Tag: investments
There are 20 entries that are tagged investments. Now displaying reults 1 - 20.
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Two Styles, One System: Communication and Money
Posted on September 24, 2008 by Him
Laura is a twenty-something woman out of school and happily married. Eliminating credit card debt has energized her to knock out her car loan and student loans. She blogs at Green Panda Treehouse about reducing debt, building savings, and working with her husband on finances, as well as her successes and failures.
Many people worry about discussing finances when they have different views. Avoiding financial talks can lead to disaster in relationships. It can build resentment and escalate into fights that tear down and could lead to divorce. Money isn’t the root of the problem, it’s lack of communication.
If you share
openly and honestly your thoughts and feelings with your fiancé or spouse, you
are missing out on a great opportunity. Relationships are mutually defined and
both need to share to make it work.
Here are a few
examples of how my husband and I handle money in our
relationship. Is it
perfect? No. Does it work? Yes, because we’re
willingly to talk about our common thoughts and our differences.
Budget
We
keep a Google Spreadsheet to display and organize our monthly
bills.
This allows us to see what our joint bills are and gives a snapshot view of our
individual accounts. I can see how much he puts in his 401(k) and he can see my
Roth IRA deposits.
He’s
great at setting up the spreadsheets and I love playing around with them. I
Goals
Some
of my personal goals are to pay off my car loan and my student loans. We
also set aside money in our budget for saving. We’re working together: our
‘extra’ money goes to joint savings and to paying down the car loan.
Investing
My
husband puts aside money for retirement, but is only semi-interested in
following his accounts. When he changed jobs and was rolling over his old
401(k) to an IRA, he asked me to look at investments to put them into.
I
get a kick out of learning new things about index funds, stocks, ETFs, etc.
While I explained why and how I came up with my suggestions, he just agreed and
made the changes. He’s more conservative with his money and his investments are
a reflection of that. I tend to invest more in international funds than him,
but the volatility is within what I can handle.
Credit Cards
I
have two credit cards (I’m closing one) while my husband has no credit cards.
After learning the hard way about high credit card interest rates, I’ve paid my
debt. I generally pay it off each month.
I
use credit cards mainly for convenience and rewards. I normally keep it at home
with me. If we go on trips, I use my credit card. He is very adverse to debt
and has not found a credit card that ‘he likes yet’. He generally saves until
he can buy it, like his car.
Paperwork
I’m
the paperwork queen. It basically falls to me to organize bill payments and
documentation requests. Due to our basic system, it doesn’t take up to much
time (5-10 minutes). If there are any issues we’ll discuss in the evening.
I
show him where I keep the files, in case something happens and he needs quick
access.
Conclusion
It’s an
imperfect system to be sure, but we make it work. The best advice we received? Talk it out and figure out what’s right for
you two.
Talking
it out can help you to understand your partner so much better and help you to
build a stronger foundation on future communication, not just with money.
Remember also that you’ll discuss these issues as your circumstances change.
It’s not set in stone.
Keeping
each other in the loop is essential to a successful marriage. Two different viewpoints can lead to a
stronger system.
Our 2007 Goals Status, Part 4: Develop The Joint Retirement Portfolio
Posted on December 26, 2007 by Him
This is part 4 of our retrospective look at our 2007 goals. Here's part 1 (Roth IRAs), part 2 (Student Loans), and part 3 (credit cards).
This year we sought out to develop the foundation for our joint retirement portfolio. This was quite a daunting task, and we had to break it up into a few pieces to make it manageable. Even though it has been over a year since the first time we've first decided to tackle this task, we feel that there is much to learn and do.
Here's a recap of what we've done this year to get closer to develop our joint retirement portfolio:
1. We determined how much money we'll need to save up for in order to retire.
2. We laid out what our portfolio looked like back in January 2007 and reviewed what was wrong with it.
5. Finally, we looked to see our progress and assessed what steps to take next.
Now, the plan is to learn more about investing in order to fine tune the numbers. We're going to reassess our allocation semi-annually and readjust the allocations if necessary.
Status: Mostly completed; needs tweaking.
