Investment advice for a friend

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Topic Author
owenmia
Posts: 146
Joined: Mon Jun 24, 2019 10:19 am

Investment advice for a friend

Post by owenmia » Wed Oct 09, 2019 3:20 pm

I have a friend who received a $100,000 windfall through life insurance.

He is 67, retired and receives about $2,200 a month combines through social security and a union pension fund. He has no other assets to speak of.

He is going to see a broker at Chase and I want to save him the 1% broker fee.

Any input on what he should go into?

chevca
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Re: Investment advice for a friend

Post by chevca » Wed Oct 09, 2019 3:45 pm

He should go into.... whatever he's most comfortable with. :happy

I'd let him know he could probably do it on his own and save the 1% fee. If he's interested to hear more about that, tell him where to read up on things. If he says no thanks and would rather pay someone 1%, let him pay someone to do it. It's his choice to make.

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ruralavalon
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Location: Illinois

Re: Investment advice for a friend

Post by ruralavalon » Wed Oct 09, 2019 3:51 pm

owenmia wrote:
Wed Oct 09, 2019 3:20 pm
I have a friend who received a $100,000 windfall through life insurance.

He is 67, retired and receives about $2,200 a month combines through social security and a union pension fund. He has no other assets to speak of.

He is going to see a broker at Chase and I want to save him the 1% broker fee.

Any input on what he should go into?
I suggest that your friend cancel the meeting with the broker at Chase. A bank is a poor place to get investing advice.

My general advice to your friend is:
1) take your time, there is no rush;
2) temporarily park the money for a short time in a very safe place, such as federally insured savings accounts or federally insured short term CDs. A good resource for comparing rates is http://www.bankrate.com ;
3) educate yourself first. Here is a wiki article you could read to start educating yourself: "Bogleheads® investment philosophy. For a quick overview of investing basics for the new person read Dr. Bernstein's short book, "If You Can". I suggest reading one or two books on general investing. Wiki article, "Books: recommendations and reviews";
4) beware of anyone (family, friend, neighbor, co-worker, broker, banker, anyone at all) trying to sell anything (real estate, stocks, bonds, insurance, annuity, CDs, mutual fund, ETF, anything at all); and
5) make a plan first, then act.
Please see the wiki article, "Managing a Windfall".

. . . . .

Here is a guide to help your friend in deciding if they want or need an advisor: "The great paradox of using an advisor is that you must know some basics in order to evaluate the advice, and once you do, you also know enough to consider doing your own management." "Chapter 10 – On Your Own or Hire an Advisor".

1) Your friend could post their financial details on this forum for ideas on investments and financial planning. Please see this for format: "Asking Portfolio Questions". I think that your friend will fund that simply gathering together all of your information together in one place will be helpful in understanding their situation and what they need to do.

2) Vanguard offers a ”Personal Advisory Service” (PAS) that will give them advice and manage their investments for an annual fee of just 0.3% of the investments. Fidelity and Schwab offer a similar service.

3) Harry Sit, who sometimes posts here, offers a service thru his blog to help people locate an advisor in their locality. "Advice-Only Search and Screening".

4) Two links for finding an advisor:
http://www.napfa.org/consumer/index.asp
http://www.garrettplanningnetwork.com/
Last edited by ruralavalon on Wed Oct 09, 2019 3:57 pm, edited 2 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

livesoft
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Re: Investment advice for a friend

Post by livesoft » Wed Oct 09, 2019 3:53 pm

Some people just like to use their bank for investing. Tell your friend that Chase has an absolutely free investment account platform called "You Invest" that he can find online. He can buy Vanguard products with it and pay no 1% fee. I know from helping a devoted Chase friend that the people inside the bank are unlikely to tell one about their free investment account called Chase You Invest.

So he could buy $100,000 of Vanguard Prime Money Market fund paying about 2% interest instead of buying a Chase CD paying only 1.7% interest. He can also get a bonus to sign up for Chase You Invest. Then while his money works for him and not for Chase, he can take his time to decide what else to do with it.
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dbr
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Re: Investment advice for a friend

Post by dbr » Wed Oct 09, 2019 4:08 pm

The first thing is too do nothing.

The second thing is do not see a financial advisor at a bank.

The third thing might be to ask here.

Fourth, a very good possibility is that the best thing is to not invest at all but simply save the money in a reasonably well paying savings account, money market fund, or CD. I personally don't think trying to maximize interest rate at today's low interest rates is very important. Having the money both safe and available and not where predators can drain off the asset is important. Note every .1% increase in interest earned is $100, which may be meaningful, but is not a lot compared to $26,400 on a year.

Eventually he can ask advice regarding whether that money is best saved and used for needs that arise or used to draw a little extra for income.

rossington
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Re: Investment advice for a friend

Post by rossington » Wed Oct 09, 2019 5:07 pm

All of the above^^^
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.

Trader Joe
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Re: Investment advice for a friend

Post by Trader Joe » Wed Oct 09, 2019 5:48 pm

owenmia wrote:
Wed Oct 09, 2019 3:20 pm
I have a friend who received a $100,000 windfall through life insurance.

