Inheritance !! Moving From Morgan Stanley ...

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countdevio
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Inheritance !! Moving From Morgan Stanley ...

Post by countdevio » Thu Jan 18, 2018 7:22 pm

Hi, first of all, please excuse me. I am a total newbie to investing.

My dad passed a year ago and left me and my brothers equal shares in individual
Morgan Stanley portfolios. Being a newbie, everything I've read is, you will never
make out in the long run with a broker.

The Stocks have done great! 30 grand this year since last year when I received the account.
I could live on what is in this account for whatever years I have left (I'm in my early 60s), unless
the stock market does a downturn. I'm thinking about it, and my thoughts are, to move this to a
non managed account like Ameritrade, Vanguard, etc.

My question(s) is, first of all, is this a good idea? What are the fees of moving a few hundred thousand
over to one of these companies? Since the stock market is at it's highest, should I sell the stocks (or
will Morgan Stanley slam me) ... or can I just move them over. I have mostly blue chip stocks, Amazon,
Facebook, Caterpilar, etc.

Again, I'm pretty clueless and I'm not really a gambler, and being in my 60's, I'm not investing
for my future. Thanks in advance for your understanding and responses.

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whodidntante
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Re: Inheritance !! Moving From Morgan Stanley ...

Post by whodidntante » Thu Jan 18, 2018 9:05 pm

You would be able to move the securities in kind to a discount broker. Some brokers will pay you a cash bonus, reimburse you for the account closing fee that MS will charge, and offer you free trades for a limited time or perpetually. Look at Merrill Edge.

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countdevio
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Re: Inheritance !! Moving From Morgan Stanley ...

Post by countdevio » Thu Jan 18, 2018 10:40 pm

Thank you ...

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brother7
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Re: Inheritance !! Moving From Morgan Stanley ...

Post by brother7 » Thu Jan 18, 2018 10:56 pm

1. Is the inherited account an IRA or some type of retirement account or a regular taxable account?
2. Are the holdings within the account mostly individual stocks? Or mutual funds?

venkman
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Re: Inheritance !! Moving From Morgan Stanley ...

Post by venkman » Thu Jan 18, 2018 11:14 pm

countdevio wrote:
Thu Jan 18, 2018 7:22 pm
Again, I'm pretty clueless and I'm not really a gambler, and being in my 60's, I'm not investing
for my future. Thanks in advance for your understanding and responses.
If you're not a gambler, and this is money you will need to live on, you should absolutely sell off the individual stocks (taking capital gains taxes into account) and move the money into something more diversified and much more conservative. Vanguard has some blended funds that invest in stocks and bonds, and those sound much more appropriate for your situation. Consider something like their Target Retirement Income Fund (VTINX--about 30% stocks and 70% bonds). While it won't produce huge gains, it will protect you from the potential for huge losses that go along with stocks. (During the crash of 2007-2009, the stock market lost 50% of its value. VTINX only lost 17%, and it had recovered by the end of 2009.)

If you're uncomfortable doing it on your own, Vanguard has a Personal Advisory Service (https://investor.vanguard.com/financial ... ial-advice) that charges a reasonable .30% of your assets annually for unbiased advice.

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Ged
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Re: Inheritance !! Moving From Morgan Stanley ...

Post by Ged » Thu Jan 18, 2018 11:39 pm

You want to get into a broker that will offer you a set of low fee index funds without trading fees, such as Fidelity, Vanguard etc. Trading in the stocks for mutual funds will incur capital gains taxes on the stock's value increase since your father's death. The longer you delay the more this will be.

Generally it's good to have a mixture of stocks and bonds to cushion market volatility. At your age you might consider something like 50/50. A good intermediate duration bond fund and a total market stock fund will keep things very simple.

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BolderBoy
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Re: Inheritance !! Moving From Morgan Stanley ...

Post by BolderBoy » Fri Jan 19, 2018 12:11 am

countdevio wrote:
Thu Jan 18, 2018 7:22 pm
... and being in my 60's, I'm not investing for my future. Thanks in advance for your understanding and responses.
Eeeek! Orientation change. Unless you are planning to die tomorrow or next week you are most certainly going to be investing for the future. You may live for another 30+ years for all you know, right? With that in mind, you are doing the right thing by planning now for how to best invest this inheritance going forward.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

Nate79
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Re: Inheritance !! Moving From Morgan Stanley ...

Post by Nate79 » Fri Jan 19, 2018 12:16 am

I would look at Schwab. They should offer you 300 free trades (Hopefully enough for you to sell all the individual stocks at no cost) and are extremely customer oriented. Get out of the individual stocks and into index funds.

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BL
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Re: Inheritance !! Moving From Morgan Stanley ...

Post by BL » Fri Jan 19, 2018 1:58 am

When you say you could live on it, the Safe Withdrawal Rate guide is 4%/year inflating according to inflation numbers. If you need 100,000/yr, you would need to have 2.5 Million to be sure you have enough for 30 years of withdrawals. 1.25 Million should give you 50,000/year. Are those the kind of numbers you have?

Do some reading in threads and Wiki, read a couple of suggested books, etc.
A quick 16-page capsule of things you should know are in this pdf by Dr William Bernstein:
https://www.etf.com/docs/IfYouCan.pdf

Another reference might be:
How to Make Your Money Last: The Indispensable Retirement Guide by Jane Bryant Quinn.

There is a great thread here on the 3-fund portfolio as well as a Wiki page.
If you are uncertain what you want, Vanguard won't get you stuck with expensive funds or insurance products like some of the others might if you don't stick to just finding low-ER total funds like total US, total International and total bond or munis if you are in a high tax bracket.

You might also consider Merrill Edge which gets you away from adviser but with the same company. Not sure if that is any advantage, however.

Have your receiving broker do the legwork for getting stocks or cash transferred. They have the incentive to get it done.

Jack FFR1846
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Re: Inheritance !! Moving From Morgan Stanley ...

Post by Jack FFR1846 » Fri Jan 19, 2018 8:58 am

First, find the basis for each stock. If this was inherited, I'd think that this would be the value on the date of death (not the original buy price). I'd move it to Schwab or TDAmeritrade first as they are well set up for stock trading and their online tools are build for this. Then you can keep or sell as you feel comfortable with to buy mutual funds or etfs. If you're in a lower tax bracket, you might pay zero for capital gains! This is why it might be advantageous to just sell a bit at a time.

You mention that you made $30k last year. If the money was invested in the S&P 500, $150k invested would have given you this return. Something to think about if you've got more than that. MS fees likely are helping to gobble up some of your gains.

Will MS charge fees to move investments of close your account? Likely yes. But you're going to pay this anyways and why keep anything there with high fees plus that same closure fee. Just move everything now.
Bogle: Smart Beta is stupid

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