May 31, 2014
Are you paying your financial advisor $50,000? If you have a $300k portfolio and are charged 1% of assets under management, you pay $3000 in the first year. And what about over 10 years if your investments return 6% annually? Now it's almost $40,000. What if you add in the money you could have earned on those fees paid? Now it's $50,000. The same exercise over a 20 year period will cost you $150,000. Are you getting service worth that much? Speak to me about fee-based financial advice and planning.
Are you paying your financial advisor $50,000? If you have a $300k portfolio and are charged 1% of assets under management, you pay $3000 in the first year. And what about over 10 years if your investments return 6% annually? Now it's almost $40,000. What if you add in the money you could have earned on those fees paid? Now it's $50,000. The same exercise over a 20 year period will cost you $150,000. Are you getting service worth that much? Speak to me about fee-based financial advice and planning.
May 29, 2014
Money Magazine (May 2014) reports that if you own actively managed funds in your portfolio, one for US stocks, one for international stocks and one for domestic bonds, you have only a 17% chance of beating a simple index fund portfolio with the same asset class exposure. But get this: if you increase the number of actively managed funds to three for each of these asset classes, your chances of beating the index fund portfolio drop to only 9%. It makes sense if you think about it.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com
Money Magazine (May 2014) reports that if you own actively managed funds in your portfolio, one for US stocks, one for international stocks and one for domestic bonds, you have only a 17% chance of beating a simple index fund portfolio with the same asset class exposure. But get this: if you increase the number of actively managed funds to three for each of these asset classes, your chances of beating the index fund portfolio drop to only 9%. It makes sense if you think about it.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com
May 28, 2014
Should we invest with the most talented managers in the world or just plop our money in an unmanaged S&P 500 index fund? And who is more talented than Warren Buffett? Well over the last five years Buffet's Berkshire Hathaway (a stock that is like a mutual fund holding his investment choices - ticker BRK-B) has returned 2% less per year than the S&P 500 index funds. 2% per year over the last five years would have cost you about $20,000 on just an initial $100,000 investment. Ouch.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com
Should we invest with the most talented managers in the world or just plop our money in an unmanaged S&P 500 index fund? And who is more talented than Warren Buffett? Well over the last five years Buffet's Berkshire Hathaway (a stock that is like a mutual fund holding his investment choices - ticker BRK-B) has returned 2% less per year than the S&P 500 index funds. 2% per year over the last five years would have cost you about $20,000 on just an initial $100,000 investment. Ouch.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com
May 27, 2014
S&P/Case-Shiller says home prices are up 12.4% in March from a year ago. Where are they going in the next 12 months? Nobody knows but many will guess. If you run across someone who says they know for sure that prices will keep rising, ask them why they haven't mortgage everything they owned to buy more real estate.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com
May 23, 2014
Dying can be very tax efficient. If you own a stock you bought at $10 and it's now at $50, if you sell it you owe taxes on the $40 gain. But if you die before selling, your heirs inherit it with a cost basis of the day of death. So they can sell it for $50 the next day and pay no capital gains tax. Why is it the IRS is encouraging us to die?
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com
May 22, 2014
Should you put money in a Roth IRA instead of a traditional IRA? If you are in a low tax bracket now then you don't give up much by contributing to a Roth and if your bracket is higher later (either because of your personal circumstances or because the government realizes it's going broke and taxes everybody more) then you avoid higher tax rates later. If you already have a traditional IRA, a Roth can give you tax diversification that would help if the government does tax everyone higher years from now when you are in retirement and need this money.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com
May 21, 2014
Have you seen on the news a respected analyst saying that stocks are either overpriced or underpriced? For every well-respected analyst that gives his/her opinion on the market, there's an equally well-respected analyst that has the opposite opinion. Beware being too quick to believe.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com
May 20, 2014
Okay, so remember my post where you could have $1 MILLION if you saved $10/day from graduation until retirement? Well believe it or not, a HALF MILLION comes from the first 10 years saving. The other HALF MILLION comes from the last 35 years. The moral: even though it's too late for that million whatever time you have left until retirement, start saving NOW! Money saved earlier grows more than money saved later.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com
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