He is 67, retired and receives about $2,200 a month combines through social security and a union pension fund. He has no other assets to speak of.

He is going to see a broker at Chase and I want to save him the 1% broker fee.

Any input on what he should go into?
I highly recommend that your friend join this forum, read the content and ask questions.

Topic Author
owenmia
Posts: 146
Joined: Mon Jun 24, 2019 10:19 am

Re: Investment advice for a friend

Post by owenmia » Wed Oct 09, 2019 6:00 pm

Yeah, I will send him over here. Hopefully he listens.

Thank you.

Grt2bOutdoors
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Re: Investment advice for a friend

Post by Grt2bOutdoors » Wed Oct 09, 2019 6:07 pm

owenmia wrote:
Wed Oct 09, 2019 6:00 pm
Yeah, I will send him over here. Hopefully he listens.

Thank you.
Tell your friend - if the CEO of Chase does NOT use their services, why would he? If the CEO doesn’t pay a sales charge, why should he?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Stinky
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Re: Investment advice for a friend

Post by Stinky » Thu Oct 10, 2019 7:29 am

owenmia wrote:
Wed Oct 09, 2019 6:00 pm
Yeah, I will send him over here. Hopefully he listens.

Thank you.
Make sure that you point him to this thread.

Also make sure he reads ruralavalon's post above - especially the first two points about "don't rush" and "park the money in a safe place while deciding". Then your friend can educate himself at his leisure.
It's a GREAT day to be alive - Travis Tritt

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JoeRetire
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Re: Investment advice for a friend

Post by JoeRetire » Thu Oct 10, 2019 7:46 am

Grt2bOutdoors wrote:
Wed Oct 09, 2019 6:07 pm
owenmia wrote:
Wed Oct 09, 2019 6:00 pm
Yeah, I will send him over here. Hopefully he listens.

Thank you.
Tell your friend - if the CEO of Chase does NOT use their services, why would he? If the CEO doesn’t pay a sales charge, why should he?
What if the CEO of Chase does use their services and pay a sales charge?
What if all your friends jumped off a cliff?

We should do what makes sense for us, and not worry about what others do.
Don't be a lemming.

Grt2bOutdoors
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Location: New York

Re: Investment advice for a friend

Post by Grt2bOutdoors » Thu Oct 10, 2019 11:44 am

JoeRetire wrote:
Thu Oct 10, 2019 7:46 am
Grt2bOutdoors wrote:
Wed Oct 09, 2019 6:07 pm
owenmia wrote:
Wed Oct 09, 2019 6:00 pm
Yeah, I will send him over here. Hopefully he listens.

Thank you.
Tell your friend - if the CEO of Chase does NOT use their services, why would he? If the CEO doesn’t pay a sales charge, why should he?
What if the CEO of Chase does use their services and pay a sales charge?
What if all your friends jumped off a cliff?

We should do what makes sense for us, and not worry about what others do.
This is the Bogleheads forum - we look to keep expenses low as possible. Do you have a better suggestion?
It makes no sense to pay someone $1,000 if they could do it themselves and keep the money working for them as opposed to a bank.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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JoeRetire
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Re: Investment advice for a friend

Post by JoeRetire » Thu Oct 10, 2019 2:46 pm

Grt2bOutdoors wrote:
Thu Oct 10, 2019 11:44 am
JoeRetire wrote:
Thu Oct 10, 2019 7:46 am
Grt2bOutdoors wrote:
Wed Oct 09, 2019 6:07 pm
owenmia wrote:
Wed Oct 09, 2019 6:00 pm
Yeah, I will send him over here. Hopefully he listens.

Thank you.
Tell your friend - if the CEO of Chase does NOT use their services, why would he? If the CEO doesn’t pay a sales charge, why should he?
What if the CEO of Chase does use their services and pay a sales charge?
What if all your friends jumped off a cliff?

We should do what makes sense for us, and not worry about what others do.
This is the Bogleheads forum - we look to keep expenses low as possible. Do you have a better suggestion?
It makes no sense to pay someone $1,000 if they could do it themselves and keep the money working for them as opposed to a bank.
What does that have to do with whatever the CEO of Chase does?

Tell the friend to keep expenses as low as possible. Avoid silly comments about CEOs - that just weakens the argument.
Don't be a lemming.

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BL
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Joined: Sun Mar 01, 2009 2:28 pm

Re: Investment advice for a friend

Post by BL » Thu Oct 10, 2019 7:32 pm

Vanguard has low-cost single balanced funds such as Target Retirement Income fund if he wants to risk a bit in equities. Otherwise CDs or Money Market funds/accounts might be more comfortable.

A SPIA, single premium immediate annuity, might be an alternative for some of it, with payments for life but no other money left.

Northern Flicker
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Re: Investment advice for a friend

Post by Northern Flicker » Thu Oct 10, 2019 7:57 pm

$30K in VTI
$10K in IXUS
$50K in iBonds (some bought after 1/1)
$10K in cash

No advisor needed.
Index fund investor since 1987.

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