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BajaGringo
Ultra Nomad
Posts: 3922
Registered: 8-24-2006
Location: La Chorera
Member Is Offline
Mood: Let's have a BBQ!
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Consider another option that some of us have chosen...
Check out early from NOB life
Take time to decide where to live in Baja
Invest in a local business that appeals to you
Work WHERE you want to be now, don't wait for retirement
Working down here feels like being on vacation 24/7 and I have never looked back. We recently signed a collaboration agreement which should help move
our operations forward...
http://www.sandiegouniontribune.com/news/2015/jul/28/keyhole...
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JoeJustJoe
Banned
Posts: 21045
Registered: 9-9-2010
Location: Occupied Aztlan
Member Is Offline
Mood: Mad as hell
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A fee only financial planner is going to take your money too, and they are going to take a lot of it. Sadly, most won't earn the money, and would be
hard pressed to beat a blind folded monkey throwing darts at companies on a dart board, and then having others invest in the stocks the monkey picked
by throwing darts.
Why the monkey does as good as professionals is explained by the " Random Walk Theory," and other theories about the market. The monkeys are also
often a lot smarter than stock brokers, financial planners, and other various names they call themselves these days.
Full commissioned stock brokers, are dinosaurs, there are not too many of them around anymore, but the ones that are still around, do OK.
Gone are the days that you call up your stock broker, and tell him to buy you 100 shares of Apple stock, or ask him to find a good stock for you. Who
wants to pay a $100 dollar commission, when you go to some place like a discount broker like E-Trade and buy that stock for less than $10 dollars.
For awhile there stock brokers, financial advisers, instead pushed fully loaded mutual funds which would come with about a 5% percent, and a small
maintenance fee. This was great for awhile, because the broker would sell you a mutual fund, that was professional managed, and he collected his
commission and spent the afternoon playing golf.
The public wised up on mutual funds too, and figured out, they could out and buy a "no load" mutual fund on their own, that did as well or better than
the "loaded" mutual fund. A "no load" mutual fund was professional managed, and the investor only had to worry about small management and others fees
that are usually under 1%.
So now stock brokers are financial advisers, financial consultants, and there are also financial planners, and they all pretty much to do the same
thing. They gather assets, and they want you to turn over all your retirement savings to them, so they could invest it for you in things like hedge
funds, if you're rich, or financial vehicles that look like hedge funds, but are really pretty much the same as mutual funds. These people also love
insurance products.
The financial planner hopes that you have at least $1 million dollars to invest with him, because of average his fee is going to be about 2%, and
that's a lot of money, and since the account is professionally managed, the financial planner is now going to go play golf, and go to a strip joint.
When he wakes up the next morning he will spend a few hours trying to reel in other fat cats.
Here is the problem besides the high fees. A typical successful financial planner, doesn't want clients with the typical 401K retirement of about
$80,000 dollars when they retire. I hear some advisers over at "Merrill Lynch" don't even want to talk with you unless you have about $1 million
dollars.
Most financial consultants really don't want to bother with an account of less than $100,000 dollars, because those kind of clients are often high
maintenance, and will be calling to take their money out because of some financial emergency or they will be calling when their account takes a hit.
They don't want you to interfere with their golf game, and strip club excursion.
So the middle class with a moderate amount of retirement savings, might have trouble finding good expert advice on financial matters, but the good
news is that if you do your homework, you could do as well or even better than the professionals who are always hard pressed to beat an index like the
S& P 500, and don't forget a monkey throwing darts, and picking stocks that way, also beats most professionals.
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AKgringo
Elite Nomad
Posts: 6004
Registered: 9-20-2014
Location: Anchorage, AK (no mas!)
Member Is Offline
Mood: Retireded
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Quote: Originally posted by bajalearner  |
I like this statement. Bob, can I use this? If yes, I'll give you credit for it. If no, I'll use it anyway and not give you credit for it. 
Great story too. Thx |
Originality is the ability to conceal your source.....and I'm not telling where I read that!
If you are not living on the edge, you are taking up too much space!
"Could do better if he tried!" Report card comments from most of my grade school teachers. Sadly, still true!
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Lee
Ultra Nomad
Posts: 3495
Registered: 10-2-2006
Location: High in the Colorado Rockies
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I have a feeling some here do not know what a financial advisor/planner is. If your ''advisor'' is also a stock broker, that's the wrong advisor.
