I Really Would Appreciate Your Advice!

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AlaskanWolf
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I Really Would Appreciate Your Advice!

Post by AlaskanWolf » Sat Feb 22, 2014 6:11 pm

[Two similar threads were merged into this one, see below. --admin LadyGeek]

I no nothing about investing. I've been trying to read up in the past week or so but quickly realized I needed about 30 years.


I'm 64 and for some years my primary source of income has been SSDI. I currently receive about $1400 a month and thank God for it! I also have managed to have a part time job. If I am able to work my full schedule I earn about $800 a month from it. But this month I've spent about a week in the hospital. An altogether too common occurrence. I am EXCEEDINGLY lucky to work for a company, and especially a supervisor who has bent over backwards in order to keep me on. But I don't know how long I will be able to hold onto the job nonetheless. I never thought I'd have to learn how to use a telephone nor learn to drive again when I became sixty. But I have a Samsung Galaxy S4 Phone that is FAR smarter than I and a month or so ago a kid hollered at me "why don't you learn to drive!" after I had obliterated a toilet paper display driving one of those grocery store carts.


I'm going to come into money from an inheritance. It seems like a lot to me but once again I quickly realized it was in actuality a small sum. I lost both of my parents in the past 5 months. They had been married for 64 years and I was blessed to have them as long as I did. I miss them terribly!

The final amount is yet to be determined but I should know within 60 days what I will have.

I have what I think is a pretty good idea now.

About $250,000 to $270,000 in ready cash. I'm told this is tax free. And there is a trust that had been my Fathers "pension" but apparently there are some loose ends involved in transferring it to my Mother that is requiring an attorney (at my expense) to sort out. My portion amounts to about $121,500.00 and my Sister and I are hoping the attorney can not only straighten out the transfer he/she can arrange to hive it paid out over a five or six year period. This money is taxable.

What I'd like to do is use what I receive in such a way as to provide as large a monthly income as possible with the lowest risk possible.

I've looked at annuities, fixed, variable, immediate etc. But I can see some of the downsides to them. For one, I'm betting an Insurance company will outlive me. For another I've had to take a hard look at how long I might actually have. I don't think I'm going to need an annuity that guarantees 30 years...

Anyway, any and all advice is GRATEFULLY solicited. Should some of you wish to visit Alaska, where I've lived these past 20 years or so, I wold be happy to assist you in planning a MEMORABLE vacation. For myself I'm thinking It's time for palm trees and the sound of the ocean when I go to sleep. I have a close friend in Baja living less than an hour from San Diego. They have sent me some intriging info on becoming an Expat down there. My money would seem to go quite a bit further...

THANK YOU ALL.

Laura
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Re: I Really Would Apprecviate Your Advice!

Post by Laura » Sat Feb 22, 2014 7:38 pm

Hi Alaskan Wolf,

So sorry to hear about the loss of your parents in the last few months. That is very difficult to deal with on top of your medical issues.

Is the $250,000 you mention the amount you will receive in addition to the money in the trust? Or, is that money going to be split with your sister? I am trying to get a handle on what you expect to have shortly.

The general rule of thumb is that you can only withdraw 4% of your portfolio without the fear of running out of money. For a portfolio of $250,000 that works out to be about $10k per year only. Will you continue to receive SSDI and how much do you need to add to your income each month? Do you have any heirs that you need to worry about or can you spend all of this money for yourself?

At Vanguard you might consider the Vanguard Target Retirement Income fund if you want to keep your assets liquid. Alternatively you could consider an annuity but not with all of your funds. This would give you some liquidity plus guarantee you an income for life. A single premium income annuity (SPIA) is what you want to consider.

I am sure others will come along shortly with some other ideas.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.

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AlaskanWolf
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Re: I Really Would Apprecviate Your Advice!

Post by AlaskanWolf » Sat Feb 22, 2014 10:23 pm

Thanks, it IS hard to lose both so close together.

My sister and are to split everything. The figures I've listed are my half and the $270,000 consists of the profits from a home in Scottsdale selling. It's due to close on 04-01-2014. Half of a CD. An estimate of what will be left in my Mom's checking which my Sister is using to pay final bill's etc.

My Half Should come in about $165,000 for the home
$55,000 for the CD
and maybe $50,000 for the checking account. Perhaps more.

So $270,000 plus whatever happens with the pension/trust where my half is $121,500.00.


I have no heirs except a Cat.

And I will continue to receive my $1400 a month SSDI. It's not a needs based program and as such will not be affected by my inheritance.

Could you give me examples of the two instruments you mention?

I'm hoping to have a total of about $2900 a month to live on. excluding the pension and the income from the part time job.

I hope to continue working as long as I can as well.

kommisarrex
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Re: I Really Would Apprecviate Your Advice!

Post by kommisarrex » Sat Feb 22, 2014 10:35 pm

Since there are no heirs and a defined monthly need/want, annuitizing may make a lot of sense. You say you want 2900/month. You currently receive 1400/mo from ssdi. 200,000 would yield another 1100 per month through an immediate annuity. So, that's 2500/mo plus whatever is left over to is for a cushion.

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AlaskanWolf
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Re: I Really Would Apprecviate Your Advice!

Post by AlaskanWolf » Sat Feb 22, 2014 10:44 pm

kommisarrex wrote:Since there are no heirs and a defined monthly need/want, annuitizing may make a lot of sense. You say you want 2900/month. You currently receive 1400/mo from ssdi. 200,000 would yield another 1100 per month through an immediate annuity. So, that's 2500/mo plus whatever is left over to is for a cushion.
Right but $2500 is still $400 less than my desired $2900.

