficient Frontier analysis on your portfolio, Ibbotson (spelling) Associates based out of Canada does most financial planning software in the industry today.

Thanks!  I was not aware of software like that.  I'll look into it.

Quoted: This is copied from another board that someone posted but I wrote this section: What I meant by 85% of Americans not making it through retirement financially I was speaking about the government statistics of how many Americans drawing S.S. end up on Medicaid- which is wellfair and not something you ever want to end up esspecially if you are married. Look I have helped people inside of ten years of retirement without a prayer by most standards get there by teaching them to be smarter with their money. Many times people fail to realize how quickly inflation and mainly medical costs and taxes will eat through their nestegg if they even have one. You have to pinpoint per every five years your projected expenses after retirement. Remember these expenses double every 20 years roughly but medical costs will generally triple in that time period. Know what it will cost you to maintain your standard of living, decrease certain expenses accordingly as you age (i.e. travel decreases) after retirement and still meet your financial obligations. Items that won't double out are your house, utilities, etc. as these tend to grow at a slower rate. First thing, Pensions/STRS/403b- most of the time these have a non-compounding cost of living adjustment of around 3%, COLA, meaning while they may pay out say 85% of your salary at retirement they won't pay out 170% fifteen years after retirement which is the same amount when you started retirement. You have to hedge these monies with outside funds, Roth for instance, this year you can contribute $4000 into a Roth IRA account- good thing is that these are non-taxable at retirement and you can take distributions (only if invested for at least five years) at age 59 and half. The nice thing is a stream of income that is non-taxable, taxes always will increase but anything you hold in your Roth cannot be touched- plus if you never need you can use it for qualified education expenses for say grandchildren and what not otherwise it's there but you still have to take some distributions RMD after retirement. 401Ks- taxable, ordinary income. While 401k's tend to outpace inflation instead of some annuity type retirement accounts they are taxable. Once again max out, and subsidize with a Roth. Make sure both spouses are contributing as much as possible. If you can only afford to put the bare minimums away- then you need to seriously evaluate your financial position. 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. The reason is because most company sponsered retirement plans suck- they are very limited in their offerings to only about ten to fifteen mutual funds and sometimes these mutual funds don't give you enough choices for proper asset allocation given your risk tolerance. My advice to everyone who stumbles upon this- hire a financial advisor, not some local hillbilly working out of his local office or house, not some banker either, but a real financial advisor that works for a large national investment firm. They will have access to the software that you need to properly determine the best way for you to make it through retirement. Second they will save you more money in taxes and manage your assets then you ever thought possible. There are litterally hundreds of ways to invest your money, IRAs, Annuities, Life policies, etc. Do not go to an insurance guy and do not go to a brokeridge firm. Do not go to anyone pushing individual securities such as pushing one stock at a time or chasing returns. Best firms in this order; Waddell & Reed, Lincoln Financial Advisors, Wacchovia, UBS, Morgan Stanley. Firms that suck; Merryl Lynch especially, AXXA, Edward Jones, and any bank or insurance company. I am saying this from working in the business feel free to e-mail me at [email protected] if you like- frankly I don't care if I offend anyone. Especially if you work for one of the ones I mentioned that suck because you know what you do, you are an insult to the financial planning industry, and the reasons I can say but won't do so on this board. Creeper

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.

Quoted: O.K., I'm 26 years old.  I have about 15,000 in the bank under a savings account @ 3%.  I am thinking of opening a roth IRA for future/retirement money.   What should I do?  Any help would be apreciated.

First I assume this is in Money Market or CD's?? Second don't let the fees for early withdraw scare you if in CD's, your losing money faster than you actually know. Inflation is nearly pacing along with what you are making, then calculate in your capital gains taxes, and you will just about break even.

Do not go to the bank for a Roth- number one. Talk to an advisor but don't pay any planning fees because you are just putting away some money and simple asset allocation and what you are investing should not be a big deal and the fees would eat up any returns you might get anyway.

My advice, invest the money into a diversified Open Purchase Account in mutual funds only with a moderate agressive portfolio. Take $4,000 of those dollars and set them aside or leave them in a money market account- then have a draft set up to take $665 a month toward your max IRA contribution (remaining six months of the year). The reason you don't want to stick the lump of $4K in is because you can take advantage of the cyclical market price fluctuations over the course of this year and because you are younger you want a well diversified share price in your portfolio for long term.

This is called Dollar Cost Averaging.

Example; You have $400 and you invest all $400 at once.

Month 1 rate at $10/share, Mo. 2 rate at $8/Share Mo. 3 rate at $2/share, then Mo. 4 rate at $10/share again. In four months you still have have $400 because you invested all at once.


Now invest $100 a month;
Mo.1 $10/share you buy 10 shares.
Mo. 2 $8/share you buy   12.5 shares.
Mo. 3 $2/share you buy 50 shares.
Mo. 4 $10/share again you buy 10 shares.

Now at month four you have 82.5 shares at $10 a share and now have $825 instead of the $400 you had originally and would have had if you had invested the entire amount.

This works the same no matter what, as share prices will fluctuate every day, and so does your cost basis- long term invest consistantly on a monthly basis. Even if the share price didn't go back up to $10 you still have shares that you bought at only $2 a share in this example and they are worth more if the price only went up to $8 or even $6 a share. Point take your $4k for this year, invest it evenly over a six month period $665/month for 2005 which you will max out your contribution for 2005.  Then next year put away $333 a month for 2006 in your Roth. Take the remainder of your money you have to invest and put into a nice well diversified moderate agressive portfolio with a full spectrum of various mutual funds accounts. I.e. large cap, mid cap, small cap, fixed, International, etc. etc.

See what I mean.

Creeper  

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.

Sad thing is I don't work there anymore- went to the analytical side of the industry.

And you are right jbombelli- it really comes down to who the person is who is sitting across from you. It never hurts to get as much education as you can before stepping into a doctors office and listening to their advice.

I know that for the rest of my life and what I have learned no one can ever pull the wool over my eyes, not these TV Suze Omgonnarippyaoff "your drunk, rich, fabulous" bullshit- no one.

What I say in these threads is really non-specific and general good starting points for people to do some investigating on their own.

Creeper

Tagged for future reference

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

Quoted: TV Suze Omgonnarippyaoff "your drunk, rich, fabulous" bullshit.

Quoted: Quoted: Thanks for being so generous, creeper. No kidding ! What is the "other board" that you posted this from?

Yes, thanks for your generosity. What's the name of that other board, by the way?