I am embarrassed and need a great deal of help

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
Uninvested
Posts: 657
Joined: Sun Mar 13, 2011 2:21 pm

I am embarrassed and need a great deal of help

Post by Uninvested »

Hi,
This is a first time post. I guess I have been a boglehead even before there was one. I am 59 years old. I lost money many years ago with an advisor, found Vanguard and will never pay anybody for help. I have had all my money except personal checking at Vanguard for 20 years. I earn a very good living, mid-300s and plan to work another several years because I enjoy it not because I have to. In 2000 when the stock market crashed, I was heavily invested in US and international index funds and panicked. I did wait until the recovery got back 1/2 of my loss and sold it all. I decided we would be in a 20 year bear market and gave up on stocks. I went heavily into a state specific muni fund and did fine. But 4 years ago I decided rates would go up alot so I sold all shares. (I was wrong obviously.) I claim no great insights into markets and I guess I was right on stocks and wrong on bonds.

I will have a pension and social security that will essentially pay all my billls as I am not a big spender. Both ex-wives have been paid off. I have 2 adult children. One needs nothing from me. The other has a normal life span but is permanently disabled and lives in a group home. It costs me basically nothing because the state pays but I assume that I could one day be responsible for everything the way the states have been going. That could be 100K a year or more. SO basically, my funds and needs for them are simply for the future, to leave to the normal kid and primarily for the other.

Now the embarrassing part. I am 100% in cash. State specific money market in taxable accounts ($8 million) and Prime money market in IRA ($2 million), all at Vanguard. (Some of the IRA is in 1-5 year CDs but I am sick of bothering with them). My Flagship rep begs me to not be in all cash and I ahve had annual checkups with the Vanguard free CFP, get allocation advice and don't do it. Because I am scared of stocks going down and rates going up. THe last suggestion, last week, was for 50% stocks and 50% bonds. The stocks about 70/30 US and international. The bond recommendation for IRA was intermediate fund and Total BOnd Market for IRA. THey advised putting it all in the munis right off the bat and stocks over a year.

I am afraid to do it, afraid of both stocks and bonds. But I am earning nothing now with short rates so low.

Can you folks give me ideas how to get unscared and to invest it. I would feel better if it was slower. I will use Total Bond in the IRA and US Total stock and total international for stocks. I also would like to consider the NJ muni long term fund for bonds to reduce state taxes and the yield is higher than intermediate (but longer duration of course).

Again, I really appreciate the help. I am embarrassed that I have so much that is doing so little and I view everything for the handicapped child.

Thank you..
User avatar
enderw88
Posts: 151
Joined: Sat Oct 16, 2010 3:20 pm
Location: Tucson, AZ

Post by enderw88 »

You have $10 million in cash. There is no risk to it, and it appears to be more than you think you will ever need. Why assume risk when you don't need to?
Craig | Tucson, AZ
User avatar
White Coat Investor
Posts: 15157
Joined: Fri Mar 02, 2007 9:11 pm
Location: Greatest Snow On Earth

Post by White Coat Investor »

I honestly think you'd benefit from an advisor. Your investing past has demonstrated that you have a hard time implementing a plan.

You should also meet with an estate attorney.

Good job saving. You have a portfolio most of us will never reach no matter how well we invest.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
elgaeb051
Posts: 333
Joined: Sun Feb 21, 2010 11:23 am

Post by elgaeb051 »

delete
Last edited by elgaeb051 on Sun Oct 23, 2011 5:38 pm, edited 1 time in total.
Manbaerpig
Posts: 1368
Joined: Wed Mar 09, 2011 2:32 am
Location: San Jose

Post by Manbaerpig »

yea really 10m in cash whats the problem? (other than missed opportunity)

at this point its the size of your yacht that is at risk :)

I think the "normal" thing to do here is estate planning and to figure out where you want your assets to go, charities, endowments, scholarships, maybe all of these.