And Should I be looking at immediate fixed annuities or variable ones?

tj
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Re: I Really Would Apprecviate Your Advice!

Post by tj » Sun Feb 23, 2014 12:21 am

Single Premium Immediate....as far as I know it's fixed.

Here's an example:

https://www.usaa.com/inet/pages/insuran ... _immediate

kommisarrex
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Re: I Really Would Apprecviate Your Advice!

Post by kommisarrex » Sun Feb 23, 2014 7:17 am

AlaskanWolf wrote:
kommisarrex wrote:Since there are no heirs and a defined monthly need/want, annuitizing may make a lot of sense. You say you want 2900/month. You currently receive 1400/mo from ssdi. 200,000 would yield another 1100 per month through an immediate annuity. So, that's 2500/mo plus whatever is left over to is for a cushion.
Right but $2500 is still $400 less than my desired $2900.

And Should I be looking at immediate fixed annuities or variable ones?
Well, the full 270k should get you 1500/mo, taking you to 2900. But, I would be inclined to keep more cash on hand and draw the extra 400/mo from that.

I got quotes from immediateannuities.com

Laura
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Re: I Really Would Apprecviate Your Advice!

Post by Laura » Sun Feb 23, 2014 9:48 am

The $2900 per month is going to be hard with the assets that you have. You might be able to get right there to the limit but inflation will reduce the value of that $2900 in terms of your purchasing power every year. To the extent that you can find some way to generate a few hundred dollars each month you will be in a better place financially. Perhaps you can find some sort of business you can do from your home that would give you the flexibility you need to handle medical issues.

Fixed annuities would be the best option for you. If the trust pays out over several years then you might be able to use almost all of the $270k to purchase a fixed annuity. When the other money becomes available over the next few years you can build up your cash account and use that money as the cushion for any unexpected expenses.

In terms of moving outside the United States, do a lot of research on that. Medicare and Medicaid do not cover you outside the US so you would need to pay for private health insurance or your medical bills. This could significantly eat into your money and may make this a bad choice for you. Finding a lower cost and warmer place to live inside the US may be your best bet financially. Some of this is state specific so pick the state very carefully before you move.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.

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AlaskanWolf
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Re: I Really Would Apprecviate Your Advice!

Post by AlaskanWolf » Sun Feb 23, 2014 11:27 am

I've had a close friend from 1985 living in Rosarito Mx. It's 40 minutes from San diego . he wants me r=to buy a house like his for about $600 and mellow out. I have something like this more in mind for the next decade.



Price Changed
Now For Rent/Lease
Bobbys by the Sea
2 bedroom, 2 bath,
Condominium
http://www.bajabrokers.com/Listing/View ... d=74124363
View Details P2#74124363

Price Changed
Now For Rent/Lease
LA JOLLA DEL MAR
2 bedroom, 2 bath,
Condominium

View Details P2#74218523 http://www.bajabrokers.com/Listing/View ... d=74218523

I have the one above listed for $1650 a month negotiated down to $1250 if I sign a one year lease. I currently live in "low income housing". I have a 2 story 1 and 1/2 bath two bedroom single family HOUSE for $970 a month here in Anchorage. I am EXTREMELY lucky to have this for what I pay. Even so I just got a $115 a month increase. IN LOW INCOME TAX SUBSIDIZED HOUSING.

And I am having a LOT of trouble navigating a home with two stories as well as the 5 months or so of walking around on snow and ice.

I moved here after losing EVERYTHING and being traumatized by a large earthquake. Specifically the aftershocks.

But since I'd first read Jack London at age 7 or so I wanted to live in Alaska. When I was a child my Father took me and my childhood best friend from across the street's Father took him and we went fishing and hunting in Alaska. Both my friend and myself made a pact standing in a campsite on the Kenai Peninsula in about 1958 that we WOULD live here together.

Some 57 years later he is STILL my closest friend. He is the Brother I never had and I love him more than life itself. He says it's the same for him. When we were still children his father was badly injured in a work related accident and chose my father to be his attorney. My dad won him some $600,000 back in the late 1950's and my friends father invested it all in a parcel of land near Confer and Evergreen on Colorado's Front Slope. I remember after hiking for about an hour to what we thought was near the middle of the parcel making a childhood pact. We carved it into a tree and cut our hands to seal it with blood. One day just the two of us would build a road onto this paradise, and build a marvelous house just for the two of us.
Over the years our

Fathers fell out of friendship over money but not so my pal and I.

MANY time various agencies have tried to pressure first his father and then my pal to subdivide and develop this parcel. He has told them all to go to HELL.

His parents passed about a year before mine. And he has now built a 2.5 mile serviceable road onto the land. He's poured a couple of pads and has a 32" Fleetwood RV parked there along with a generator that (SERIOUSLY) could power a small city. He's GOING to built that home. He plans to live there thinking it the cheapest alternative he has, aside from his love of the area. I am still welcome, and we talked at length yesterday about this and other things. We talk several times a year.

He was the first of us to make it to Alaska. One day his boss at ARCO in Denver called him in to discuss some bad news. There was no way around it he'd HAVE to go to Alaska. The company would compensate him for forcing him to live in such a god awful place. A MUCH larger salary, all the time he wanted a year or more to live in the most luxuriest hotel in Anchorage, stuff like that. He managed not to burst out crying in joy until he left the boardroom. Whereupon he called me and I was for the first time in my life JEALOUS of him!!!