My advisor charges by the hour. No sales, pitches, investment/money management, nothing. He's licensed in Colorado, MBA UCLA, BA in math,
Berkeley. Totally up front, high integrity. Charges about $200/hour. This is what he offers:
''I offer a broad range of financial planning and investment advisory services, including:
Current portfolio review and analysis
Investment recommendations for taxable and retirement accounts
Asset allocation recommendations, including alternative investments
Cash flow and budget analysis
Regular review of investment statements
Investment strategy for inheritance or other large sums
Review and selection of investment managers
Retirement planning, including retirement readiness and distribution strategy
Social Security optimization strategies
College education planning
Home purchase/sale and mortgage financing analysis
Review of real estate and other private investment opportunities
Life insurance and annuities review
Tax planning strategy for investments
Maximizing company stock options and benefits
Most services are offered on an hourly basis – please contact me for a full discussion of my fees, estimated time involved in rendering services, and
other questions.''
US Marines: providing enemies of America an opportunity to die for their country since 1775.
What I say before any important decision.
F*ck it.
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SFandH
Elite Nomad
Posts: 7084
Registered: 8-5-2011
Member Is Offline
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I think one thing is true when it comes to money.
The only thing harder than making money is keeping it.
[Edited on 8-7-2015 by SFandH]
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JoeJustJoe
Banned
Posts: 21045
Registered: 9-9-2010
Location: Occupied Aztlan
Member Is Offline
Mood: Mad as hell
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Now if I was shopping for a financial planner, I'd look for one that has a Certified Financial Planner( CFP) designation, and now it's pretty much
becoming a standard thing to have. If the financial planner, has the CFP, you know they passed a grueling 2 day national exam.
The stock broker, financial consultant test is the series 7, six hour test, which also isn't easy and takes a few months to study for and pass.
Of course, even with a CFP, they will have trouble out performing an index fund, or the monkey, although they will know something about insurance,
estate planning, and taxes, although with the last two, you might want to consider an CPA, or estate planning attorney, than a jack-of-all trades CFP
financial planner.
The only designation that really impresses me is the " Chartered Financial Analyst(CFA) these people are like the navy seals of investment world,
they are also the money managers of the large mutual funds and hedge funds, but they usually don't give retail investment advice,, but again 90
percent of these mutual fund managers with CFA's, they can't beat the S&P 500 index either, although a few of them do, and some of their hedge
or mutual funds are less risky than the S&P 500 index, which is still a stock index, and weighted average, and so therefore it carries risk.
Of course this is "Baja Nomad' where there are a lot of ex-pat on fixed income, and for those people they should learn to read and understand
"Morningstar" that rates and reviews mutual funds, using a star system in different mutual fund categories.
A dog, gets a one star, and a great mutual fund gets a 5 star ranking based on their performance, risks and rewards and other criteria. Of course
picking a 5 star ranked mutual fund doesn't guarantee success, but for sure I'd keep away from the dogs with one or two stars.
"http://www.morningstar.com/
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Alm
Ultra Nomad
Posts: 2725
Registered: 5-10-2011
Member Is Offline
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| Quote: Originally posted by JoeJustJoe | | ... the good news is that if you do your homework, you could do as well or even better than the professionals who are always hard pressed to beat an
index like the S& P 500 |
Definitely wouldn't waste time on financial planner. With 7 years investment horizon I am not even sure that index funds like S&P will work (much)
better than some 2.5% savings account. Another 6-years long recession could be just around the corner.
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tripledigitken
Ultra Nomad
Posts: 4848
Registered: 9-27-2006
Member Is Offline
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| Quote: Originally posted by Alm | [rquote=994736&tid=79794're. uthor=JoeJustJoe]... the good news is that if you do your homework, you could do as well or even better than the
professionals who are always hard pressed to beat an index like the S& P 500 [/rquote]
Definitely wouldn't waste time on financial planner. With 7 years investment horizon I am not even sure that index funds like S&P will work (much)
better than some 2.5% savings account. Another 6-years long recession could be just around the corner. |
I'm going to assume your 7 yr time horizon is until you retire. Your need to have your nest egg grow doesn't stop there. Limiting your upside return
to 2 1/2 % may not be the smartest plan. Just saying. If you expect to live at least 10-20 years most would advise at least 40% in equities. That
all depends on your ability to sleep with the financial decisions you make. By the way, whose offering 2 1/2% savings accounts?
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Kgryfon
Senior Nomad
Posts: 624
Registered: 1-27-2009
Location: East Bay, CA
Member Is Offline
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Umpqua, I'm in almost the exact same situation as you, except I'm a woman. Planning on taking the money and running in about 3 years, living off my
pension/401k until the first opportunity to collect my SS. Watched my mom sink into Alzheimer's and my dad from heart issues. Both dead now. Going to
do what I want while I still can. Maybe we can be roommates and split the costs 
I like to fish and have my own boat, but I'll be selling it when I retire and buying a new one wherever I land. I say go for it!