Perhaps put 1m into a trust for each child, some for yourself, and figure out how to donate the rest that meets your desires for charity?

or go back to option 1 and worry about the size of your yacht :)

maybe a little 120' er and cruise the carribbean until other plans manifest?

congrats, so jealous :)
realitytruthprozac
Posts: 201
Joined: Thu Jul 16, 2009 11:38 pm

Post by realitytruthprozac »

Buying stocks or bonds right now is a bad move.
Stick with your instinct.
fishndoc
Posts: 2327
Joined: Wed Apr 11, 2007 11:50 am

Post by fishndoc »

If I were in your position, I would put 10% of my money in diversified equity funds, and the rest in a 10 year Treasury Ladder, and forget about worrying about investing, and spend time with my family.
I have 2 adult children. One needs nothing from me. The other has a normal life span but is permanently disabled and lives in a group home.
No matter how old, children always need something from their parents, and not always money.
" Successful investing involves doing just a few things right, and avoiding serious mistakes." - J. Bogle
am
Posts: 3727
Joined: Sun Sep 30, 2007 9:55 am

Post by am »

How about 20% Total Market, and the rest in 50% cash and 50% munis assuming taxable account.
Ben24
Posts: 199
Joined: Wed Dec 29, 2010 7:14 pm

Re: I am embarrassed and need a great deal of help

Post by Ben24 »

Uninvested wrote: Both ex-wives have been paid off.
lol

Your fear is preventing you from getting serious returns. You need to stop thinking about the short term. You need to be ok with a market crash, knowing that 1. you have plenty of money in bonds/cash 2. a recovery is inevitable and 3. youre well diversified and in it for many years to come.

If you cant conquer this fear on your own i guess you should try and meet with a few advisors and pick your favorite one, or stay all cash. I think its a terrible mistake to stay all cash out of irrational fear though. You dont have to give up all your cash remember, even if you only invested half your money youd be getting huge returns.
Topic Author
Uninvested
Posts: 657
Joined: Sun Mar 13, 2011 2:21 pm

Post by Uninvested »

Thank you for the responses thus far and I look forward to more. So far, everybody is on the conservative side. I am viewing a lot of this as 80 year money assuming the disabled child could live 80 more years. So if all is in cash and low yielding treasuries for example with just a tad of stocks, what will it be worth in 50 years or so with inflation, etc. I am also not the yaught type and have resigned myself to accept the fact that spending for spending's sake provides me with no pleasure. I get what I need, which isn't that much unfortunately.
JDCPAEsq
Posts: 1835
Joined: Mon Mar 05, 2007 3:58 pm
Location: Southwest Florida

Post by JDCPAEsq »

I usually don't venture too much into investment matters, but wouldn't the rest of you think $8 million in a state specific money market fund is far too much concentration? I'm well aware of the tax benefit to the OP, but why take the risk of having it all in one state, regardless of the state?
John
atomiclightbulb
Posts: 406
Joined: Wed Dec 26, 2007 7:45 pm

Re: I am embarrassed and need a great deal of help

Post by atomiclightbulb »

Uninvested wrote: I ahve had annual checkups with the Vanguard free CFP, get allocation advice and don't do it. Because I am scared of stocks going down and rates going up. THe last suggestion, last week, was for 50% stocks and 50% bonds. The stocks about 70/30 US and international. The bond recommendation for IRA was intermediate fund and Total BOnd Market for IRA. THey advised putting it all in the munis right off the bat and stocks over a year.

I am afraid to do it, afraid of both stocks and bonds. But I am earning nothing now with short rates so low.
Nothing to be embarrassed about. If you are personally financially secure through pension and social security, and have $10M in assets, you've essentially won the game and don't need to play in the stock markets anymore.
Can you folks give me ideas how to get unscared and to invest it.

Again, I really appreciate the help. I am embarrassed that I have so much that is doing so little and I view everything for the handicapped child.
The only thing I recommend is diversification. A combination of your currently held State munis, plus TIPS (Treasury Inflation Protected Securities) and Prime Money Market might be a good idea.

Also, keep some cash in a bank account so that if shares fall in price, you won't need to cash them out at a loss. For amounts over the $250,000 FDIC insurance limit, use a bank that participates in http://www.cdars.com/.

Again, if you've won the game, there's no need to play the markets anymore. Tell the Vanguard advisor or CFP that.
atomiclightbulb
Posts: 406
Joined: Wed Dec 26, 2007 7:45 pm

Post by atomiclightbulb »

Uninvested wrote: So if all is in cash and low yielding treasuries for example with just a tad of stocks, what will it be worth in 50 years or so with inflation, etc.
In part that's why I have recommended TIPS for part of your portfolio.

https://personal.vanguard.com/us/funds/ ... IntExt=INT

The fund is composed almost entirely of U.S. Treasury-backed bonds that will keep pace with inflation. This is about as secure a holding as you can get.
mzcapital
Posts: 18
Joined: Sun Mar 13, 2011 2:03 pm

Post by mzcapital »

@uninvest, most importantly, you need an estate plan to 1) make arrangement for your disabled child; 2) save on estate taxes. Don't let any estate planning attorneys talk you into buying expensive insurance products though - many of them have relationship with insurance agents.