What it meant was by the time I was ready to move here I was SET UP. I was on an A list of Who's Who in Alaska. But they are mostly dead or gone now.

Anyway I don't know that I want to move back to Colorado. It would involve a harder climate for me to navigate, and in honesty I'm embarrassed I didn't turn out to be more successful in my life.

But I have THAT OPTION and I am GRATEFUL for it.

But i so wish to have a place where I can open my bedroom window and fall asleep listening to the sound of the Pacific Ocean Surf.

The place in Baja is about a 40 minute drive from San Diego.And the medical facilities there are quite good as far as I've been able to ascertain. And food, Med's, utilities, etc. are MUCH cheaper there than say ST. Pete Florida or Conifer Colorado.

I'm babbling. It's early morning and I am in a LOT of pain. I just took my pain meds and in about an hour won't hurt as much for a few hours. I remember when I took NO daily Meds. It seems like a dream about someone else...

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AlaskanWolf
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Re: I Really Would Apprecviate Your Advice!

Post by AlaskanWolf » Sun Feb 23, 2014 11:31 am

Question,

Am I committing suicide posting this much personal info online? I've been told so by several people.

But one, I'm very lonely now. And two, I REALLY wish to have the advice of a lot of people to weigh against the advice I'm starting to get from CFP's.

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AlaskanWolf
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Re: I Really Would Apprecviate Your Advice!

Post by AlaskanWolf » Sun Feb 23, 2014 11:35 am

“Come to the edge.' 'We can't. We're afraid.' 'Come to the edge.' 'We can't. We will fall!' 'Come to the edge.' And they came. And he pushed them. And they flew.”

― Guillaume Apollinaire

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BL
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Re: I Really Would Apprecviate Your Advice!

Post by BL » Sun Feb 23, 2014 11:46 am

You can edit your comments at any time. So when you are satisfied with the answers you get (or not), you can go back and edit anything you feel is too personal or you don't want to be found. Granted the internet remembers very well (Google your name or some revealing exclusive words and see what you come up with.) but at least it is harder to find.

I personally am very careful what information I put out, not because of the current people here, for instance, but because of the possibility of others searching or accidentally finding it. On the other hand, most of my personal information such as name, email, phone number, etc., is readily available because it is placed there by other organizations. It is a trade-off.

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Re: I Really Would Apprecviate Your Advice!

Post by Fallible » Sun Feb 23, 2014 12:55 pm

.....
Last edited by Fallible on Mon Feb 24, 2014 1:31 pm, edited 2 times in total.
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Re: I Really Would Apprecviate Your Advice!

Post by Laura » Sun Feb 23, 2014 3:48 pm

So sorry to hear about all your problems. Rosarito may be 40 minutes from San Diego but border crossings can take 1-2 hours so make sure you understand what will be involved in getting access to a physician. If you need to do this frequently you may not enjoy the all day journey involved in getting back and forth. If you need to be hospitalized it will be costly for an ambulance to transport up to the border. You then need to switch to a US ambulance at the border crossing. You also mention costs that are higher than what you are paying in Alaska and you are already pressed for cash. I am not sure it makes financial sense although the weather may be better. Also, medicare/medicaid is based on state residency and if you are living in Mexico it could be hard to convince California you are a California resident and entitled to care. Please take the time to research this before you make any final decisions. It might be worth trying to visit your friend for a few months to see how it goes before moving permanently. You can find out more about Mexico by reading the State Department Travel Warning on Mexico and the Country Specific Information.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.

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Re: I Really Would Apprecviate Your Advice!

Post by AlaskanWolf » Sun Feb 23, 2014 6:22 pm

Health insurance costs for an expat like I would be might just kill this deal for me.

Florida maybe?

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Re: I Really Would Apprecviate Your Advice!

Post by AlaskanWolf » Mon Feb 24, 2014 1:09 pm

I got a very nice private message from someone who apparently lives up here. This was my response.( I don't think I'm violating any of their wish to r=be private.)

Hi XXXXXX,

Thank you for your kind words. I am always very hesitant to meet people in RL I've met online. Nothing personal, I AM paranoid. The reason I'm on Disability isn't related to the over 20 orthopedic operations I've had, its due to an emotional problem caused by my experience in an Californian earthquake. So please don't be offended.

Did you participate in the Rondy Auction? When I was younger I was a real Killer of Critters. Until one afternoon when I came home and my THEN girlfriend told me something like "If you bring ONE more dead animal into this house you will be left with masturbation as your only release!". She used phrases and words I think might violate the agreement I OK'd when signing up for this Forum, but you get the idea. It was just about two years later that Earthquake happened, and one result was I decided to just give it ALL up and move here.

Yesterday as I was driving down Strawberry on my way home from work I had to stop in traffic for about 10 minutes. There was a line of 5 or 6 cars and most of the drivers had abandoned their cars to take pictures of a Cow and her young charge. Probably born this past Spring.

We are ALASKAN's, even though we live in Anchorage. And last I hear there were about 2000 of them in the Anchorage bowl, so as you know seeing a moose isn't exactly a surprise. But there they were, snapping away and acting like they lived in Brooklyn and had never seen a moose except while watching the National Geographic Channel.

I took several pictures as well. I just LOVE being here. Even though I'm actively looking for a place to move to that doesn't have snow and ice 5 months of the year. Wew I wealthy I'd have a place here as well as whatever I end up with in Florida, or Baja, wherever.

