Alfa is spot on. As is your husband for balking at 32K per year. It's actually much more than that because you lose out on the money that money could have made for you over the rest of your life. On your nest egg of 2.6M, you will effectively pay $734,000 for every 1% in management fees over 25 years. If you live for another 25 years, do you want to give greater than $1,000,000 of your money to these money managers in that time? Because that's what they'll be taking if they charge you even a 1.5% management fee with no other fees for the investments they put your money in (hint: you will pay other fees for where they put your money). If you're wondering how that math could possibly be right, take a look at the short but very enlightening web page below: Stocks -- Part IX: Why I don't like investment advisors | JLCollinsnh
Which begs the next question, where to put it? It's with Fidelity now so I assume that we would have to move it somewhere. I'm obviously clueless here although I'm sure that my husband is not.
Mine is with fidelity and it is staying there. Many options for funds and ETFs with no cost. But if you went with an advisor then you would probably need to move it to wherever they need it.
You may not need to move it at all. You may just need some assistance rebalancing to a safer portfolio (i.e. less stocks, more bonds) within Fidelity. I know that thinking about what you need to do with that much money can be overwhelming and tiring, but if you're willing to read the full Stock Series by JL Collins from the link I provided, it'll take you all of a few hours to educate yourself on how simple it can really be. I'll reprovide it below; your husband may really benefit from his first article in the series, as well, which focuses on the fact that the market will crash again, but everything will be fine if you don't panic. You and your husband have already done the hard part of properly saving for your future, which is commendable in a world where many Americans don't even have a $5000 emergency fund. It should really take no more than one rebalancing of your portfolio, and then 1-2 hours of maintenance every 6-12 months. Stock Series | JLCollinsnh
Thanks a lot for your insight and suggestions everyone. Good info for us to discuss at home. Thanks again.
Tony Robbins has something like this in his book Money, but if I came to your house and sold you on the below investment opportunity: You put up all the capital There's a less than 5% chance I will outperform the broader market You pay me 1-3% of your total investment each year no matter how good or bad my performance, even if I lose money, which will take as much as half of your future investment earnings. You would justifiably slam the door in my face. But that's basically the value proposition of 99.9% of investment advisors.
There are some people for whom it makes sense. People who are by nature too conservative (or aggressive), those who really can’t grasp the concepts etc. But for the most part, even if you just dump it in an age appropriate target fund you will probably come out ahead of where you would have been with an advisor.
Forgot to add that Mr Swampbabe is in finance and is responsible for millions of dollars for his company. It’s different when it’s your own money though
just pass the money over to me to manage...I can guarantee the fee will be less than $32K . You could go to schwab/fidelity and try out some of their robo-investing tools with a portion of your money. And then put some money aside for Mr Swampbabe to play around with.
I agree, but many people simply either can't deal with the personal stress or r not financially oriented. I have a finance background and always seem to overestimate the general publics' knowledge of investments. My SIL is an accountant but still hands it over to a bank advisor who sucks. I've even given here some sample ETFs and mutual funds and she still is afraid to make the change. My wife would be the same way. Luckily my son takes after dad.
Absolutely pay off the car. No reason to loose even more money on a declining asset. You have too much money to be paying interest on a car. Depending on your mortgage rate you should think about shedding that too. Zero debt feels pretty good.
It's amazing to me that people will spend hours per week watching television, but not 30 minutes to educate themselves on how to guarantee that they don't run out of money before they die. Heck, 30 minutes per month is honestly probably all it would take. But for anyone just too overwhelmed that feels like they must absolutely have someone else help them manage their finances, they should make sure that they are working with a fiduciary financial advisor. Otherwise, they are literally giving their money to somebody who is paid to put that money in the most costly investments. Fiduciaries at least have much stricter requirements to help remove the inherent conflicts of interest with most "advisors." That said, it doesn't mean that they are magically better/wiser investors... What Is a Fiduciary Financial Advisor? - SmartAsset
Simply reading the WSJ and IBD daily would help most people gain an understanding of investing. Books and videos will certainly increase your knowledge too. Just make sure to save 30 minutes a day to watch reruns of Green Acres.
Eh, if you have a bunch of money low interest debt is great. The only reason to pay it down is if you're concerned about your ability to pay if the economy turns south and you lose your job. Otherwise, you're way better off deploying your cash to higher yielding, diversified investments.
If swampbabe were 25 years old in the wealth accumulation phase or her life, I'd probable agree with you. But with retirement looming, reducing debt and thereby monthly expenses is probably more important.
Say her mortgage is 4% and she owes 100k. While there are certainly investments that MIGHT yield her more money, but they come with risk. Paying off the loan has no risk and protects capital. As you age protecting capital is most important.
Eh, to each their own. If you have an investment account worth $2.6 million, servicing ~$4,000 in mortgage interest payments ($100k x .04) per year is nothing. That's like 10 basis points. Your total portfolio risk will barely move by paying off the loan, and you have more than enough money to weather any short term market fluctuations anyways. If you have a million dollar mortgage, the question is harder.