Am I in Trouble [Assets in cash, help requested]

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Topic Author
shaks24
Posts: 4
Joined: Sat Apr 29, 2017 10:27 am

Am I in Trouble [Assets in cash, help requested]

Post by shaks24 »

Disabled on SS and Medicare due to ESRD at age 58
SS pays 2300 per month
Have IRA with 330,000
Have After Tax Account with 1,350,000
Primary Home worth 500,000 with 16,000 Heloc balance
No other debt
Rental Home with no mortgage brings in 800 per month
Own 4 parcels of investment land worth about 120,000
All financial assets in cash currently so not much investment income
I spend about 5,000 per month on average
I know better than to time market but plowing in to socks and bonds now seems crazy
Am I foolish being in cash?
Its hard to think straight due to my medical condition and medications.
My financial assets are all at Schwab
Just looking for unbiased feedback as to where I might stand.
Thank you
mega317
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Re: Am I in Trouble

Post by mega317 »

Did I read this wrong? What kind of trouble do you mean? 1.6 million liquid, 5k expenses minus 3k from SS and rental. That 1.6 will last you 60 years. I'm ignoring inflation and I assume you have some medical expenses not mentioned but still, your worry should be about your heirs.
livesoft
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Re: Am I in Trouble

Post by livesoft »

I think not owning some stocks and bonds in the form of index mutual funds is crazy.
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cheese_breath
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Re: Am I in Trouble

Post by cheese_breath »

shaks24 wrote:...I know better than to time market but plowing in to socks ... now seems crazy
Buy shoes instead. :P
The surest way to know the future is when it becomes the past.
davidlukewilcox
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Re: Am I in Trouble

Post by davidlukewilcox »

income: $2300 (SS)+$800 (rental home)=$3100/mo
expenses: $5000/mo.

Shortfall: $1900/mo.

You need your investments to cover you for $1900/mo.

Current assets:
$330,000 (IRA) + $1,350,000 (taxable) + $120,000 (land)=$1,800,000.

You need $1,800,000 to create $1,900/mo of income, or about $23,000 of income.
$23,000 is about 1.2% of $1,800,000. Given that 4% is considered a "safe withdrawal rate", you appear to be very safe if you invest right.
Topic Author
shaks24
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Joined: Sat Apr 29, 2017 10:27 am

Re: Am I in Trouble

Post by shaks24 »

As far as medical I pretty much am covered 100% between original medicare A and B, Prescription D with very minimal copays, and medigap F that covers almost everything Medicare A and B does not. The gap is expensive because I am under 65. I got out of the market in investments in 2015 after firing Morgan Stanley due to the fees of a UMA. I intended to reinvest but so far have not. Schwab is making a killing investing/loaning my idle cash.
delamer
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Re: Am I in Trouble

Post by delamer »

Why is it crazy to put money in stocks and bonds right now? As long as you expect a higher, long-run return from stocks and bonds than cash, why wouldn't you invest in stocks and bonds?

I'd rather be making the killing with my money than have Schwab doing so.

If you really feel that your medical condition is impairing your ability to make good financial decisions, it is time to find a fee-only planner who can help you.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Topic Author
shaks24
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Re: Am I in Trouble

Post by shaks24 »

delamer wrote:Why is it crazy to put money in stocks and bonds right now? As long as you expect a higher, long-run return from stocks and bonds than cash, why wouldn't you invest in stocks and bonds?

I'd rather be making the killing with my money than have Schwab doing so.

If you really feel that your medical condition is impairing your ability to make good financial decisions, it is time to find a fee-only planner who can help you.
Thank you. I think that is what I probably will do.
Vanguard Fan 1367
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Re: Am I in Trouble

Post by Vanguard Fan 1367 »

shaks24 wrote:
delamer wrote:Why is it crazy to put money in stocks and bonds right now? As long as you expect a higher, long-run return from stocks and bonds than cash, why wouldn't you invest in stocks and bonds?

I'd rather be making the killing with my money than have Schwab doing so.

If you really feel that your medical condition is impairing your ability to make good financial decisions, it is time to find a fee-only planner who can help you.
Thank you. I think that is what I probably will do.
You could do this. An alternative would be to buy something like Vanguard's Wellesley Fund with your cash. You are on a Boglehead site and the advice from Bogle would be to not lose the percent or two of your return using a financial advisor. Granted you are at Schwab but it would be pretty easy to take your cash over to Vanguard, invest in one fund to keep it simple.

There are many choices. In your case I think that the simple investing of your money in Wellesley will give you roughly a 60 percent Bond 40 stock. The fee with 1.5 million is .15 percent. The advisor will want more than that. Hopefully if you choose an advisor you might consider Vanguard. They will advise you for .30 percent of your assets under management.

