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I have this conversation at least 30 times per day.

Discussion in 'The Lounge' started by stoney, Mar 23, 2013.

  1. stoney

    stoney Part of the unwashed, middle-American horde

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    http://www.youtube.com/watch?feature=endscreen&NR=1&v=iacqPzW0ukM

    It always amazes me the stupidity of Americans. I had a guy yesterday roll $500k into an Edward Jones IRA charging a 5% sales commission because the advisor was a buddy from high school. Who called him 2 weeks ago, for the first time in 30 years, and said he should roll it there. He just paid $25k to somebody to put his money into a template mutual fund that he could have paid $8.95 to do for himself at Charles Schwab, or for free with me. To add insult to injury, the fund he was going into has underperformed ALL of its benchmark indexes for the last 15 years. You just can't fix stupid.
     

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  2. jonKranked

    jonKranked Press Button, Receive Stupid

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    stoney make me some money
     
  3. stoney

    stoney Part of the unwashed, middle-American horde

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    None of my friends listen when I try, so I am getting ready to stop trying.
     
  4. jonKranked

    jonKranked Press Button, Receive Stupid

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    it wouldn't do me any good right now anyways, all my money is about to go into a house
     
  5. 4xBoy

    4xBoy Turbo Monkey

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    I have maybe a Fiver, can you make it into a million in my lifetime?
     
  6. Pesqueeb

    Pesqueeb bicycle in airplane hangar

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    I wouldn't worry about it. Real estate is a sure thing.
     
  7. stevew

    stevew unique white person

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    maybe a move greece/cyprus is in order......they could use your midas touch.....
     
  8. Nick

    Nick My name is Nick

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    behind you, don't wait up.
    I have learned a ton about smart investment from you in the past two years.

    Any :monkey:s needing investment guidance should hit up Stoney. He knows his sh!t.
    He should write a book or something.
     
  9. dante

    dante Unabomber

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    Just think of stupidity as a Keynesian stimulus plan for stupid people...
     
  10. stoney

    stoney Part of the unwashed, middle-American horde

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    Unfortunately, you are the outlier. As for the book, I should really pull up what I already put together and see how far along I can get.
     
  11. H8R

    H8R Cranky Pants

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    How much would you charge to come up with a retirement plan for a semi-professional musician with a roller coaster income pattern?
     
  12. stoney

    stoney Part of the unwashed, middle-American horde

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    Unfortunately, my job doesn't allow me to do that in a formal manner. Everything I give my friends is "highly suggested, but not a recommendation". Send me a pm with your email. I can put together a few 'best practices' you can reference. It's all stuff that you can find online as free, public information, I'll just help consolidate a few things for you.
     
  13. eaterofdog

    eaterofdog ass grabber

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    Eight dollars... and ninety five cents.
     
  14. stoney

    stoney Part of the unwashed, middle-American horde

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    I saw Pesqueeb posted this on FB. It's appropriate.

    http://www.cnbc.com/id/100578392 "11 Things About 401(k) Plans We Need to Fix Now "

    I don't necessarily think these are things to 'fix', but to be educated about. A large number of the people I talk to have heavily concentrated company stock positions (ie 90% of their entire savings - at any dollar amount), with total faith in their companies. I will even bring up Enron, WorldComm, Lehman, and Bear Sterns, but they think their company stock will never go down. Ever. Sometimes it pains me to do my job because people do things that are so bad for themselves.
     
  15. Pesqueeb

    Pesqueeb bicycle in airplane hangar

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    I work for an airline. I eject company stock the second I get it. I lost on the last stock purchase but so far, in 12 years that one time is the exception. The good news I guess is that, while not great, my 401k plan with the airline isn't all that bad either.
     
  16. stoney

    stoney Part of the unwashed, middle-American horde

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    Shockingly, most aren't.
     
  17. JohnE

    JohnE filthy rascist

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    Front Range, dude...
    I like/trust our Ed Jones guy...I guess there are scammers all over...my retirement is failry stable I think-
    I have Ed Jones stuff, plus independant investments, to include thrift savings through the gubbmint & AD military retirement...
     
  18. Pesqueeb

    Pesqueeb bicycle in airplane hangar

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    All that bad or all that good?
     
  19. stoney

    stoney Part of the unwashed, middle-American horde

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    Most people do like their Ed Jones advisor. Most are hired initially as door-door sales people, so they are very personable. It's the charged financial plans and the high load funds that they put people into, after they charge them for an expensive financial plan.

    Aren't that bad.
     
  20. trailmike

    trailmike Chimp

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    I have a Roth IRA , and have a lot of my money in CD's is that a good idea?
     
  21. sstalder5

    sstalder5 Turbo Monkey

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    I'm 21, in college, with a seasonal job. Can you help me retire in 5 years?
     
  22. CBJ

    CBJ Turbo Monkey

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    I am ready to listen I have a portfolio that needs help.
     
  23. stoney

    stoney Part of the unwashed, middle-American horde

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    I’ve gotten few pm’s asking about the basics of selecting a financial advisor and doing a financial plan. I am not giving any advice on how to invest. No advise on what advisors or firms to select and am being general with this information that can be found elsewhere on the internet.