Planning the Joint Retirement Portfolio: December 2007 Update
Posted on December 21, 2007 by Him
This is part 5 of our Planning the Joint Retirement Portfolio series. See what we went out to do here, how we got our magic number (part 1), assessed our portfolio back then (part 2), the big picture of our portfolio (part 3), and then a detailed plan allocation (part 4).
It has been almost a year since we've started the joint retirement portfolio series, and almost 6 months since we've last looked at our joint retirement portfolio. Since then, we've done many changes to get it to our model portfolio. We've sold some, bought some, and cleaned things up a little. Our current asset allocation is depicted in the pie chart below.
Compared to our model portfolio, we're still not quite there yet.
When we first started this exercise, we showed you what was in our portfolio. Here are the detailed holdings in our portfolio as of today.
| Fund | Ticker | % of Portfolio |
|---|---|---|
| TOTAL | 99.9% | |
| Roth IRA (Vanguard) | ||
| Ameren | AEE | 0.9% |
| Boeing | BA | 0.5% |
| General Motors | GM | 0.6% |
| Northern Trust | NTRS | 1.3% |
| Prologis | PLD | 1.0% |
| Vanguard Total Bond Market Index | VBMFX | 13.7% |
| TOTAL PERCENTAGE OF PORTFOLIO ASSETS | 18% | |
| Roth IRA (Fidelity) | ||
| Fidelity Real Estate Investment | FRESX | 7.7% |
| Fidelity Small Cap Value | FCPVX | 8.5% |
| TOTAL PERCENTAGE OF PORTFOLIO ASSETS | 16.2% | |
| 401(k) | ||
| AllianceBernstein International Value Fund (A) | ABIAX | 11.7% |
| Dreyfus Premier S&P STARS Opportunity Fund (R) | DSORX | 7.1% |
| Fidelity Advisor Small Cap Fund (T) | FSCTX | 6.9% |
| Neuberger Berman Socially Responsive Fund (Investor) | NBSRX | 2.7% |
| STI Classic Small Cap Value Equity I | SCETX | 11.2% |
| TOTAL PERCENTAGE OF PORTFOLIO ASSETS | 39.6% | |
| SIMPLE IRA (Vanguard) | ||
| Vanguard Target Retirement 2045 | VTIVX | 26.1% |
| TOTAL PERCENTAGE OF PORTFOLIO ASSETS | 26.1% | |
The remaining 0.1% is cash that is floating around in some of the accounts.
We made most of the changes to our portfolio last summer. We now plan on reassessing our target allocations every six months or so, and then adjusting if necessary. Much of the difficulty of getting a cohesive portfolio is balancing the available account in each of our brokerage accounts, namely Her's 401(k). Another obstacle is the minimums required to invest in many mutual funds at Fidelity or Vanguard. In order to get around that, we're currently looking at ETFs; that is not looking like an attractive option due to the high trading fees relative to our balances at Fidelity and Vanguard.
We welcome your comments and suggestions on our current portfolio.
Bad Time to Rebalance Our Retirement Portfolio?
Posted on August 16, 2007 by Him
One of our goals this year was to "come up with a retirement action plan that includes correct asset allocation, periodic re-balancing, and a re-assessing how much we're socking away." We've gotten pretty far with that, as we've written a few articles that detail our progress. We're pretty happy with the plan we drew up, but we haven't done much (read: we've done nothing) to get our current asset allocation to what our target is.
Since the social and work commitments are slowing down at the end of this month, we thought we'd finally sit down and coordinate our retirement accounts to get our target asset allocation. But with the stock market doing some kooky things as of late, we're not so sure that's a good idea.
Should we rebalance our portfolio now, or should we wait out the current market volatility? If we wait it out, isn't that a form of timing the market? When do you think it would be a good time to rebalance? Does this even matter considering we're going to let these investments sit for 20+ years?
SIMPLE IRA, Meet Vanguard
Posted on May 22, 2007 by Him
I've written in the past about my dissatisfaction with my SIMPLE IRA plan administrator. In the past few months I decided to move my hard earned dollars elsewhere. And by elsewhere I mean Vanguard.
As I stated before, our plan administrator is also the guy who manages all of the money for the higher ups in our company...the same higher ups that I had to get sign the paperwork so that I can transfer my funds. Tricky.
I've decided that I would approach this in the most professional way that I can think of: just be straightforward with everyone. Here's how it all went down.