Bogle predicts 4 percent going ahead. If you did manage 4 percent in the Wellesley that would be 60 thousand annually which would come in handy for living your life.

You would have to resist the temptation to sell when the inevitable bear market happens. So many people invest their million and a half, watch it drop 10 to 50 percent and then don't hold on for the inevitable come back from the bottom. If you were invested in 1929 and could hold out till 1933 you got the best stock market increase of all time in 1933.
John Bogle: "It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."
btenny
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Re: Am I in Trouble

Post by btenny »

I am sorry about your medical situation. Hope things go OK down the line. As you say you have had a lot hit you recently and making investment decisions is hard when you are distracted or sick. Are you married or have a significant other? How about sisters or brothers? Are any of these relatives close enough to you physically and personality wise to help you regularly? If these people are available I suggest you talk with them in detail about helping you do some of this financial stuff. Close relatives make the best helpers. But if these relatives are uncomfortable making these decisions you might want both this person and a adviser.

So I also suggest a financial planner who works for a hourly fee. These advisers do all kinds of stuff and helping you figure out your $$ future is what they do best.

But as other have said you have lots of $$ and are in great shape. So don't hurry to do this. Get a person who you like and can work with.

Good Luck.
delamer
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Re: Am I in Trouble

Post by delamer »

Vanguard Fan 1367 wrote:
shaks24 wrote:
delamer wrote:Why is it crazy to put money in stocks and bonds right now? As long as you expect a higher, long-run return from stocks and bonds than cash, why wouldn't you invest in stocks and bonds?

I'd rather be making the killing with my money than have Schwab doing so.

If you really feel that your medical condition is impairing your ability to make good financial decisions, it is time to find a fee-only planner who can help you.
Thank you. I think that is what I probably will do.
You could do this. An alternative would be to buy something like Vanguard's Wellesley Fund with your cash. You are on a Boglehead site and the advice from Bogle would be to not lose the percent or two of your return using a financial advisor. Granted you are at Schwab but it would be pretty easy to take your cash over to Vanguard, invest in one fund to keep it simple.

There are many choices. In your case I think that the simple investing of your money in Wellesley will give you roughly a 60 percent Bond 40 stock. The fee with 1.5 million is .15 percent. The advisor will want more than that. Hopefully if you choose an advisor you might consider Vanguard. They will advise you for .30 percent of your assets under management.

Bogle predicts 4 percent going ahead. If you did manage 4 percent in the Wellesley that would be 60 thousand annually which would come in handy for living your life.

You would have to resist the temptation to sell when the inevitable bear market happens. So many people invest their million and a half, watch it drop 10 to 50 percent and then don't hold on for the inevitable come back from the bottom. If you were invested in 1929 and could hold out till 1933 you got the best stock market increase of all time in 1933.
I did not intend to suggest an adviser who would take a percent of assets; what I meant was finding an adviser who would be paid on an hourly basis. But I wasn't clear. Although in this situation, even an adviser who takes a percentage might be worth the cost.

If I was concerned that I was beginning to lose my ability to make good decisions, I'd want to find a trustworthy local adviser who was in sync with the Boglehead philosophy of buying index funds. Hopefully that person would be able to talk me out of making detrimental changes to my portfolio if I was not thinking clearly. Investing in Wellesley is all well and good, but not if you aren't sure if you can stay the course and that seems to be a big part of the OP's concern. And the Vanguard advisers are too remote to effectively fill the role.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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William4u
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Re: Am I in Trouble

Post by William4u »

Definitely get a FIDUCIARY financial adviser that is paid by the hour. You are financially in good shape, but you need advice.

http://money.usnews.com/money/blogs/the ... -fiduciary
Topic Author
shaks24
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Joined: Sat Apr 29, 2017 10:27 am

Re: Am I in Trouble

Post by shaks24 »

Thank you everybody for such thoughtful and wise comments. I would never use a % of account fee manager again after the Morgan Stanley UMA experience. They pretty much did what the market did but took 1.5% plus expenses of underlying funds that may have been used. Also they often did reallocations based on their committees forecast that generated unanticipated capital gains and a hefty tax bill in some years. I like ETFs and Schwab has some good ones so I may seek help from a fee only advisor (not % of account) in at least getting a chunk of the cash back in using my existing Schwab account as it is a living trust account.I aslo like Schwab cause they have a brick and mortar facility in my town which come in handy at times.
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BL
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Re: Am I in Trouble

Post by BL »

I am concerned about considering an hourly advisor because it could mean someone who then convinces you to let him/her manage your money and perhaps sells insurance or annuities as well. I would trust Vanguard, but would not dare recommend anyone else. (I have heard of a few possible sources here on Bogleheads.)