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Alm
Ultra Nomad
Posts: 2725
Registered: 5-10-2011
Member Is Offline
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Term Deposits.
I agree, something should be kept in equities. Not everybody can sleep well with those highs and lows though. "Safe" indices like S&P don't look
too well either. From 1998-1999 to 2013-2014 it's a roller coaster with deep lows and highs, and total growth for the period is flat. Investing not
in the very low and not in the high - you can't time the market - one would make about 2.0% annual in those 15 years. With potential to win maybe 50%
over that period. Or - lose 50%.
10 years isn't long enough these days. 20 years - maybe, but this would bring the guy into his late 70s.
Picking up a sure winner in stocks - good luck with that 
[Edited on 8-8-2015 by Alm]
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JoeJustJoe
Banned
Posts: 21045
Registered: 9-9-2010
Location: Occupied Aztlan
Member Is Offline
Mood: Mad as hell
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| Quote: Originally posted by Alm | | Quote: Originally posted by JoeJustJoe | | ... the good news is that if you do your homework, you could do as well or even better than the professionals who are always hard pressed to beat an
index like the S& P 500 |
Definitely wouldn't waste time on financial planner. With 7 years investment horizon I am not even sure that index funds like S&P will work (much)
better than some 2.5% savings account. Another 6-years long recession could be just around the corner. |
The only thing possibly wrong about this type of thinking, is that for at least the last six year now, we been hearing the stock market is not only
going to crash, but they said, the "sky was going to fall too! They said the FED, propped up the stock market with the stimulus and low interest
rates near zero, and so they said, it was just a matter of time the stock market was going to crash again, and there were going to be things like mass
unemployment, hyperinflation, and perhaps even locusts like were in the biblical times!
Now I'm not going to say these people were wrong, because clearly the dark clouds seemed to be on the horizon, but what they predicted didn't
materialized, not yet anyway. Maybe that financial tsunami, will finally hit around the same time as we get a new President in 2016, and we will put
all the blame on that new President.
So the problem was that if you listened to these warnings the last six years and sat on the sidelines, and put all your savings under your mattress.
You would have lost money, because you missed a great bull run in some of these last years.
This is why some financial planners and financial consultants are great. They can hold you hand, and tell you that they will be there for your
watching the storm clouds, and they will help you navigate the choppy waters, but when that financial tsunami, I doubt they will be able to help, and
just like 2007, most people suffered great losses on paper anyway.
So putting all your money in a bank CD, is risky too, because if the market doesn't crash, you'll miss out, and you also run the risk of outliving
your money in you stick all your savings in a bank CD that pays about a 1% interest rate if you're lucky.
And I do agree with your statement here: "something should be kept in equities," but again that would depend on risk tolerance and other factors.
[Edited on 8-8-2015 by JoeJustJoe]
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Alm
Ultra Nomad
Posts: 2725
Registered: 5-10-2011
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Joe, - it didn't crash completely. Still if you look at the S&P in the period that I mentioned - lasting 14-15 years, not 6 - there was a couple
of 50% drops. And the end result was flat for the period. So - it didn't crush in 15 years. And it did crush by 50% more than once, in that period.
Now it's up again for about a year. Nobody knows for how long.
Btw, some credit unions are paying 3% in CD.
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ehall
Super Nomad
Posts: 1906
Registered: 3-29-2014
Location: Buckeye, Az
Member Is Offline
Mood: It's 5 o'clock somewhere
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This is a great thread. I turn 48 next week and only plan on working another 9 years. Alot of interesting things to think about.
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umpqua
Junior Nomad
Posts: 29
Registered: 12-10-2006
Member Is Offline
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Hey, I'm back. I went to a Wilco show in Bend over the weekend and was offline for a while. I spoke to a cop in Bend and he told me "there's a lot of
beer in this town so be careful." Don't know why I thought that was so funny but it was and he damned sure was right....there IS a lot of beer in that
town.
I had a 40 minute convo with a financial planner last week. It didn't feel like he was trying to sell me anything. I gave him some basic information
and he ran some numbers and gave me a "rough" estimate of what my finances would be like in another 7 years. He seems to think that based upon
historical market performance, my past and projected earnings, etc that I will have approx. $40K annual in retirement income if I cash out at 63. I'm
going to take another run at it with him when I have next quarters statements in hand to get an even closer look.
This has been a great discussion. It's really sparked some thought for me and it appears that it is relevant with others as well.
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Lee
Ultra Nomad
Posts: 3495
Registered: 10-2-2006
Location: High in the Colorado Rockies
Member Is Offline
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| Quote: Originally posted by umpqua | I'm going to take another run at it with him when I have next quarters statements in hand to get an even closer look.
This has been a great discussion. It's really sparked some thought for me and it appears that it is relevant with others as well.