1. Research new home for SIMPLE IRA. I would have loved to have moved to Fidelity since I already have a Roth IRA with them, but they don't take "orphaned" accounts; I'd have to get everyone in my company to go along with. The other choices were T. Rowe Price, Schwab, and Vanguard. I ultimately chose Vanguard because I like the idea behind low cost index funds.
2. Call broker. Notify him that I'll be changing brokerages and to expect an asset transfer form. Ask him to close the account as soon as the asset transfer is completed. Of course he didn't sound pleased when I told him. He asked why I was moving my funds, to which I replied, "I just like doing this stuff myself." And by that I mean I don't like getting whacked by your fees. Nothing personal, dude.
3. Approached higher up who needs to sign paperwork. Explained that I'm moving SIMPLE IRA. Handed over paperwork. Smooth transaction.
4. Wait.
5. Account opened!
6. Mail in asset transfer form. Wait.
7. Assets are transfered! Woo!
A few months ago I listed the contents of both of our investment portfolios. We've made some changes, but the biggest one is the liquidation of JCLGX and the acquisition of Vanguard Target Retirement 2045 Fund (VTIVX). I did have to take a 1% hit on the assets I had in JCLGX for less than a year; I minimized this by asking my old broker to stop putting money into that fund way back in February. Thus, about $4,000 was subject to that fee - I can live with a $40 hit now to save in fees and expenses down the line.
The only thing that I don't like about having my SIMPLE IRA with Vanguard is their $25 fee for each mutual fund you have. This fee can NOT be waived by signing up for the e-service package, but can be waived once I have more than $100,000 total in all Vanguard accounts. Fortunately, the minimum balance fees are waived for funds in a SIMPLE IRA.
Now that this has all been completed, I'll revisit our "Planning the Joint Retirement Portfolio" (Part 1 Part 2 Part 3) series. It's only been on hold for the past 3.5 months.
Planning the Joint Retirement Portfolio: Slicing Up The Allocation Pie
Posted on June 01, 2007 by Him
This is part 4 of our planning the joint portfolio series. To see how we got here, read this intro post, then read part 1: The Magic Number, part 2: Currently, It's A Mess, and finally part 3: Large Scale Allocation.
In the past four months since the last post in the series, we were mostly waiting for my SIMPLE IRA transfer from my old brokerage to Vanguard. Since that transaction is now complete, we have had some time to talk about the finer points of our retirement investment portfolio.
In that timeframe we also read a few good investing books. Her read A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing
In order to come up with a diversified retirement portfolio, we had to know ourselves a little bit. We know that we don't plan on retiring for another 30+ years, we are buyers and holders, and we can tolerate a lot of risk right now. If it were a perfect world and Her and I had one brokerage company that handled our accounts, the breakdown of our asset allocation would be as follows:
We're going to have a heavy investment in small-caps, leaning towards value stocks. I know, I know, past performance isn't necessarily an indicator or future performance, but 50+ years of data is pretty compelling. The large- and mid-cap stocks will probably be covered by investing in total stock market index funds. In fact, we're going to try and get most of our portfolio in low-expense index funds. Yes, REITS are still there, mostly because the companies in many REIT index funds manage commercial properties and not residential housing. And of course good ol' bonds, just in case the market goes splat.
There you have it. Now all we have to do is implement it. Your comments are welcome.
Should We Diversify Brokerages?
Posted on March 26, 2007 by Him
Our retirement holdings will soon be with three different brokerage companies. Her's 401(k) is stuck with who manages it for her company, but the Roth IRAs can all be moved from one brokerage to another. The question is, why would we want to?
I bring up this question because I'm in the process of moving my SIMPLE IRA (here's why I'm doing this) to Vanguard. Her's Roth IRA is at Vanguard, mine is at Fidelity. I originally wanted to move my SIMPLE IRA to Fidelity to have all of my accounts in once place, but they don't allow "orphan" (just me, not my whole company) SIMPLE IRA accounts. After a little research, I found out that Vanguard, T. Rowe Price, and Schwab all allow orphaned accounts. Since Her's Roth IRA is already with Vanguard, I decided to keep everything streamlined and go with them. I never even considered other places to move my SIMPLE IRA such as a discount broker.