As to you investment, maybe a 20/80 or a 30/70 portfolio will do for you. Take 30/70 for example, I might go with

10% US Equity
10% Int'l Equity
5% REIT
5% Commodity
70% Total Bond Market

Once you have that, rebalance periodically.

Any plan is better than no plan. If you are unable to stick to a plan, then a fiduciary financial advisor maybe helpful.

Michael
Prudent Investing, Lasting Wealth
User avatar
stevewolfe
Posts: 1537
Joined: Fri Oct 10, 2008 7:07 pm

Post by stevewolfe »

realitytruthprozac wrote:Buying stocks or bonds right now is a bad move.
Stick with your instinct.
Why is buying stocks or bonds right now a bad move? What is the right move? Tin Foil futures? :)
User avatar
Christine_NM
Posts: 2791
Joined: Tue Feb 20, 2007 1:13 am
Location: New Mexico

Post by Christine_NM »

Un -

Any significant foray into stocks and bonds at this point would likely result in a loss because your fear of not leaving enough for your handicapped child makes you terribly fearful of even short-term losses. Maybe you can get over this with an advisor, but then again, maybe the advisor will take too much risk with such a large portfolio (falsely thinking he could never lose it all) and your child will suffer after you are gone. Perhaps both children would suffer, since one would be caring for the other.

You seem to have a portfolio that you can live with, even if your Flagship rep doesn't like it. If you can keep pace with inflation you have absolutely nothing to be embarrassed about.

If you go into TIPS for inflation, then you probably would need a very small percentage of equities to try to balance the fluctuation of bonds.
18% cash 44% stock 38% bond. Retired, w/d rate 2.5%
ResNullius
Posts: 2091
Joined: Wed Oct 24, 2007 3:22 pm

Post by ResNullius »

EmergDoc wrote:I honestly think you'd benefit from an advisor. Your investing past has demonstrated that you have a hard time implementing a plan.

You should also meet with an estate attorney.

Good job saving. You have a portfolio most of us will never reach no matter how well we invest.
Ditto. You really need to talk with an Estate attorney about a plan for your disabled son after your death. It could save you a bundle. Same for Estate taxes. As for how to invest, that's up to you to decide. Sounds like you've gotten a lot a good advice, but refused to listen.
Topic Author
Uninvested
Posts: 657
Joined: Sun Mar 13, 2011 2:21 pm

Post by Uninvested »

Thanks all. I am following carefully. I always am good at giving advice to others, but need the help. I indeed have a will and trust set up. I may have to revise it but it is reasonable for now.

I just started a new job. I wonder why I am still working except I like the work and would probably be bored otherwise. Does anybody else work who doesn't really need to? Maybe its not really work when you don't have to do it>>>>
KyleAAA
Posts: 8759
Joined: Wed Jul 01, 2009 5:35 pm
Contact:

Post by KyleAAA »

With $10 million saved up, why not something like 20% equities at most (split between domestic and foreign) with the rest in short-term bonds (duration under 3 years)? Even if rates do go up your bonds under 3 years aren't going to get hit too hard and the small allocation to stocks should give you enough growth potential to at least keep up with inflation without much long-term risk. I'd definitely stick to treasuries and highly-rated munis on the bond side and maybe TIPS in your IRA. And if you're still nervous, maybe keep a million or so in a CD ladder or savings account (spread around to keep everything FDIC insured, of course), just in case.

I see absolutely no reason for you to invest half your portfolio in equities, but I do worry your portfolio won't keep up with inflation if you keep it all in cash.
Last edited by KyleAAA on Sun Mar 13, 2011 4:04 pm, edited 3 times in total.
Manbaerpig
Posts: 1368
Joined: Wed Mar 09, 2011 2:32 am
Location: San Jose

Post by Manbaerpig »

If it were me I would consider something like:

$1m trust for son #1, invested 50/50 lazy portfolio set and forget
$1m trust for son #2, ditto
$1m in cash for my mattress :) (I think you can find 1.25% or so in a money market)
$1m in domestic equity (invested by a paid advisor, charging maybe 0.25% ER or less ideally, this is $2500 to buy some index funds for me)
$1m in foreign equity (ditto)

$5m in a structured bond portfolio, not sure how to implement this :)
I would be heavy on TIP and light on JNK
lazyday
Posts: 3799
Joined: Wed Mar 14, 2007 10:27 pm

Post by lazyday »

If you like working, why stop? Unless maybe you thought you'd enjoy retirement more. Sounds like you really enjoy your work, and that's great.