    For starters, most FA’s are not Certified Financial Planners (CFP) or Certified Financial Analysts (CFA), they are sales people who are paid on commission. If the advisor isn’t a CFP or CFA, I would end to walk away. This is your life savings; treat the FA interviewing process as such. When you are doing your research, find the person that is best for you. They might not be the nicest, most social, etc. They could be someone like me: somewhat socially awkward, but have a ton of experience and knowledge. From my stand point, if I meet an FA who has a large book and is socially awkward, they are probably very good. When it comes down to it, being an FA is a sales position. If somebody can’t sell and they are doing very well, there is a reason for it.

    There are two levels of advice you can get – the suitability standard and fiduciary responsibility. The suitability standard is one that most branch-level advisors are required to use. They have asked the appropriate questions to make sure that the investment isn’t wrong (ex. 90 y/o pensioner into international stocks). It is the lower standard, but one to shy away from if you can. The other is fiduciary responsibility. CFA, CFP, CAIA (Certified Alternative Investment Advisor), MBA-Business and a few others fall into the category being required to give advice on a fiduciary level as part of having those certifications. This means that it is their legal responsibility to give good and appropriate advice. They aren’t there making sure you are not in the wrong fund; they are responsible to get you into the right fund. If I had the choice, I would make sure that the FA has fiduciary responsibility. A lot of times you can get something in writing saying such. If they can give you something stating as much, walk away.

    The commissions the FA lives by usually fall under two categories: Sales Loads on mutual funds and management fees on managed accounts. Sales loads fall under multiple categories: Front-end, back-end, level-load, and no-load.

    Front-end are usually referred to as A-shares. They have a lower internal cost, but you usually end up paying an upfront fee to buy the lower level. These loads can be up to 5.2% legally (iirc). Most advisors will push these, as they get a fat check right away.

    Back-end load are usually referred to as B-shares. There is no upfront sales load, but when you take the fund out, you get charged a fee. This reduces as you hold the shares, but you have to hold them for a long time to get pass that date.
    Level load are usually referred to as C-shares. There is no load that you see, but the internal costs are higher than on the A- and B-shares. These end up costing you more money long-term.

    No-load funds and described as such. Fees on these are less than C-shares, and these are how you should be investing.
     
    #23 -   Mar 24, 2013
    Last edited: Mar 24, 2013
  24. stoney

    stoney Part of the unwashed, middle-American horde

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    Management fees are usually between .5% and 2.5%. These are charged on an annual basis based on the amount of the money being managed. Managed funds are supposed to be ‘custom tailored’ to the individual investor, but are generally chosen from a template of a couple firm pushed solutions. A true manager should be running your investment as a portfolio of stocks, bonds, etc. There are very few true money managers for the asset level of most of us here. I’m not a huge fan of managed accounts unless they are actively managing your account.

    Financial Plans are another way to be charged fees that have both benefits and risks. Many firms will do financial plans for free, then put you into a specific model portfolio that you will pay heavy fees in. Some will charge you a planning fee AND then put you into loaded funds. That is double dipping and you should avoid it. Other will charge for plans, and then put you into portfolios of no-load funds and ETF’s.

    The latter is what you should be looking for. The advisor would need to be a CFP for this. They are charging you for life planning, but not taking a slice on the investments; they are incentivized to invest you based on need, not profit. Proper planning should take taxes, lifestyle, kids, college, trust planning, death planning, etc. These can be up to a few thousand dollars based on how deep you go, but are generally worth the money. Know that you want a planner who has multiple experts in their book: CPA, trust attorney, CFA, CAIA, etc. They should acknowledge that they are not an expert at everything, and put together a team to cover all aspects.

    Fees are what really eat into your returns and you need to pay attention to them. A portfolio of ETF’s and index funds is a great cheap way to invest, but if they are pushing for rebalancing on a regular basis, be wary of churning. Churning is buying and selling quickly to generate commissions and is illegal. Ask how they get paid; ask about returns from investors in similar situation as yourselves (ex. 30 y/o couple with a small child). They should be able to provide you some sort of information on their historical returns. Transparency is your friend. If the advisor is younger, are they working with an established one? I’m 32, and despite having my years of experience, have no CFA of CFP. If you were meeting me for the first time, I would expect any of you to walk away if I was not working for an established CFP/CFA.

    For most people, mutual fund portfolios are the best way to go. Just make sure that you aren’t paying loads and that it is appropriate for you. While I don’t like pushing any specific type of fund (and I am not giving advice to anybody here), no-load target date funds are nice in that the risk is automatically adjusted for your own age. They are ‘good enough’ for most people, but if you can afford a true financial plan and the advisor is a true planner, I would suggest working with one. Just do a LOT of research, meet with LOTS of advisors, don’t feel pressured into anything, and lastly – don’t move your money anywhere until you know how you will be getting invested.
     
    #24 -   Mar 24, 2013
    Last edited: Mar 24, 2013
  25. stoney

    stoney Part of the unwashed, middle-American horde

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    No, but you can make me a 3-tap keggerator for a small fee.
     