The main reasons I decided to move money over to Vanguard is that I wanted to take advantage of their low-cost index funds and simplify our financial lives. I can't help but wonder, is the grass greener on the other side? Am I missing out on anything by keeping our retirement funds in only a few places? What reasons would I want to have multiple brokerages?
Planning the Joint Retirement Portfolio: Large Scale Allocation
Posted on February 09, 2007 by Him
This is part 3 of our planning the joint portfolio series. To see how we got here, read this intro post, then read part 1: The Magic Number and part 2: Currently, It's A Mess.
Lately we've both been pretty busy with our work and social lives, leaving little time to discuss the finer points of our joint retirement portfolio. What has been quite a boon to us are automatic deductions from our paychecks that continue to plow money into our retirement accounts.
When we do have the time to talk about asset allocation, the conversation usually goes like this:
Him: Hey, our investment portfolio is a little off our target allocation.
Her: So what is our target allocation?
Him: I dunno, 80% stocks, 20% bonds?
Her: 20% bonds? What are you, 60-years-old and neutered? 100% socks!
Him: Your face is a bond.
...and we end up not doing anything.
This really boils down to how much risk we're willing to take. Here are the factors that we're taking into consideration when determining our risk: we're fairly young (mid 20's), have 30+ years until we retire, we're buyers and holders, and while not pleasant, we have weathered out the bad times that our (limited) portfolios have been through.
Without further ado, here's our large scale allocation at least for the next few years:
Yes, 90% stocks and 10% bonds. In the next post of this series, we'll slice up the pie into more specific asset classes.
SIMPLE IRA - Should I Stay Or Should I Go?
Posted on January 24, 2007 by Him
There have been numerous times on this blog that I have expressed dissatisfaction towards the investment options that are currently offered for my SIMPLE IRA plan. A few weeks ago I incorrectly stated that I could only invest in loaded fund of funds; on further review of all of the products, there was a mix of loaded mutual funds with pretty good expense ratios and loaded fund of funds with high expense ratios. Personally, I don't like paying loads or excessive funds.
SIMPLE IRA plans are different than 401(k) plans in that an employer can either require its employees to deposit their contributions at an employee selected financial institution (using Form 5305-SIMPLE [PDF]), or have its employees select to designate their own financial institutions for receiving contributions (using form Form 5304-SIMPLE [PDF]). My employer has chosen the latter, with us being able to choose our own financial institution for our contribution.
Not everyone at my company understands this portability of our funds, with due reason. Our company brings in a guy from a brokerage firm to educate (sell?) new employees about the SIMPLE IRA. He's brought in for one reason: he manages the money of our higher ups. Admittedly, when I started participating in the plan, I thought that this guy and his brokerage firm was the only way to go. I did notice that we were given the form to choose our own financial institution, but no one else in the office was able to help, so I signed up with the guy and his brokerage company (a downfall of working at a small company as we have no HR person).
In the year and a half since I have had my SIMPLE IRA, I've learned that there are a few options with my plan:
1. Pick up and move. There is no penalty for transferring SIMPLE IRA assets from one financial institution to another. So far I've looked at moving my SIMPLE IRA to either Vanguard, T. Rowe Price, or Schwab, on the basis of their reputations and investments. The problem? The 1% deferred sales charge on all contributions less than a year old, which would really only be a measly $60 or so. Also, I don't want to burn any bridges with the high-ups by snubbing their guy of my business.
2. After two years in the plan, transfer assets to a Traditional IRA. On a yearly basis, accumulate money in my SIMPLE IRA, then transfer funds (see how this works at Barry's blog) The problem? The financial guy recommends class C shares with a deferred sales charge after that is waived after one year, of up to 1%. I don't want to lose out on 1% of my assets every year. Alternatively, I could just let my contributions sit in a money market account and let it earn interest.
3. Stay where I am. The problem? I don't like paying for loaded funds. Also, it was never disclosed how much we're paying this guy to "manage" our money. Fortunately, after looking over my statements it seems that it is a reasonable $35 a year.
I am leaning towards option #1. I'd like to hear your thoughts.
Planning the Joint Retirement Portfolio: Currently, It's A Mess
Posted on January 16, 2007 by Him
For those of you keeping track (and who isn't?), this is the second step of our Planning the Joint Portfolio series. Here's step 1 if you missed it.