For your investing, the most important thing is probably sticking with whatever plan you come up with. Stay the course, as we say here. If you can't, then you'd probably be better off with a fee only advisor, or going with well chosen risk-free assets. -or very low risk.

If you can stay the course, 50/50 might be too high risk for you. You could go much lower risk. For example:

10% Total US Stock Market
10% Total International Stock Market
10% REITS Index (Or, maybe actual real estate. Or leave out.)
10% TIPS
20%+ High quality municipal bonds, ST, or mix ST and IT
10% Short Term Treasury Bonds; 20% if state tax is high enough
20%- FDIC insured CDs at banks that have low early withdrawal penalties
10% Treasury Bills

If you want to overcome your fear, it might help to become more knowledgeable, if you haven't already read good books with historical overviews like The Four Pillars of Investing by W Bernstein.
retiredjg
Posts: 43242
Joined: Thu Jan 10, 2008 12:56 pm

Post by retiredjg »

uninvested, welcome to the forum!

I would agree with your advisor that you need to get some money invested in something - if for no other reason than to keep up with inflation. I'm not sure why it needs to be 50% stocks and 50% bonds though. Your history would suggest that you are too risk averse for that.

Do you think you could handle 25% stock? With 25% stock, you might see about a 12% drop in portfolio value in the next bad downturn. Could you stomach that?

What about 25% stock, 25% bonds and TIPS, 50% cash/equivalents?

Another idea is to have the entire portfolio in individual TIPS. I don't know anything about this type of investing - don't know if it is good or bad, but it might be something to research.
User avatar
fredflinstone
Posts: 2776
Joined: Mon Mar 29, 2010 7:35 am
Location: Bedrock

Post by fredflinstone »

put 100% of your IRA money in long-duration TIPS bonds. Don't bother with a fund.

For the taxable assets, I recommend putting most of your money in short-term pre-refunded SLGS-collateralized municipal bonds. See:
http://blogs.forbes.com/investor/2011/0 ... a-bargain/

Also: I can't remember the name or details, but there is some organization out there that will take a large lump sum investment and divide it into many different FDIC-insured CDs. This spares you the hassle of having to set up, say, 20 different accounts at 20 different banks in order to keep each account under $250,000.
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash (mainly CDs) 22 / TIPS 8
retcaveman
Posts: 911
Joined: Wed Oct 21, 2009 8:12 pm

Post by retcaveman »

With that amount of cash, you don't need to take a lot of risk. But you are quite exposed to the effects of inflation and taxes (you could save some money by generating cap gains vs ordinarly income).

I think it's more challenging to invest a pool of money (lump sum), once you have it than to invest it via every paycheck when you are accumulating. Hmmm I guess that's another approach ie keep what you currently have but start investing future earnings and add more from savings on dips.

Due to the amount of money involved and your child with needs, you may benefit from an advisor. Maybe an estate attorney and a CPA. I would be leary of most "financial planners" and would never do anything with my money with which I was not comfortable. If you do consider a financial planner, do not go with anyone who sells financial products, just advice by the hour.

FWIW, in the past, when I have been frozen by fear of the market, I have found that sticking your toe in water/putting a stake in the ground helps to keep me grounded. It forms a base from which you can measure movement + or -. I would not do anything drastic eg dump millions of my money into the market all at once.

For example, maybe you decide to explore the market with say 25% of the cash or just $1M. But because of your concerns about the current levels of the stock and bond markets, put 50% of whatever you want into the market (the funds you mention seem quite reasonable to me ie Total Market, Total Bond and Total International) and dollar cost average the other 50% over whatever time period you are comfortable with. I would think at least one year and maybe even two. I would also take advantage of any big drops in the market to add more at the better entry point. (I know timing is frowned upon, but anyone who bought in '82, '03 or more recently when the S&P was I think 666 didn't do badly.)

Due to your large cash position, even if this investment in the markets goes bad, it won't affect your lifestyle. While my comments are very conservative, I am reacting to your stated reluctance to invest in the markets.