When I made the decision to move up here I'd taken a few days off from my sales gig in Santa Clara and had flown up here to commiserate with my best friend (Since 1957) who lived in Eagle River at the time. We'd driven into Anchorage and stopped off at the Great Alaskan Bush Company for a drink before going to the airport to drop me off for my return to the Bay Area. As you know the Great Alaskan Bush Company has nothing to do with topiary.

Anyway just as were were about to leave I asked to use my pal's Mobile phone. He was always ahead of the curve. I called the owner of the company I'd been working for. I'd been one of the top producers, usually THE top producer, for over 6 years.

"Jim it's XXX, sorry to call you at home so late but I have to talk to you."

His response blew me away.

"Hi XXX, always nice to speak with you. Would it help if we arranged for your stuff to be packed up and sent up there?"

I was speechless!!!

"Jim what are you talking about?XXX we have been waiting for years for you to finally just move up there. If you have more than two days off you go to Alaska. Last year when you won the two week trip to Hong Kong you called the travel company and arranged to have your trip converted to a trip to Alaska. When people go into your office your likely to be tying something you claim is an "Egg Sucking Leech" fly, and people have to navigate carefully to sit down because of all the taxidermy. When I tell the rest of the people they are all going to say they thought you'd have done this a few years ago!".

So for me to talk about LEAVING Alaska is unusual, and it literally brings tears to my eyes. I'm crying as I type this. I figure anyone in the Forum reading this now has confirmation I'm a nut.

I just spent an hour talking to a travel agent about flying out to warmer climates to explore for a new home. I'm going to be late for work. But when I tell my boss why she will understand.

I sure wish I had more money. Of course who doesn't! But God, I wish I could know that I'd be able to be secure (more or less) in a new home where it's always warm, BUT have enough income to fly up here occasionally!

I have an appointment with a representative of T Rowe Price this afternoon.He's going to show me some things he's worked up.


:(

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Best Way To Utilize $250,000?

Post by AlaskanWolf » Tue Mar 25, 2014 5:26 pm

[Thread merged into here, see below. --admin LadyGeek]

I'm about to receive some money from an inheritance. Eventually the total amount I receive may be as high as $420,000 or more. But I expect to get $250,000 transferred into my new Morgan Stanley account by April 3rd. I'm going to be 64 later this year.

I have been living on an income comprised of SSDI and a part time job. I find myself at a point where I physically may have to quit working. If this had happened a few months ago I'd be looking at becoming homeless. The approximately $1400 SSDI is not enough to cover my basic living costs here in Anchorage. But I now find myself able to not work and still survive.

My hope is to move out of Alaska before next Winter. Move to a place with palm trees and sand and a much lower cost of living. Possibly Sarasota Florida (the orthopedic surgeon who performed the total knee replacement on my left knee is there) or Austin Texas. Having moved and lowered to some extent my living costs I hope to have my right knee replaced. A surgery that will NOT be easy. My knees have been real challenges for the Dr's. And one reason I haven't done this before is I would not be able to work for at least 6 weeks, probably more if my previous experience mirrors this operation. And I would have lost the part time job and Voila! Homelessness! Having recovered from that surgery I would still have some significant physical problems but I think I could then go and find myself another part time job. It's my hope and intent to work till I simply can't. Not just for the money, but because it's important for me psychologically.

My Morgan Stanley CFP at my behest located an immediate Fixed Annuity with an APR of 6.80%. I'd thought to spend $200,000 of my capital and buy one which would give me lifetime monthly payments of $1134.03. I've been earning, on a good moth, about $850. The maximum allowed by SS in order for me to keep my disability intact is $1070 a month for 2014. The remaining $50,000 would be invested by Morgan Stanley with an eye towards generating additional income via dividends etc. As would the rest of the funds when I eventually receive them.

But my Brother-in-law told me he thought it a very bad idea. Of course once you buy an annuity as I describe the principal is GONE. He said he thought it quite doable to invest the $250,000 and receive a return of 5% using a combination of stocks and MM's etc.

I have almost NO experience in finance. IS this 5% doable? If so I would get about $12,500 a year, enough to let me survive, and the principal would still be accessible. AND might even increase if I'm smart and lucky and the winds blow favorably.

Could you folks advise me? I apologize for being so ignorant and naive! I'm trying to study and learn about economics and investing etc. But there is no way to garner decades of knowledge and experience overnight...

Thank you all!


Wolf

kerplunk
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Re: Best Way To Utilize $250,000?

Post by kerplunk » Tue Mar 25, 2014 5:35 pm

Sorry to hear about your medical issues.

I live in Tampa. Sarasota is a beautiful place. Cost of living is low. You'll enjoy it there. Visit Siesta Key :)

Do you have any other investments or savings? It would help us if you could fill this out: http://www.bogleheads.org/forum/viewtop ... f=1&t=6212

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runner9
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Re: Best Way To Utilize $250,000?

Post by runner9 » Tue Mar 25, 2014 5:38 pm

How about the suggestions previously given?

http://www.bogleheads.org/forum/viewtop ... 1#p1969871

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Re: Best Way To Utilize $250,000?

Post by bertilak » Tue Mar 25, 2014 5:56 pm

AlaskanWolf wrote:IS this 5% doable?
Wolf,

Going by average, expected, returns, 5% seems reasonable, but it is not, for the following reasons:
  • You cannot live on average returns because your expenses are comparatively constant. You need to deal with the lean years as well as the fat. You can't tell the gas company you will catch up on your bill "someday." As has been said, the market can remain irrational longer than you can remain solvent. It is also said that you only get one swipe at the cat. In other words, you may not be able to wait long enough for the good years to average out the bad.
  • Related to that is the concept of reverse-dollar-cost-averaging. When you are contributing to your savings portfolio, bad years allow you to buy low and don't force you to sell low. This is a good thing and is what is assumed in all those rules of thumb about returns you can expect. Since you are spending instead of investing, this will cause your personal returns to be lower than market returns.
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Re: Best Way To Utilize $250,000?