A few weekends ago we went through the process of writing down all of our retirement investments down in one place. As our net worth statement says, we currently have our retirement funds spread across four accounts: my SIMPLE IRA, my Roth IRA, Her 401(k), and Her Roth IRA. The investment holdings in all of our accounts are as follows:
| Fund | Ticker | % of Portfolio |
|---|---|---|
| TOTAL | 100% | |
| Roth IRA (Vanguard) | ||
| Ameren | AEE | 1.42% |
| Boeing | BA | 0.76% |
| General Motors | GM | 1.06% |
| Northern Trust | NTRS | 1.56% |
| Prologis | PLD | 1.57% |
| Vanguard Prime Money Market Fund (Cash) | VMMXX | 1.05% |
| TOTAL PERCENTAGE OF PORTFOLIO ASSETS | 7.42% | |
| Roth IRA (Fidelity) | ||
| Advanced Micro Devices | AMD | 2.59% |
| CVS Corporation | CVS | 3.94% |
| General Electric | GE | 7.11% |
| Northern Trust | NTRS | 2.59% |
| Pfizer | PFE | 2.20% |
| Aston/TAMRO Small Cap N | ATASX | 7.52% |
| Fidelity Cash Reserves (Cash) | FDRXX | 1.54% |
| TOTAL PERCENTAGE OF PORTFOLIO ASSETS | 27.49% | |
| 401(k) | ||
| AllianceBernstein International Value Fund (A) | ABIAX | 16.74% |
| Dreyfus Premier S&P STARS Opportunity Fund (R) | DSORX | 9.84% |
| Fidelity Advisor Small Cap Fund (T) | FSCTX | 9.31% |
| Neuberger Berman Socially Responsive Fund (Investor) | NBSRX | 4.15% |
| TOTAL PERCENTAGE OF PORTFOLIO ASSETS | 40.04% | |
| SIMPLE IRA | ||
| John Handcock Lifestyle Growth Fund (C) | JCLGX | 21.19% |
| Cash Reserves (Cash) | - | 3.85% |
| TOTAL PERCENTAGE OF PORTFOLIO ASSETS | 25.05% | |
Running our total retirement investments into the Morningstar X-Ray tool yields this additional information about our overall portfolio:
You can see here that as for our total investment we are pretty much all in stocks, with the only exposure to bonds being primarily in JCLGX. In our stock holdings, we are weighted very heavily in large cap stocks. A lot of that is due to our individual stock exposure. All of those stocks were bought when we were in college and didn't know much about investing. While we knew little about Roth IRAs at the time, we did know that it was a relatively safe place to try and learn about investing.
After looking at the damage we realize that we have much to work on. The next post in this series will tackle how much risk we want to take on to get where we want to go.
Fund of Funds - Your Thoughts?
Posted on January 03, 2007 by Him
Ah, the fund of funds. I was introduced to this gem of an investment when I was eligible for my SIMPLE IRA at my job.
What is it? It is exactly what it says it is, a mutual fund that invests in...funds. (How about a Wikipedia definition? Or an Investopieda one?) Many funds that we already know and love are funds of funds. They include:
Hedge Funds - Those get-rich-quick funds that don't have to disclose a damn thing about what they're invested in and only allow people with mondo cash invest in them.
Target Funds - Those fancy investments that reallocate your holdings from more risky to less risky over time to your target retirement date.
Lifestyle Funds - Attempt to achieve a specific asset allocation within the fund usually determined by whatever adjective describes the fund, and rebalances to remain at that allocation. Example: "Aggressive Growth" may invest in 100% stock funds, while "Balanced" may invest in a 50/50 stock/bond fund mix. Let me wax poetic about my experience with these kinds of funds.
Currently, I am only invested in a "Growth" lifestyle fund in my SIMPLE IRA (one of the reasons why we're tinkering with our retirement portfolio), which is invested in 80% equities and 20% fixed income. Over the past year, it has a total return of 12.57%. Not bad.
When it comes to figuring out how this investment fits in with the rest of our retirement portfolio, I had to dig a little deeper. According to the prospectus, the fund can be invested in any number of funds that are listed in over 8 pages. How many are in my fund of funds? At the time of this writing, my glorious fund of funds is currently invested in 43 different mutual funds. They range from all asset classes, making it difficult to see what else in our portfolio may be lacking.