Good luck.
"The wants of mortals are containers that can never be filled." (Socrates)
Roy
Posts: 970
Joined: Wed Sep 10, 2008 9:34 am

Post by Roy »

fredflinstone wrote:put 100% of your IRA money in long-duration TIPS bonds. Don't bother with a fund.
You've already won the game. I'd also consider individual TIPS but only those you know would be held to maturity.
User avatar
fredflinstone
Posts: 2776
Joined: Mon Mar 29, 2010 7:35 am
Location: Bedrock

Post by fredflinstone »

realitytruthprozac wrote:Buying stocks or bonds right now is a bad move.
Really? how do you know that? Can you share your crystal ball with the rest of us regular people?
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash (mainly CDs) 22 / TIPS 8
JW-Retired
Posts: 7189
Joined: Sun Dec 16, 2007 12:25 pm

Post by JW-Retired »

Uninvested,
You were heavily into stocks for a while then sold all of them. Then it was munis but sold all them too. I'm not getting what's behind your all-in mentality. I don't know if an advisor could help with this. You might choose not to follow his advice and end up selling everything again anyway, whatever it happened to be.

The basic idea is to diversify and stay that way. I'm sure you know that all into any one thing is risky. All into cash is an inflation risk I would not take if I were you. Very probably all cash would support your child for his/her lifetime and much more, but IMO there is a slight chance of substantial inflation. This ten million might not amount to much in a few decades, let alone 80 years. You really should have some TIPS and some stocks to help protect against this. How about 30% TIPS& bonds/30% TSM/and 40% cash for a while? Could you find some way to hang in there forever with that? But you have to stop the jumping in and out or one of these times it will cost you dearly. Dunno how you convince yourself to stay-the-course but I think if you avoid ever being "heavily invested" in any one asset class it might help.
Diversify, diversify, diversify.

Cool you continue to work. Last thing we need is people good at their job retiring early just because they can.
JW
Last edited by JW-Retired on Sun Mar 13, 2011 8:51 pm, edited 1 time in total.
User avatar
fredflinstone
Posts: 2776
Joined: Mon Mar 29, 2010 7:35 am
Location: Bedrock

Post by fredflinstone »

JW Nearly Retired wrote:Uninvested,
You were heavily into stocks for a while then sold all of them. Then it was munis but sold all them too. I'm not getting what's behind your all-in mentality. I don't know if an advisor could help with this. You might choose not follow his advice and end up selling everything again anyway, whatever it happened to be.

The basic idea is to diversify and stay that way. I'm sure you know that all into any one thing is risky. All into cash is an inflation risk I would not take if I were you. Very probably all cash would support your child for his/her lifetime and much more, but IMO there is a slight chance of substantial inflation. This ten million might not amount to much in a few decades, let alone 80 years. You really should have some TIPS and some stocks to help protect against this. How about 30% TIPS& bonds/30% TSM/and 40% cash for a while? Could you find some way to hang in there forever with that? But you have to stop the jumping in and out or one of these times it will cost you dearly. Dunno how you convince yourself to stay-the-course but I think if you avoid ever being "heavily invested" in any one asset class it might help.
Diversify, diversify, diversify.

Cool you continue to work. Last thing we need is people good at their job retiring early just because they can.
JW
I agree 100% with the above sentiment. In fact, I would take it one step further. Since the biggest threat to your cash-heavy portfolio is inflation why not add some timber REITs and precious metals into the mix? Maybe:

20% TIPS in your tax-deferred accounts
50% pre-refunded SLGS-collateralized munis (duration <5 years)
10% total U.S. stock market index fund
10% international stock market index fund
5% Central Fund of Canada (a tax-efficient gold/silver fund)
5% timber REITs (Rayonier, Plum Creek, Potlatch)

these last two asset categories may seem like more trouble than their worth, but gold, silver, timber, and land should hold their value better than bonds or cash in a high-inflation environment.
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash (mainly CDs) 22 / TIPS 8
User avatar
blacktupelo
Posts: 209
Joined: Mon Feb 19, 2007 6:43 pm
Location: St. Louis Missouri USA

Post by blacktupelo »

Larry Swedroe's three principles of Need to take risk (low for you), Ability to take risk (high for you) and Desire to take risk (low for you) balance out that you shouldn't be taking much risk.

However, in cash you are at risk of inflation and cash has no inflation protection so TIPS ladder seems the way to protect yourself. Diversified stocks also provide some inflation protection but you don't have the need or desire to live with the risk.

You definitely need an estate plan if you don't have one that takes your children into account, and charity if you are so inclined.
Larry
jmbkb4
Posts: 280
Joined: Sat Feb 12, 2011 4:47 pm

Post by jmbkb4 »

With your net worth, a Vanguard adviser would (if not fly to meet you) would certainly speak with you on the phone.

I'd call up Vanguard and have them help you.