Post by MN Finance » Tue Mar 25, 2014 7:45 pm

I like the idea of the annuity in this case because it transfers longevity risk plus eliminates the risk of trying to invest the money yourself. There are downsides - lack of growth potential to combat inflation, and risk of coming out behind by living a short life - but I don't think those are huge concerns. You'll have 50k to invest for future inflation adjusted living expenses and my guess is that leaving a legacy is very low on the priority list.

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Re: Best Way To Utilize $250,000?

Post by Leemiller » Wed Mar 26, 2014 7:28 am

If I was you I'd take the annuity and use the cash to buy a condo with low maintainance fees that was close enough to walk to a grocery store somewhere in FL. Sarasota is great, I went to college there. I don't know that real estate market, but in Ft Laud 50k is enough for a nice little place. Why stress yourself out with risk? What are you going to do when the market drops 20% or more in the future? You can instead set yourself up with low fixed expenses & two guaranteed income streams while you take care of your medical issues.

Maybe someone can opine on how to pick a good, safe annuity as well. I'm not really familiar with them.

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Morgan Stanley A Big Mistake?

Post by AlaskanWolf » Thu Mar 27, 2014 1:24 pm

[Thread merged into here, see below. --admin LadyGeek]

I am getting $250,000 on approximately April 2cnd as part of an inheritance. SHortly I think to get an additional $50,000 and over the next five years an additional $120,000. I have signed up with a Morgan Stanley person in Chicago based on a family recommendation. As of today however, NO funds have been transmitted into that account.

She researched on my request immediate fixed annuities and the best was from American General life paying an APR of 6.8%. and I thought to put $200,000 into it and receive a monthly payment of $1134 a month for life. I have been living on my SSDI and a part time job. I have had to finally quit my part time job due to health concerns.

Question: am I better off canceling my agreement with Morgan Stanley and hiring a fee only based adviser? I found one online and after speaking to him found he would charge me $2000 as opposed to the 1.5% Morgan Stanley charges me? At a minmum...

Would I be better off having the funds wired into a basic savings account until I can decide on the best way to proceed?

I DO NOT want to blow this. I have no way of ever gaining access to this kind of money again.


Your advice is greatly valued.

Wolf

PS, the Morgan Stanley woman is going to tear my head off if I cancel at this stage.

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Re: Morgan Stanley A Big Mistake?

Post by chaz » Thu Mar 27, 2014 1:29 pm

It's OK to be a headless wolf. I would recommend investing in Vanguard index funds. Very inexpensive cost.

Look at the forum wiki.

Good luck.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page

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Re: Morgan Stanley A Big Mistake?

Post by barnaclebob » Thu Mar 27, 2014 1:32 pm

What is your complete financial picture? An annuity may or may not be right for you. For sure do not give money to Morgan Stanley unless you are completely convinced its the right thing to do. Put the money into a savings account until you know where you want it to go. The guy at MS is likely highly trained to make you feel comfortable giving him control of your money but don't do it until you are ready.

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Re: Morgan Stanley A Big Mistake?

Post by Grt2bOutdoors » Thu Mar 27, 2014 1:40 pm

Why would you sign up with anyone before thoroughly researching ALL of your options?
Have you tried Vanguard's annuity service to see if you can obtain a better quote for a Single Premium Immediate Annuity?
Who cares if she tears your head off - it's you (keeping it PC) damn money, not theirs!
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Re: Morgan Stanley A Big Mistake?

Post by DTSC » Thu Mar 27, 2014 1:51 pm

Please take some time (6-12 months) to learn how to invest your windfall before doing anything. It's perfectly OK to stick the $250K in an FDIC insured savings account for that long, rather than screwing it up.

We don't know your entire picture, but it sounds like your health is not so great, such that your are not able to work. If this is so, you might not be a good candidate for buying an annuity. I tend to think of an annuity as "longevity" insurance. If your health is average or below average, outliving your money might not be as big a concern.

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Re: Morgan Stanley A Big Mistake?

Post by runner9 » Thu Mar 27, 2014 1:54 pm

http://www.bogleheads.org/forum/viewtop ... 7#p2007267

Why do you keep starting threads with the same/very similar question(s)?

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Re: Morgan Stanley A Big Mistake?

Post by Valuethinker » Thu Mar 27, 2014 2:00 pm

AlaskanWolf wrote:I am getting $250,000 on approximately April 2cnd as part of an inheritance. SHortly I think to get an additional $50,000 and over the next five years an additional $120,000. I have signed up with a Morgan Stanley person in Chicago based on a family recommendation. As of today however, NO funds have been transmitted into that account.

She researched on my request immediate fixed annuities and the best was from American General life paying an APR of 6.8%. and I thought to put $200,000 into it and receive a monthly payment of $1134 a month for life. I have been living on my SSDI and a part time job. I have had to finally quit my part time job due to health concerns.

Question: am I better off canceling my agreement with Morgan Stanley and hiring a fee only based adviser? I found one online and after speaking to him found he would charge me $2000 as opposed to the 1.5% Morgan Stanley charges me? At a minmum...

Would I be better off having the funds wired into a basic savings account until I can decide on the best way to proceed?

I DO NOT want to blow this. I have no way of ever gaining access to this kind of money again.