Wait, 43 different funds? You know what that means?
Oh yeah, I'm paying 43 different funds worth of expenses. Well, not really, but it is to the tune of 2.25%. Someone has to pay for all of those fund managers' kids' college tuitions. Not only that, but this fund is loaded! Class C shares baby, with a 1% deferred sales load if I sell before I've had them a year. Apparently, these funds of funds didn't have to fully disclose all of their fees, but that should be changing. Not all funds of funds have expense ratios this high - target funds are usually on the low side.
I know what you're saying. "So, Him, if these loaded fund of funds suck so badly, why are you invested in it?"
Because my SIMPLE IRA plan administrator only offers loaded funds of funds, that's why. I'm currently plotting on how I can best change where I have my SIMPLE IRA. We'll see how that goes.
REIT 'Em and Weep
Posted on December 18, 2006 by Her
I purchased 6 shares of Prologis (PLD) Real Estate Investment Trust (REIT) on 10/15/2003 for $36.89 per share. Today it is worth $62.18 per share.
This is an increase of over 68%!
I first learned about REITs during a real estate class I took as an elective in college. A REIT representative came to our class and explained what a REIT is. A REIT is an investment company that manages a portfolio of real estate (usually large buildings like office and hotel towers, not single family homes) to earn profits for shareholders. He also hyped his company's REIT as a "great investment!" This piqued my interest. Later I researched his company and discovered that it was probably not the money-maker he claimed it was. But during my research I found Prologis. It had very good projections and seemed to be managed responsibly, so I invested. I am very pleased with the performance of this investment. I am hoping that it will eventually split shares as it seems to be heading pretty high in price.
Planning the Joint Retirement Portfolio
Posted on December 08, 2006 by Him
A few months ago, Her posted about the idea we had of investing into our retirement accounts as if it were one retirement portfolio. Great idea, right? Let's pool our retirement money and fix our allocation and goals as one. Super-duper. Yeah.
Well, since then, we've done nothing to go forward with that plan. We have been investing into our own retirement accounts not taking into account the larger picture. But looking at our monthly net worth statements, we haven't been doing too badly. That doesn't mean that we couldn't be doing better, or that our current allocation may set us up to do much worse.
Over the next month or so, we're going to be doing some research and taking action on a step-by-step basis on this whole retirement thing. I'm thinking it may look a little like this:
1) Set up retirement goals, a la the magic retirement number.
2) Put all of our retirement accounts on the table, and figure out how we're doing, and what we're invested in.
3) Figure out the large scale allocation, i.e. how much to put into stocks and bonds. I guess this could also fall into the category of finding out our risk tolerance.
4) Within our stocks/bonds aloocation, decide how we will allocate our stocks into different market caps and sectors, and the same for bonds.
5) Educate ourselves about different investment vehicles. Sure we know the basics of mutual funds, index funds, and the like, but I personally don't know much about bonds, or about the inner workings of funds, or why I'd want to pick an indexing ETF vs. an index fund. I have no idea what I just wrote.
6) Select investments or rebalance holdings that we currently have.
7) Sit back and let the market do its thing, and reassess every quarter or semi-annually.
Steps 1-3 are pretty straightforward. Step 5 is the daunting one, but it will be good for us as it will allow us to expand our knowledge of investments so that future decisions will be much easier.
Hopefully, by the end of the year we'll have a rockin' portfolio.
Where NOT to Ask for Financial Advice
Posted on July 27, 2006 by Him
Recently on Slashdot, a reader asked this question:
"I am a rising junior in college and decided to take out loans to cover all my costs so I could graduate with money in the bank. My tuition bill is minimal as I have a nearly full ride, but living is always expensive. With that said, I feel like my thousands sitting in the bank could be doing work for me instead of collecting dust till the day I graduate. I have been researching how I could best invest my money so I have immediate access to it if needed, but still do better than a mere savings account. There seems to be a lot of mixed advice and some obvious scams out there. So I ask Slashdot, what is the best plan for a college student to do with his money?"
Of all places to ask a question like this, why on a tech oriented website? I don't ask computer advice from a financial planner.