I'm sure they'd be more than willing to.
assurancefp
Posts: 66
Joined: Thu Nov 04, 2010 6:36 pm

Post by assurancefp »

Uninvested,

First of all, congratulations on your assets that you have accumulated.

With identifying your investing habits and tendencies, it does seem that a fee-only advisor would be well worth the small fees. It wouldn't hurt anything to go and interview with a few advisors in the area and see what their opinions are. The most important part for you is that they share your goals and your spending principles. Also, having an advisor that works well with your CPA and estate attorney would be helpful.

Something to consider when debating between a Vanguard advisor vs. a local fee-only advisor. There is a different mental position when you pay for something. It is actually one of the most intimate experiences people have. Expectations on both people are different and often provide different outcomes even if the paying for services doesn't matter. If you pay $2500/year for an advisor, that money means virtually nothing to your portfolio, but it may have a drastically different mental impact on how you consider the advisor's advice. Again, something to consider.

I have a different way to think of your portfolio that may help. Mentally divide your assets into 2 groups.

Group 1 is for your retirement and includes your social security, pension, and any assets that you would possibly need for retirement. With your risk tolerance and needs, these assets can basically be in cash, TIPS, or laddered CDs that are guaranteed (an advisor can take care of the CD ladders as part of their fees, which sounds like something you do not enjoy). Ultra conservative.

Group 2 is assets that you will be giving away. The easiest way is to consider those assets as given away or gone. This is obviously easier said than done, but a mental thought to try and achieve. Once you agree that these assets are given away, set a asset allocation plan that corresponds to the new owners (children). An advisor can help you keep the correct path, but you have to be willing to accept these assets as given away.

If you haven't already, a giving plan should be set up with the Group 2 money. At this point, maximizing tax-free giving ($13K/year) can help to get your estate down under the taxable limits. Any grandchildren to set up education accounts for? Any assets you can transfer over time will greatly help the estate issues. You may also want to consider starting to use the $5M gift/estate tax limit to give away money now (to a trust) so that future appreciation can be given tFo your heirs as opposed to the government.

Finally, there is absolutely nothing wrong with working for fun. I actually commend that and hope to do that for myself in the future.
elgaeb051
Posts: 333
Joined: Sun Feb 21, 2010 11:23 am

Post by elgaeb051 »

delete
Last edited by elgaeb051 on Sun Oct 23, 2011 5:39 pm, edited 1 time in total.
letsgobobby
Posts: 12073
Joined: Fri Sep 18, 2009 1:10 am

Post by letsgobobby »

High assets + high tax bracket and low risk tolerance argues for a lot of bonds. But those are tax-inefficient for you.

Low cost VA for some portion?

Seems like this has come up recently.

So for example:

50% Vanguard variable annuity in bond index fund (note: see what Vanguard offers before taking the plunge. I don't think they offer TIPS, for example, which is unfortunate).
25% taxable muni funds, diversified
12.5% total US Stock market
12.5% total international stock market

TIPS in a taxable account in your tax bracket would be extremely painful.

Take some advice from Ben Graham, who advocated no less than 25% and no more than 75% stocks for most investors. You do need to keep pace with inflation over many decades and it is hard to imagine doing that with fixed income alone. A largely TIPS ladder portfolio would be attractive, but it seems you do not have adequate tax advantaged space to make that feasible.

Really would consider a fee only financial adviser who specializes in high net worth situations, because taxes and your fear factor could eat you alive.
User avatar
alec
Posts: 3101
Joined: Fri Mar 02, 2007 2:15 pm

Post by alec »

With your amount of assets, and your admitted bad track record at managing your investments, I'd just call Rick Ferri and have his firm manage the investments. The 0.25% IA fee could probably be worth it.
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" - Upton Sinclair
User avatar
Watty
Posts: 21873
Joined: Wed Oct 10, 2007 3:55 pm

Post by Watty »

Along with the other posts about you needing to see a financial advisor and estate planning lawyer I think that is a good idea too. I wouldn't be surprised if some sort of trust is appropriate for the disabled kid.

I would caution you about being careful about picking a financial advisor since there are lots of legal ways for people to sell you terrible products under the guise of being "advisors" when they really are sales people. Once you have a professional plan, getting a second and even a third option from another professional would be appropriate.