Your advice is greatly valued.

Wolf

PS, the Morgan Stanley woman is going to tear my head off if I cancel at this stage.
You always have the right to walk away, remember that. It's your money. It's in your wallet, no one has the right to take it out of your wallet.

I assume there has been a credit rating check on American General life? Because most state guarantee funds are only for the first $100k of premium. Many of us suggest splitting a lump sump between 2 insurers for that reason. Did the MS lady consider/ suggest that?

I would check on Vanguard re SPIA to see what you can get.

The difference between the MS adviser and the fee only adviser at this point is 1.5% of 200k vs. $2000? So only $1k: 2k v. 3k. However I would be concerned about future fees you wind up paying to Morgan Stanley for example on that other 50k. That other 50k I think you should consider just putting it into the Vanguard Balanced fund-- you will have some equity risk then, but not too much.

I would also consider whether you should put part of your money into an inflation adjusted SPIA. Maybe not this lump, but the later amounts.
My logic is this. I believe your Social Security disability is CPI indexed thus providing you with some lifestyle protection. But that may not be enough, depending on how long you live (given your health issues this might be less of an issue). Over 30 years at 2% inflation the purchasing power of that flat annuity would *halve*.

You should also make sure, given your health problems, that you have an 'impaired life' annuities. The opposite of life insurance, a major health issue (or smoker etc.) means you get a better rate with an SPIA.

FWIW I don't know anything about American General, nor about US annuity rates. But it doesn't sound like the MS lady is leading you too far astray and the additional $1k cost is not too much to pay for good advice in this situation. Where it gets difficult if she starts recommending high cost mutual funds for the rest of your money. Really you'd be better off with something like Vanguard balanced.
Last edited by Valuethinker on Thu Mar 27, 2014 2:05 pm, edited 1 time in total.

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Re: Morgan Stanley A Big Mistake?

Post by Valuethinker » Thu Mar 27, 2014 2:01 pm

DTSC wrote:Please take some time (6-12 months) to learn how to invest your windfall before doing anything. It's perfectly OK to stick the $250K in an FDIC insured savings account for that long, rather than screwing it up.

We don't know your entire picture, but it sounds like your health is not so great, such that your are not able to work. If this is so, you might not be a good candidate for buying an annuity. I tend to think of an annuity as "longevity" insurance. If your health is average or below average, outliving your money might not be as big a concern.
There are however 'impaired life' annuities and they will have higher payout rates. At which point, this doesn't seem like such a bad way to do it-- enough income the OP can retire from work and have a decent standard of living, with some small savings for 'fun' and emergencies.

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Re: Morgan Stanley A Big Mistake?

Post by deikel » Thu Mar 27, 2014 2:11 pm

I really can't stand it when people just recommend....oh, go to Vanguard and the world becomes a better place....BS

I think your problem right now is that you have educated yourself a little bit (and maybe need more) and you picked an advisor based on recommendation (nothing wrong with that). But now you get cold feet because a lot depends on the fact that you do it right (nothing wrong with that either).

The recommendations you got from Morgan Stanley dont appear to be obviously terrible to me (no expert on annuities whatsoever however) - so your problem is not with MS. The basic question is, if you should have an annuity, which is entirely unclear since you dont give us the information to make a comment about that.

The best thing to do would be to ask at least two more advisors about what you should do with your money, and they should be advisors you trust - because you need to live with your decision afterwards and you should not blame your advisor.....beacsue you are making the decision.

I would recommend to start with your local bank as a start. Nothing wrong with the independant advisor either, but yes you would have to pay them money - thats the difference between 'free' opinion and a larger investment house that absorbs such cost in its fees against all customers....
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Re: Morgan Stanley A Big Mistake?

Post by BL » Thu Mar 27, 2014 2:39 pm

Don't do anything or give anyone control of your money until you are certain about your decision. There is no rush. The bank will keep it safe.

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Re: Morgan Stanley A Big Mistake?

Post by JW-Retired » Thu Mar 27, 2014 3:26 pm

AlaskanWolf wrote:I am getting $250,000 on approximately April 2cnd as part of an inheritance. SHortly I think to get an additional $50,000 and over the next five years an additional $120,000. I have signed up with a Morgan Stanley person in Chicago based on a family recommendation. As of today however, NO funds have been transmitted into that account.

She researched on my request immediate fixed annuities and the best was from American General life paying an APR of 6.8%. and I thought to put $200,000 into it and receive a monthly payment of $1134 a month for life. I have been living on my SSDI and a part time job. I have had to finally quit my part time job due to health concerns.

Question: am I better off canceling my agreement with Morgan Stanley and hiring a fee only based adviser? I found one online and after speaking to him found he would charge me $2000 as opposed to the 1.5% Morgan Stanley charges me? At a minmum...
I think an annuity might be the way to go but take it slow and comparison shop. We need a clue as to your age to even guess if the MS annuity quote is reasonable. Also we have no idea if your health problems are life shortening and if the annuity quote took that into account. Your past thread mentioned you need a knee replacement, which seems doubtful to be life shortening.
Anyway, if you go to http://www.immediateannuities.com/infor ... rates.html
you can put your age in and get what the quote for what a SPIA costing $200k would give in monthly income. I get just a few dollars less than your $1134/month for a 63 year old male. If you are younger than 63 the payment gets smaller & if older bigger. That will give you something reasonable to compare the MS quote to but it won't include the health issues.

I don't think there will be any fee to buy a SPIA online, but I've not done it.
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Re: Morgan Stanley A Big Mistake?