Also I would have to drive 300 miles to have a chance to meet with this possible safe hourly paid advisor.

Vanguard does have some all-in-one funds that might work for some portion of assets.
Wellesley, Life Strategy Conservative or Income, Target Date Income, etc. A total US market fund for a small % of portfolio also might work. Choose a low ER (below 0.2% if possible), with no loads or 12b-1.
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celia
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Re: Am I in Trouble

Post by celia »

I think you need to take a trusted friend/relative with you if you see an advisor, to help you ask questions and understand the answers. This is doubly true if you are on meds that make it hard for you to focus or make decisions. Do you also have a Durable Power of Attorney for Health Care decisions and one for financial decisions? This is the person you should bring into the loop at this time.
shaks24 wrote:I got out of the market in investments in 2015 after firing Morgan Stanley due to the fees of a UMA. I intended to reinvest but so far have not. Schwab is making a killing investing/loaning my idle cash.
Has Schwab shared the growth with you during this time? I hope you haven't been paying them fees while your money just sits there.

If it is all in cash, you risk losing out on the spending power due to inflation. Having some cash is good, to cover several years of expenses, but not your whole portfolio.
Vanguard Fan 1367
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Re: Am I in Trouble

Post by Vanguard Fan 1367 »

delamer wrote:
Vanguard Fan 1367 wrote:
shaks24 wrote:
delamer wrote:Why is it crazy to put money in stocks and bonds right now? As long as you expect a higher, long-run return from stocks and bonds than cash, why wouldn't you invest in stocks and bonds?

I'd rather be making the killing with my money than have Schwab doing so.

If you really feel that your medical condition is impairing your ability to make good financial decisions, it is time to find a fee-only planner who can help you.
Thank you. I think that is what I probably will do.
You could do this. An alternative would be to buy something like Vanguard's Wellesley Fund with your cash. You are on a Boglehead site and the advice from Bogle would be to not lose the percent or two of your return using a financial advisor. Granted you are at Schwab but it would be pretty easy to take your cash over to Vanguard, invest in one fund to keep it simple.

There are many choices. In your case I think that the simple investing of your money in Wellesley will give you roughly a 60 percent Bond 40 stock. The fee with 1.5 million is .15 percent. The advisor will want more than that. Hopefully if you choose an advisor you might consider Vanguard. They will advise you for .30 percent of your assets under management.

Bogle predicts 4 percent going ahead. If you did manage 4 percent in the Wellesley that would be 60 thousand annually which would come in handy for living your life.

You would have to resist the temptation to sell when the inevitable bear market happens. So many people invest their million and a half, watch it drop 10 to 50 percent and then don't hold on for the inevitable come back from the bottom. If you were invested in 1929 and could hold out till 1933 you got the best stock market increase of all time in 1933.
I did not intend to suggest an adviser who would take a percent of assets; what I meant was finding an adviser who would be paid on an hourly basis. But I wasn't clear. Although in this situation, even an adviser who takes a percentage might be worth the cost.

If I was concerned that I was beginning to lose my ability to make good decisions, I'd want to find a trustworthy local adviser who was in sync with the Boglehead philosophy of buying index funds. Hopefully that person would be able to talk me out of making detrimental changes to my portfolio if I was not thinking clearly. Investing in Wellesley is all well and good, but not if you aren't sure if you can stay the course and that seems to be a big part of the OP's concern. And the Vanguard advisers are too remote to effectively fill the role.
Hopefully the different advice will help the OP to make a wise decision. I sort of have advisor phobia. Bogle says something like "never have so many done so little for so high a fee." If you can find a good fee only advisor that would be great. My sister's husband wanted an advisor and ended up getting sold an annuity, which with maybe a 6 percent commission was good for the advisor.
The OP wasn't too happy with his advisor. I have dealt with a few advisors over the years and I feel much better using Jack Bogle for my advice than any of the few I have dealt with.
John Bogle: "It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."
MoonOrb
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Re: Am I in Trouble

Post by MoonOrb »

You have a lot of assets for someone who needs to come up with about $25k/year to fund your expenses (after SS and rental income are factored in).
Even if you lose half of what you have, you should easily have enough.

If you're anxious about getting into the market right now you could (a) set aside a large chunk in a combination of cash and TIPS and (b) DCA your way back into the market over a period of time with what's left over after that.
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Bogle_Feet
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Re: Am I in Trouble

Post by Bogle_Feet »

shaks24 wrote: I know better than to time market but plowing in to stocks and bonds now seems crazy
Does 28% SPY /72% BND look "crazy"?
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