Greg
User avatar
VictoriaF
Posts: 19549
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Post by VictoriaF »

Uninvested wrote:I am viewing a lot of this as 80 year money assuming the disabled child could live 80 more years. So if all is in cash and low yielding treasuries for example with just a tad of stocks, what will it be worth in 50 years or so with inflation, etc.
Can the disabled child manage money? I would suggest using the IRA account for a rolling ladder of TIPS. The problem is that if your life expectancy is, for example, 90 years, you can maintain the ladder for 30 more years, and it could last for 30 years after your death. But it would not cover the last 20 years of your child's life.

Another problem is that most of your assets are in taxable accounts which are not TIPS friendly. Equities are well suited for taxable accounts, and you should consider keeping at least a small percentage of your assets in equities. Start with 2% and slowly add to 10% in the Vanguard Total Stock Market (TSM). Then wait for a year or two to see how it feels. After that consider building up to 20% in equities.

Read about Single Premium Immediate Annuities (SPIA) and see if it would work for your child. The Bogleheads' Guide to Retirement Planning has an excellent chapter on SPIAs.

Finally, keep reading and posting at this site. Many of us came to the Bogleheads community after making great financial errors in our past. But the ability to discuss our finances in an open forum has a therapeutic effect. The value of this group proved very high during the 2008-2009 crisis, and probably saved many of us from making old mistakes.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
marco100
Posts: 763
Joined: Thu Mar 01, 2007 7:09 pm

Post by marco100 »

Uninvested,

with that amount of money at stake, it would be worth your while to actually have an in-person consultation with a financial advisor.

Two people who post here and that I believe are in that business, and are probably about as trustworthy as anyone you could ever find, are:

Rick Ferri

Larry Swedroe
User avatar
jh
Posts: 1830
Joined: Mon May 14, 2007 11:36 am
Location: USA

Post by jh »

...
Last edited by jh on Sat May 07, 2011 5:49 pm, edited 1 time in total.
User avatar
woof755
Posts: 3174
Joined: Sun Aug 05, 2007 2:03 pm
Location: Honolulu

Post by woof755 »

$10 million.

If I had that, I'd seriously consider DFA or just send larryswedroe a sizzling hot private message...no one here knows more about individual TIPS than him.

Congrats on the nest egg but more importantly on having the job you love doing--priceless.
"By singing in harmony from the same page of the same investing hymnal, the Diehards drown out market noise." | | --Jason Zweig, quoted in The Bogleheads' Guide to Investing
User avatar
joe8d
Posts: 4457
Joined: Tue Feb 20, 2007 8:27 pm
Location: Buffalo,NY

Post by joe8d »

With your amount of assets, and your admitted bad track record at managing your investments, I'd just call Rick Ferri and have his firm manage the investments. The 0.25% IA fee could probably be worth it.
Good advice.
All the Best, | Joe
Lorraine
Posts: 81
Joined: Fri Jan 14, 2011 3:49 pm

Post by Lorraine »

Uninvested, I know how you feel...my situation was very similar to yours. I had been totally in stock funds until I retired and pulled most money out just before the 2000 crash. Then I was in money markets for 10 years (until just recently)! My money was at Fidelity and I went through the same thing...they would call me and tell me how I really needed to get that cash invested. But I was paralized and just couldn't follow through other than a tad amount in a couple of bond funds (which I didn't understand and therefore wasn't comfortable with). My mind knew they were right but I had an overwhelming fear from what I saw the stock market do in 2000 and 2007-08. What helped me was finding this forum and reading it for a couple of months. I moved most of that money to Vanguard and now have (in index funds) 40% stocks/30% bonds/30% cash...an allocation I think I can live with regardless of how the markets go. You could go a bit more conservative to 'get your toes wet' again in investments and then go from there.

Please do the reading that people have suggested, I think that will help a great deal. Also be totally honest with the Flagship rep. just like you were here about your fears. People freezing up after crashes is fairly common and they've dealt with it before. You and I aren't the only ones! :lol: Others have given excellent advice and that's more than I can provide. I mostly wanted you to know you aren't alone.

Also, keep things in perspective...you are truly blessed to have the nestegg you have and a job you truly enjoy! I wish you and your sons the best!
User avatar
Peter Foley
Posts: 5245
Joined: Fri Nov 23, 2007 10:34 am
Location: Lake Wobegon

Post by Peter Foley »

Uninvested
You've done well and per Larry Swedroe, have no need to take risk. Larry's seemingly simple advice about balancing the need to take risk with the ability to take risk has become the cornerstone to my approach to investing.
That said, I suggest you read the Trinity Study on the Wiki and take a look at the charts. It is neither a tough nor a long read. I would hope that the study might convince you to take a 20% position in equities. Based on your past emotional response to investing, I would suggest dollar cost averaging if you decide to go that route. As suggested by others, the balance could be in laddered CDs and TIPs. Keep as much of those as possible in tax deferred accounts.