Post by runner9 » Thu Mar 27, 2014 3:30 pm

My link above is to the OP's very similar question 2 days ago. He says in that thread he'll be 64 later this year.

Yet another reason to combine these very similar threads....

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Re: I Really Would Apprecviate Your Advice!

Post by LadyGeek » Thu Mar 27, 2014 4:10 pm

FYI - To avoid missing important information needed to help the OP, it's best to keep all the information in one spot. I merged the OP's prior 2 threads into here.
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Re: Morgan Stanley A Big Mistake?

Post by AlaskanWolf » Thu Mar 27, 2014 6:39 pm

Grt2bOutdoors wrote:Why would you sign up with anyone before thoroughly researching ALL of your options?
Have you tried Vanguard's annuity service to see if you can obtain a better quote for a Single Premium Immediate Annuity?
Who cares if she tears your head off - it's you (keeping it PC) damn money, not theirs!
I doubt there is anyone more naive about investing on this Forum than I.

Because I was forced by medical problems to quit my part time job today. It's the first time since I was 16 I was unemployed and expected to remain so for the foreseeable future. And I can't live on the $1396 my SSDI provides monthly. I feel a LOT of pressure to get the $250,000 I'm getting about April 2cnd WORKING for me. As is I'm going to have to take maybe as much as $800 out just to pay living expenses. I'm not going to get a final check because I spent all of the last pay period in the hospital. No work no pay...

I didn't know about Vanguards annuity service. I had liked the advice I was given about Vanguard until I learned they had the bulk of their money in Bonds. And I've learned that if interest rates go up Bonds go down.

I REALLY want to figure out the BEST way to use the $250K to generate SECURE INCOME. At least $$1200-$1500 a month. The annuity I was offered was the highest available and gave me $1134 a month forever for $200000. BUT that is an irrevocable move. And it is highly likely interest rates WILL go up in the next twelve months. So annuities will pay more in all likelihood in a year or two than they do now. But LIVING off my principal until I figure this out??

AAAARGH!

Fed On Target To Raise Interest Rates In Spring 2015

http://www.forbes.com/sites/advisor/201 ... ring-2015/

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Re: I Really Would Apprecviate Your Advice!

Post by AlaskanWolf » Thu Mar 27, 2014 6:41 pm

LadyGeek wrote:FYI - To avoid missing important information needed to help the OP, it's best to keep all the information in one spot. I merged the OP's prior 2 threads into here.

THANK YOU!

I'm sorry not to have used better Forum etiquette. I'm really feeling desperate to learn enough and make the right choices in just a couple of days!

I will never again have this kind of money nor the opportunity.

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Re: Morgan Stanley A Big Mistake?

Post by AlaskanWolf » Thu Mar 27, 2014 6:43 pm

BL wrote:Don't do anything or give anyone control of your money until you are certain about your decision. There is no rush. The bank will keep it safe.


But I'm forced to take some of it out immediately for living expenses to cover the loss of my ability to work a part time job. Maybe as much as $800 a month.

:(

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Re: I Really Would Apprecviate Your Advice!

Post by rec7 » Thu Mar 27, 2014 6:47 pm

If I were you I would move to the midwest a person can live on $1400 if they are careful. 50k will buy a house in the midwest that leaves you 200k to invest how you want. The burn rate is much slower than AK.

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Re: Morgan Stanley A Big Mistake?

Post by Grt2bOutdoors » Thu Mar 27, 2014 7:00 pm

AlaskanWolf wrote:
Because I was forced by medical problems to quit my part time job today. It's the first time since I was 16 I was unemployed and expected to remain so for the foreseeable future. And I can't live on the $1396 my SSDI provides monthly. I feel a LOT of pressure to get the $250,000 I'm getting about April 2cnd WORKING for me. As is I'm going to have to take maybe as much as $800 out just to pay living expenses. I'm not going to get a final check because I spent all of the last pay period in the hospital. No work no pay...

I didn't know about Vanguards annuity service. I had liked the advice I was given about Vanguard until I learned they had the bulk of their money in Bonds. And I've learned that if interest rates go up Bonds go down.

I REALLY want to figure out the BEST way to use the $250K to generate SECURE INCOME. At least $$1200-$1500 a month. The annuity I was offered was the highest available and gave me $1134 a month forever for $200000. BUT that is an irrevocable move. And it is highly likely interest rates WILL go up in the next twelve months. So annuities will pay more in all likelihood in a year or two than they do now. But LIVING off my principal until I figure this out??

AAAARGH!

Fed On Target To Raise Interest Rates In Spring 2015

http://www.forbes.com/sites/advisor/201 ... ring-2015/
Can you claim unemployment insurance for the loss of the part-time work?
If you can, you should.
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Re: I Really Would Apprecviate Your Advice!

Post by JW-Retired » Thu Mar 27, 2014 7:53 pm

AlaskanWolf wrote: I feel a LOT of pressure to get the $250,000 I'm getting about April 2cnd WORKING for me. As is I'm going to have to take maybe as much as $800 out just to pay living expenses.........................

I REALLY want to figure out the BEST way to use the $250K to generate SECURE INCOME. At least $$1200-$1500 a month. The annuity I was offered was the highest available and gave me $1134 a month forever for $200000. BUT that is an irrevocable move. And it is highly likely interest rates WILL go up in the next twelve months. So annuities will pay more in all likelihood in a year or two than they do now. But LIVING off my principal until I figure this out??
You will not be able to "figure out the BEST way.....to generate SECURE INCOME". Nobody can, it's impossible. Interest rates may stay low for a long time like Japan for the last 20-something years, or maybe they won't. IMO, rather than burning up your principal I would hedge my bets and put say $100k into the annuity now. That would get you most of the $800/month extra you need to live on. The principal burn of the other $150k would then only be $233/month.