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I get 2nd hand reports from my wife who's met with our financial advisor. Think I recall part of that process is to look at monthly bills and that
determines how much it'll cost to live.
When someone comments that they're looking to live cheap in Baja inevitably someone comments that Baja isn't cheap. Guess I'd look at comparisons
-- cheap in comparison to what? LA? Aspen?
I fish every morning between Punta Lobos and Migrino and always think if I needed to live on fish alone, I could survive on minimal income. Oh,
and a friend has a farm where I buy veggies weekly which comes to about $10.
$40k in Baja, I think, will go a long way.
US Marines: providing enemies of America an opportunity to die for their country since 1775.
What I say before any important decision.
F*ck it.
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JoeJustJoe
Banned
Posts: 21045
Registered: 9-9-2010
Location: Occupied Aztlan
Member Is Offline
Mood: Mad as hell
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| Quote: Originally posted by Alm | Joe, - it didn't crash completely. Still if you look at the S&P in the period that I mentioned - lasting 14-15 years, not 6 - there was a couple
of 50% drops. And the end result was flat for the period. So - it didn't crush in 15 years. And it did crush by 50% more than once, in that period.
Now it's up again for about a year. Nobody knows for how long.
Btw, some credit unions are paying 3% in CD. |
I never said the S&P Index is safe, the only thing I said, is the S&P Index, beats about 90 percent of all Mutual funds, out there, and in the
same class.
But that statistic is like the homicides killings in Mexico, where some say 80% to 90% of all homicides are drug related. The numbers seem to vary on
the S&P 500, depending on who is crunching the numbers. So lets just say the S&P 500 beats most mutual funds, or other retirement accounts
out there.
Even in a bear market, it's rare for a strong mutual fund to lose half it's value, but the S&P 500, and just about all other stock funds lost
their shirt in 2008. One thing that makes the S&P 500 perform so well, and fall during times of a bear market, is it's a weighted average of
stock. So not all 500 companies that make up the S&P index are equal. The top 10 top stocks in the S &P 500 really drive the index, and many
of those companies are tech stocks. An Index fund is cheap too, with low management fees.
Since the S&P 500 is an index, it's also used to compared to other mutual funds, on both the performance and risks. They use something called the
"Beta" which is, " A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole."
So when a company has a beta over 1.00, the mutual fund is considered more risky, and also has more of a upside potential, and those with a beta below
1.00, fluctuate less, supposedly pose less risk, and lower returns.
So what a financial consultant might do, because older investors are Conservative, is put you into a Growth& Income, fund, that has companies that
been around for a long time, and also pay a dividend which is income.
Growth & Income funds are supposed to help you weather a financial storm, but their performance usually lags the S&P 500, and other Growth
stock mutual funds, but in a real bad bear market, these so-called safer investments fall too just like everything else, with the exception is a few
utility stocks, and commodity stocks like gold funds.
So this is why I personally, just stay in the S&P 500, and other sector mutual funds, although I have about 25 percent in bonds, which really
should be higher, but I don't have much risk aversion.
3 percent CD in a credit union, not bad! I see most banks offering 1%, so do you know if the CD's are FDIC insured, and what's the deposit term?
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Sweetwater
Senior Nomad
Posts: 915
Registered: 11-26-2010
Member Is Offline
Mood: chilly today hot tomale
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Just catching up here after a weekend ride....my first overnighter this year.....and just learned of another of the high school gang who passed this
last week at the ripe old age of 60. Apparently he had some prostate ca removed and collapsed at home a few days later. Nobody around to rescue him.
So, in addition to not being able to predict longevity, I just want to comment on the Morningstar mutual fund ratings....they're not at all predictive
of future earnings. Specifically, I'll point to the Pimco funds which have a 5 star rating on their growth fund but it got saddled with some of the
leftover bonds (big scandal to read about-Bill Gross). The fund still carries it's 5 star rating but has a horrible YTD performance.
And Keith Richards carries on......
BTW, I pulled retirement a couple months shy of my 55th B'day....30 years with one employer is more than enough, both for me and them.....good thing I
stuck to the retirement program that was offered in 1980.....it got morphed twice and if I had ever cashed out (to buy a car like some guys), I would
not have made it out.....
Everbody\'s preachin\' at me that we all wanna git to heaven, trouble is, nobody wants to die to git there.-BB King
Reality is what does not go away when you stop believing in it. -Philip K Dick
Nothing is worse than active ignorance. Johann Wolfgang von Goethe(1749-1832, German writer, artist and politician)
When choosing between two evils, I always like to try the one I\'ve never tried before. - Mae West
Experience is what keeps a man who makes the same mistake twice from admitting it the third time around.
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