With some equities and some TIPs you reduce long term inflation risk. At present, that is the only risk for which you are not covered.
User avatar
VictoriaF
Posts: 19549
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Post by VictoriaF »

joe8d wrote:
With your amount of assets, and your admitted bad track record at managing your investments, I'd just call Rick Ferri and have his firm manage the investments. The 0.25% IA fee could probably be worth it.
Good advice.
$10,000,000 x 0.25% = $25,000 / year and giving up the control of his money. He is trying to figure it out himself; why should not he?

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
User avatar
fuermcs
Posts: 58
Joined: Mon Mar 22, 2010 3:39 pm

Post by fuermcs »

jmbkb4 wrote:With your net worth, a Vanguard adviser would (if not fly to meet you) would certainly speak with you on the phone.

I'd call up Vanguard and have them help you.

I'm sure they'd be more than willing to.
Really, just do this.

Tell them you are extremely risk averse. Despite that, they'll still put you in something a lot more reasonable than 100% cash. And that will still reduce risk. Remember, not investing at all (100% cash) isn't exactly zero-risk either. You're always taking risk.

Best thing to do is to be honest with yourself that you hate risk. But also, keep your emotions out of it after you've setup an asset allocation.

I recall reading articles about people losing 50% of their retirement savings a couple years ago, and pulling out of the market since they couldn't take the fear anymore. Then the market shot up over these past two years. It would have been a brilliant time to buy – as of today, but who knows about tomorrow.

Keep your emotions for your family and friends, not your bank account.
Mulligan
Posts: 47
Joined: Wed Jul 23, 2008 9:55 pm

Post by Mulligan »

I agree with EmergDoc, you should retain a financial advisor, preferably a fee only money manager, that uses passive investments and can help with estate planning or make good referrals for estate planners in your state.

You don't need to take much risk. A good advisor will identify your need and ability for your future needs, and make recommendations appropriate for your needs.

Mulligan
User avatar
joe8d
Posts: 4457
Joined: Tue Feb 20, 2007 8:27 pm
Location: Buffalo,NY

Post by joe8d »

$10,000,000 x 0.25% = $25,000 / year and giving up the control of his money. He is trying to figure it out himself; why should not he?

Victoria
Based on the OP's past history as described,I feel he would definitely benefit from the "hand holding" aspect that a respected advisor such as Rick would provide.
All the Best, | Joe
james22
Posts: 1743
Joined: Tue Aug 21, 2007 2:22 pm

Post by james22 »

Swedroe-like: 70% VWSUX, 15% VISVX, 10% VINEX, 5% VGPMX.
JDCPAEsq
Posts: 1835
Joined: Mon Mar 05, 2007 3:58 pm
Location: Southwest Florida

Post by JDCPAEsq »

VictoriaF wrote:$10,000,000 x 0.25% = $25,000 / year and giving up the control of his money. He is trying to figure it out himself; why should not he?Victoria
After tax cost = ~$15,000. Not bad for managing $10M
John
User avatar
fredflinstone
Posts: 2776
Joined: Mon Mar 29, 2010 7:35 am
Location: Bedrock

Post by fredflinstone »

JDCPAEsq wrote:
VictoriaF wrote:$10,000,000 x 0.25% = $25,000 / year and giving up the control of his money. He is trying to figure it out himself; why should not he?Victoria
After tax cost = ~$15,000. Not bad for managing $10M
John
if his yield is 2% ($200,000 per year), management costs will eat up one-eighth of his returns.
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash (mainly CDs) 22 / TIPS 8
golfallday
Posts: 118
Joined: Sat Feb 14, 2009 3:43 am
Location: College Point, NY

Post by golfallday »

Wow! Great job saving. Call Vanguard; they will certainly formulate a plan consistent with your risk tolerance. In fact, they will RUN to the firepoles to help you considering the amout of $$ here. Wouldn't be surprised if one of the big-shots in Valley Forge ended up with the call.

I agree that you need to come up with an estate plan; do your homework in selecting this lawyer. Take your time here. You need a very seasoned lawyer that specializes in this arena and has handled high-net-worth clients. Ask questions; and ask for proof he/she has handled big clients.

Best wishes.

------------------
30% VIIIX; 20% FSEMX; 20% VTIAX; 30% VBTIX.
Post Reply