Some of the comments surprised me with suggestions of frugality, as I assumed the audience was a tech-savvy gadget-hungry kind of people. There's a lot of good advice, but then there's also a lot of bad advice.
What would your advice to this kid be?
Investment Mystery Update
Posted on June 29, 2006 by Her
Thanks to our readers, I have been able to solve (partly, anyway) the mystery of an investment my grandmother set up for me.
Reader Claire (of Tired But Happy) commented,
I can see how you would want to avoid approaching your grandmother. Another idea would be to just call the brokerage firm. You wouldn't even necessarily need to speak to your g-ma's broker.
Great idea, Claire! I found the brokerage's phone number online and called it. I got the automated system which prompted me for my social security number. I punched it in, figuring my gig was up. But it accepted it, and prompted me to set my new password. I punched that in and was immediately offered to "Push 1 for account information." I did!
Since I didn't speak directly to a broker (I am trying to be as discreet as possible), I only got the basic information. The account is worth around $12,000 with the assets invested entirely in the Franklin Templeton Utilities Fund Class A (FKUTX). There have been no redemptions, transfers, exchanges or purchases. The system listed three recent distributions, each about $90, and said they were reinvested.
So, some of my basic questions have been answered. I now know how much the account is worth, what sector it is invested in, and how actively it is being managed.
Some questions are still unanswered. Most baffling is why it is invested in an income fund if my grandmother isn't taking the distributions as income.
Now what? There's the old adage, "Don't count your eggs before they hatch," and I'm pretty sure this account counts as an unhatched egg. Since my grandmother has never spoken of the account I suppose she may be counting on it as an emergency fund for herself. This is all fine with me. The most important information I have gained from all this is that I now know I am (potentially) over-invested in energy utilities. Without counting on her money specifically, I can "work around" it in regards to my retirement investments. I hold an energy stock in my Roth IRA (Ameren Corp, AEE), and surely own stock in energy utilities in the mutual funds in my 401(k). I am also over-invested in income funds. In addition to the FKUTX fund I also have shares in MFS Research Bond Fund A (), another income fund. At my age my portfolio should be weighted more toward growth than income. So my plan now is to dump these kind of investments in my retirement accounts and purchase more large cap mutual fund shares instead. Him disagrees with my logic, believing I should pretend I don't know about the possible windfall. What do you think?
Identify This Investment
Posted on June 19, 2006 by Her
I need help to identify a mystery investment.
My grandmother is a wealthy woman who has always had access to professional financial advice. About twenty years ago she set up some sort of estate plan that involved her children and grandchildren, including me. An account was set up for each of us. She has never spoken of it to me, but I am aware of its existence because I have been paying taxes on it every year. Now that I am an adult, and would like to have an accurate understanding of my finances, I am trying to identify this investment.
Here's what I know:
The investment is in her name, and I am also identified in some capacity. The investment earns around $300 a year in dividends and these are withdrawn by my grandmother. The dividends have been pretty constant, leading me to believe that the account value is also pretty stable. I pay the taxes on the dividends every year. I know that my grandmother had a good financial planner who may have helped her use some complicated or rare investment strategies or products. I have passed all the "milestone" adult birthdays, such as 18 and 21, without her mentioning the account to me, so I now believe it is meant to transfer to me after her death. However, she did transfer ownership of my parents account several years ago. My parents liquidated the account and paid off about $20,000 in debt. (My parents don't know much about finance and don't know what kind of account it was.)
Here's what I suspect:
I know that you can use a "charitable remainder trust" to make a donation to a charity, whereby you get the tax deduction for the gift but you get to hold the assets and profit from the gains until your death. I suspect she may have set up something similar for us.
Why not just ask grandma about it? Because I love her and respect her. If she wanted to discuss it with me, she would have. I think it would be in very poor taste to inquire about what I now believe is part of her will. On the other hand, I feel that I have a right to know why I am paying my grandmother's taxes every year. So rather than ask her, I am asking all you educated personal finance bloggers to help me solve the mystery discreetly.
I want to know...
What kind of investment is this? How much might it be worth? How might this affect me (with taxes and other regulations) when I do become the owner of the account? Is this an investment I could hold and grow or something I would have to liquidate upon receipt?
What if I Had Invested?