    #25 -   Mar 24, 2013
    Last edited: Mar 24, 2013
  26. stoney

    stoney Part of the unwashed, middle-American horde

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    Inflation is currently around 2%. If you are not making at least that amount of money in your IRA, then you need to look at reinvesting into something that can adjust for inflation. TIPS and most equity funds will, as the value of a company doesn't go down with inflation. The price will adjust for inflation.
     
  27. stoney

    stoney Part of the unwashed, middle-American horde

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    I can't give advice to individual people. There are multiple independent research reports that are available for free. I personally use Casey Reports, Miller Money, Stansbury Associates, and a few more. I also have quite a few paid memberships that I use more so. These are all educational, and I suggest reading them regularly.

    I do all of my own stock selections, but I also read research for about 1-1.5 hours per day, every day. I've also been doing this every day for 10 years so... yeah.
     
  28. CBJ

    CBJ Turbo Monkey

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    What do you think about picking a portfolio of dividend paying stocks yourself vs buying into a fund? But you are right I need to do some self education.
     
  29. Nick

    Nick My name is Nick

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    behind you, don't wait up.
    The right track. You are on it.
     
  30. stoney

    stoney Part of the unwashed, middle-American horde

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    Nick- That report I sent you earlier today about picking stocks... Can you help me out and write up a 10-20 line summary? It's not something that I can post up, as it can be implied to be advice.

    As for dividend paying stocks, an example of how reinvesting of dividends works in your favor. In 1988 Warren Buffet took a $50mm position in Coca-Cola. After 20 years, his annual payout in dividends alone was greater than his initial purchase.

    The way to think about dividend paying stocks is demand of the product:

    How many of you use Tide, Gillette razors, and Dawn? How likely would you be in a time of economic pullback to switch to cheaper versions of these products? Most likely, you wouldn't, as with most other people. This is the kind of company that has a highly captive clientele and a product that can fetch a premium, hence it is able to produce steady, growing dividends with little worry about loss due to company collapse. What is this company? Proctor and Gamble.

    These are simple things. Buy stable dividend producing companies, reinvest dividends, and don't sell when the market goes down. When things go to hell, buy more - buy low, sell high.

    From a cost perspective, a single trade is usually $5-10 depending on the broker. Buy it, reinvest it, forget about it. Just keep adding money every month to the account.

    I target 10% of my pre-tax income into savings. Just split to make sure that you are setting side enough in non-retirement accounts so that you don't get into an emergency situation and have to get into you IRA/401k. There are substantial taxes and penalties for doing that. I try to put aside 20% into after-tax from all of my savings.


    I AM NOT RECOMMENDING AND PARTICULAR INVESTMENT OR GIVING ANY SPECIFIC PERSONAL INVESTMENT ADVICE!!!
     
    #30 -   Mar 24, 2013
    Last edited: Mar 24, 2013
  31. Austin Bike

    Austin Bike Turbo Monkey

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    I never believed in advisors. Then about 10 years ago we went to one and it turned things around. We were making money, our investments no longer fight against each other. But then in 2008 the market went south and he didn't help us out of the hole. We didn't lose as much on the way down but didn't get the upswing.

    Switched to schwab last year and couldn't be happier. Fees are relatively unimportant if you are beating the market, but suck if you aren't. Schwab is ultra low on fees. We consolidated a large number of disparate accounts into a handful and and things are in much better shape now.
     
  32. stoney

    stoney Part of the unwashed, middle-American horde

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    We discussed this a few years back. It makes sense for a lot of people, most, actually. If you don't have the time to put in the work, it's hard to make sure you're doing the right things. One of the major things that advisors will do is get you in an automated savings plan. Setup a monthly contribution into your IRA, and you are already ahead of the pack.

    We setup a monthly take of $100/m into Haley's 529 plan, we both max our IRA's, I have max contributions going into my 401k to get the company match, and I set aside about $500/m into our brokerage account.
     
  33. stoney

    stoney Part of the unwashed, middle-American horde

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    I forgot to mention. Read these books, in this order:
    1. The Little Book of Value Investing, by Christopher H. Browne and Roger Lowenstein
    2. Chapters 8 and 20 of The Intelligent Investor, by Benjamin Graham
    3. The Most Important Thing, by Howard Marks
    4. The Little Book That Still Beats The Market, by Joel Greenblatt
    5. Security Analysis, by Benjamin Graham *this is serious business*
     
    #33 -   Mar 24, 2013
    Last edited: Mar 24, 2013
  34. eaterofdog

    eaterofdog ass grabber

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    This reminded me to check the bitcoins I bought seven months ago. I'm up 600%. What the hell?
     
  35. Austin Bike

    Austin Bike Turbo Monkey

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    I started saving when I was in my early 20's, I'm good on that front. I can retire in 3 years.
     
  36. $tinkle

    $tinkle Expert on blowing

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  37. SkaredShtles

    SkaredShtles I love NEWCASTLE and will ONLY drink NEWCASTLE!!!!

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  38. jonKranked

    jonKranked Press Button, Receive Stupid

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  39. johnbryanpeters

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  40. $tinkle

    $tinkle Expert on blowing

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    good find; sadly, i must first spread the rep as thinly as spun gold