But nobody knows what's best, including me for sure.

Good luck.
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Re: I Really Would Apprecviate Your Advice!

Post by AlaskanWolf » Thu Mar 27, 2014 8:34 pm

Everbank
https://www.everbank.com/

Offered me a 1.1% 6 month rate on my first $100,000 and .61% on the remaining $150,000 if I put it in one of their online checking accounts. THAT sounded like a decent place to park this money for a month or two. Am I missing something?

I found no hidden fees etc.

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Re: I Really Would Apprecviate Your Advice!

Post by kenner » Thu Mar 27, 2014 9:00 pm

Conventional wisdom seems to be that Single Premium Immediate Annuities (SPIAs) will offer you the highest income for the rest of your life. Insurance companies sell them, so you can shop around for the best deal. However, the maximum benefit/payout is usually accomplished only as you approach age 70. Will your cash flow situation allow you to wait until you get closer to age 70? If not, you can still consider an SPIA now, realizing that your benefits may be somewhat less than maximal. But sometimes life circumstances dictate our decisions. A bird in the hand ...

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Re: I Really Would Apprecviate Your Advice!

Post by kenner » Thu Mar 27, 2014 9:16 pm

One of the top contributors to this forum has written an excellent artcle about SPIAs:

http://www.obliviousinvestor.com/single ... e-annuity/

There is a wealth of information available on the internet. If you are interested in learning more, I am sure that anyone on this forum will be glad to help.

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Re: I Really Would Apprecviate Your Advice!

Post by kenner » Thu Mar 27, 2014 9:32 pm

Here is another website that can give you an estimate of what you might expect from an SPIA:

http://www.immediateannuities.com/

Remember to shop around.

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Re: I Really Would Apprecviate Your Advice!

Post by LadyGeek » Thu Mar 27, 2014 9:36 pm

It's also in the wiki: Immediate fixed annuity (a.k.a. SPIA)

To be clear, annuities are complicated - there's no avoiding that. Don't be discouraged if you get stuck. Just ask and we'll help you figure it out.

Update: I added kenner's link http://www.obliviousinvestor.com/single ... e-annuity/ (ObliviousInvestor a.k.a. Mike Piper) to the wiki.
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Re: I Really Would Apprecviate Your Advice!

Post by Valuethinker » Fri Mar 28, 2014 4:30 am

AlaskanWolf wrote:Everbank
https://www.everbank.com/

Offered me a 1.1% 6 month rate on my first $100,000 and .61% on the remaining $150,000 if I put it in one of their online checking accounts. THAT sounded like a decent place to park this money for a month or two. Am I missing something?

I found no hidden fees etc.
Everbank has a terrible credit rating, I believe.

OK you are FDIC protected (MAKE SURE of that). If the FDIC takes over the bank, you can lose interest, I believe? (the FDIC can decide the interest awarded was excessive), but you can't lose your principal sum.

Still I would feel ginger enough about the whole thing to have CDs with 2 different banks.

On the annuity question you could buy $100k now and then $100k later. That way if interest rates rise you are not wholly stuck. You might have to eat into your capital a bit whilst you wait.

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Mother Of Bog! I'm Uncertain/Frightened To Buy Fund

Post by AlaskanWolf » Sun Apr 13, 2014 9:00 pm

[Thread merged into here, see below (next page) --admin LadyGeek]

OK!

At this moment I have a tad over $160,000 in my checking account earning ZERO. And I am expecting at least another $100,000 to be sent me this month.

I have been reading, watching videos, and the TV trying to learn about investing for at least 5 hours every day for the past week.

I have been especially interested in the Vanguard LifeStrategy Income and the Vanguard Wellington Funds.

I am retired, disabled, almost 64, and have about $1400 a month income from SSDI. I figure I need about $2500 a month to live. I should have about $270,000 to $280,000 total to invest by Summer. And I expect to start receiving an additional $21,500 a year for the next five years.

I WAS hooked up with a Morgan Stanley VP in Chicago who specifically got her license to work with me here in Alaska. I became disenamored with her when I discovered the seemingly insignificant 1.5% cost would be measured in thousands of dollars a year. Bear in mind I haven't had this kind of money before and am HIGHLY unlikely to get this type of boon again.

Can you folks give me some of your thoughts on WHICH Vanguard Funds to invest in? My head hurts...

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Re: Mother Of Bog! I'm Uncertain/Frightened To Buy Fund

Post by z3r0c00l » Sun Apr 13, 2014 9:14 pm

Yes go with a conservative fund and sleep well at night. However, the two funds you mention here are wildly different. One is 20% stocks and the other is 66% or so. Pick something reasonable and go with it. Maybe you want to buy half now and buy the next half in 6 months if that makes you feel better. It sure would make me feel better!

I would suggest LifeStrategy Conservative Growth Fund in this case, it is a better balance for your age and needs.

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Re: Mother Of Bog! I'm Uncertain/Frightened To Buy Fund

Post by RNJ » Sun Apr 13, 2014 9:21 pm

You need a guaranteed income to cover a guaranteed lifetime shortfall. Neither fund you mention (or any other fund) will get you there. Isn't this what annuities are made for?
Last edited by RNJ on Sun Apr 13, 2014 9:24 pm, edited 3 times in total.

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