Posted on May 13, 2006 by Her
Ever wonder how well you would have done if you had purchased a stock before it became hot? Well, there's a free online calculator at Sharebuilder called "What If I Had Invested?" that can tell you! I found this by accident yesterday (I don't have a Sharebuilder account) while I was looking up some other information on investing. The cool thing is that you don't have to have a Shareholder account to use the calculator tool. You just enter the stock symbol, the date you wish you had invested, and how much you wish you had invested. You can customize other data as well, such as if you had reinvested the dividends or not.
I purchased Boeing (BA) on September 12, 2001. Too bad I could only afford two shares!
Financial Milestone Achieved!
Posted on April 19, 2006 by Her
Today, for the first time in my life, the total value of my investments (Roth IRA, 401K and ING Direct Savings) surpassed $10,000! I track these accounts in an Excel graph every day but it was still a big surprise to see it cross the $10,000 mark. For all those who have commented on our blog that we aren't walking the walk as much as we talk the talk...well, stuff it. I am $10,000 richer than I was 18 months ago, and richer than I have ever been before. I feel like I won the lottery!
How I accomplished this goal:
• I contribute 6% of my salary to my 401K. My employer matches 40% of my contribution.
• I bought a few shares of a few stocks when they were at rock bottom. For example, I bought shares of Boeing shortly after 9/11. I bought shares of GM the day it was downgraded. The Boeing has done great, the jury's still out on GM.
• Every Saturday after we pay bills, part of what's left goes into my ING Direct account. Most monetary gifts also go straight in.
Open For Debate: Joint Portfolio
Posted on April 19, 2006 by Her
We have been managing our money in a joint checking account for a year with much success, and this week He broached the idea of a new joint venture for us: the Joint Portfolio. Up until now we have each funded and managed our own retirement accounts. He has a Roth IRA that was a gift from his parents and a SIMPLE IRA at work. I have a teensy tiny Roth IRA that I funded myself while in college and a 401K at work. When he suggested we might assess our combined portfolio to see if we are diversified and balanced as a whole, I thought it was a great idea. We discussed our similarities: We are both fairly aggressive in our investing strategy, make approximately similar incomes, have a similar amount invested, and are the same age. We think that this makes us good candidates for a Joint Portfolio. It would be nice to see all our investments at once and make sure that we are balanced correctly. It is probably going to take an entire afternoon and Excel to get it done, but I think it will be a good exercise.
Doe you and your significant other make any attempt to manage your retirement accounts as one portfolio? Any suggestions for us?
Stocks For Babies
Posted on March 23, 2006 by Her
After reading Laws of Finance's post, Starting Them Off Young today I was curious enough to do some research. LoF wrote a pretty persuasive piece on why stock is a great gift for babies and children. My cousin just had a baby last weekend and we haven't yet bought a baby gift, so this sounded like a really innovative idea. I googled "buy stock for baby" and lo and behold, someone has created a business to do just that. www.oneshare.com sells stocks as gifts. You purchase one share in your recipient's name (for gifts to children, their parent must be named as a joint owner) and receive one stock certificate, matted and framed, with an inspirational message. Some of the stocks for children include Pixar, Disney, and Dreamworks. They sell about 150 different stocks in all. The concept is really fun, but it's also pricey. You pay the going rate for the share of stock, plus a $39 fee, plus around $50 for the frame. This puts the total price of a $25 share at around $115. It's a good thing the kid has plenty of years for the stock to gain value, because it's going to take until they're 105 just to break even! In addition, high-risk/high-return stocks such as small cap companies aren't offered by oneshare, as they deal in popular large cap stocks. It's highly unlikely that a single share in a large cap company could become a golden ticket to wealth. So really, these kinds of gifts are more of a novelty than a serious investment.
However, this could be a fantastic investment for two other reasons.
The stock certificates are often lavishly illustrated with characters from the company. I've heard that in some cases these "collectible" certificates can be worth more than the stock they represent. A particularly rare certificate could end up increasing in value.
The other way the certificate could be of value is as inspiration. If the parents of the child hadn't considered making investments in their child's name, this could be a fun push in that direction. And of course, the framed certificate could inspire the child to take an interest in finance and lead to life of fiscal responsibility. Now that's a good investment!
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