Client wants pension planning right before the deadline!

[sea-tax]

About my $2,000 IRA sheetrock hanger:

(1) His bank CD interest isn't doing him any good.
(2) He doesn't have the time or skill to buy/sell individual stocks.
(3) The "blue chip" stocks cost too much for him to get a base in those.

Soooo...do you know of any good mutual funds that invest in small-cap (is that the right term?) stocks that cost around, say $20 per share, which his $2,000 would buy him a hundred shares of?

If you can't say (rules and all), then never mind and thanks anyway. Sorry for getting you mixed up a while ago -- I was thinking about that quote (but, you could do worse than get mistaken for him -- he's a pretty good ole boy, as are you).

Personally I like American Funds, Oppenheimer funds , franklin templton funds and a few others. Specifically I could not say for your client with out knowing his situation in and out, ie: risk and suitibility requirements.

One more reason you should go get the proper licenses who better than you to help your client.

[JoshinNC]

I also like American Funds

Personally I like American Funds, Oppenheimer funds , franklin templton funds and a few others. Specifically I could not say for your client with out knowing his situation in and out, ie: risk and suitibility requirements.

One more reason you should go get the proper licenses who better than you to help your client.

All of my clients are in American Funds, except for the one who is in a variable annuity (1035 from a former advisor). I also have 100% of my and my wife's retirement assets in a broad mix of American Funds. I would not advise my client's to buy a fund that I wouldn't own myself.

As a matter of fact, this month's copy of Money covers that topic, sort of. It ranks the performance of funds where the manager owns some of the outstanding shares and those where the manager does not. The ones with manager participation outperform the ones without by nearly 3% annually.

[JoshinNC]

I should clarify,

OK> Tell me if I screwed up on this one. I bought a townhouse in VA (Smith Mountain Lake) in 1999. Vacationed there for 5 years and sold it in 2004. Purchase price= 255,000. Selling price = 564,000. For not being an investment the outcome was better than my mutual fund. By the way I lost 65,000 in my Fidelity Mutual Funds & Simple pensions during the same time period.

you're PRIMARY RESIDENCE is not an investment. A property bought for rental, spec, or vacation use can be considered an investment, if your primary motivation in purchasing it was to sell at an appreciated price. You should not, however, be buying your primary residence with the only motivation being to appreciate in value and sell. You should buy a primary residence to live in, and if it appreciates in value that's great.

I just sold a townhouse that I bought at foreclosure 3 months ago for $110,000. We had a purchase price of $80,000. That was an investment, through and through. If I sell my house for that kind of gain that's different.

[JoshinNC]

You're most likely buying "wrap" funds

I saw this and immediately thought of my current 401(k). In the past my various 401(k)s have been with a fund company, like T. Rowe Price or Fidelity. But at my current company it is through John Hancock and all of the funds if from a fund company like T. Rowe are prefaced by 'John Hancock'. My supervisor has been complaining about the fees appearing to eat her income. I've only recently opened mine since I had to start taking RMDs from my inherited IRA and need to 'replace' my retirement assets by more than the $4000 I could put in my IRA (and I can still put the $4000 in my Roth) and my biz doesn't generate enough income to make a SEP a viable option. I'm wondering if we should really start making a ruckus and try to get them to change plan managers.

These are funds sold by insurance companies in retirment plans that may or may not be in a variable annuity. Basically, the insurance company goes out and buys the real T. Rowe or Fidelity fund at market price and then sells it to you with an extra layer of expenses. Those expenses are their profit on the fund. So, you are getting a lower return than is available by buying those funds directly because your expense ratio is higher.

It sounds like you work for a smaller employer. A little dissent by the workers can bend the ear of the owner, and lead to plan changes pretty easily. There are many competent advisors who would love to manage your plan and put you in an account without these wrap funds. If you can give me some info on where you're at I can give you some referrals if I or someone on the board can't help you.

[Luis Mopeo]

you're PRIMARY RESIDENCE is not an investment. A property bought for rental, spec, or vacation use can be considered an investment, if your primary motivation in purchasing it was to sell at an appreciated price. You should not, however, be buying your primary residence with the only motivation being to appreciate in value and sell. You should buy a primary residence to live in, and if it appreciates in value that's great.

I just sold a townhouse that I bought at foreclosure 3 months ago for $110,000. We had a purchase price of $80,000. That was an investment, through and through. If I sell my house for that kind of gain that's different.

I have a suggestion. If you're trying to convince someone about a particular financial planning technique, stop saying a home is not an investment. That might sound fine in financial planning parlance, understood at professional seminars and conferences, but I'll bet it sounds very unusual to people you're trying to assist with financial planning.

How about "A personal home is not income-producing property."

Ah. I feel much better now. I'm just trying to help, honest.

That $30,000 gain on your home is different than flipping a condo. Your home is a tax shelter because you get to exclude the gain.

[Black Bart]

Sea-tax & Josh

Thanks guys - we'll look at American, but do you know if they offer a mutual fund that buys only low-cost ($20) stocks that are fairly stable, although not well-known?

As to my man's "situation," there isn't any to speak of. He's single, sixty, a day laborer, and rents an apartment. His total assets are a car (not paid for), $4K in 2 bank CD IRAs, the change in his pocket, and the shirt on his back. I inherited him from a retiree year before last and (I count this as a personal achievement) I got him to buy those two IRAs. He said he'd always meant to start saving, but never got around to it (and so it goes).

Anyway, he'll be back in January to file and buy another IRA, so I'm going to try and get him to roll the $4K and put the new $2K (that's all he can afford) into stocks for the usual reasons (keeping up with inflation, etc.).

[JoshinNC]

visit

Thanks guys - we'll look at American, but do you know if they offer a mutual fund that buys only low-cost ($20) stocks that are fairly stable, although not well-known?

As to my man's "situation," there isn't any to speak of. He's single, sixty, a day laborer, and rents an apartment. His total assets are a car (not paid for), $4K in 2 bank CD IRAs, the change in his pocket, and the shirt on his back. I inherited him from a retiree year before last and (I count this as a personal achievement) I got him to buy those two IRAs. He said he'd always meant to start saving, but never got around to it (and so it goes).

Anyway, he'll be back in January to file and buy another IRA, so I'm going to try and get him to roll the $4K and put the new $2K (that's all he can afford) into stocks for the usual reasons (keeping up with inflation, etc.).

https://www.americanfunds.com

all the funds, with objectives are listed there.

You really should get him to sit down with an advisor. He'll have to buy load funds, because his account is so low, but that's ok. At least he'll get professional advice. Do you have an Edward Jones office in your town? They are my competition, but they usually have good reps. Maybe you could get the rep to meet you at your office when this guy comes in and have a short 10 minute introduction. For every client you send to him/her they'll send you at least one back, guaranteed.

[sea-tax]

Thanks guys - we'll look at American, but do you know if they offer a mutual fund that buys only low-cost ($20) stocks that are fairly stable, although not well-known?

As to my man's "situation," there isn't any to speak of. He's single, sixty, a day laborer, and rents an apartment. His total assets are a car (not paid for), $4K in 2 bank CD IRAs, the change in his pocket, and the shirt on his back. I inherited him from a retiree year before last and (I count this as a personal achievement) I got him to buy those two IRAs. He said he'd always meant to start saving, but never got around to it (and so it goes).

Anyway, he'll be back in January to file and buy another IRA, so I'm going to try and get him to roll the $4K and put the new $2K (that's all he can afford) into stocks for the usual reasons (keeping up with inflation, etc.).

BB in my humble opinion I would not encourage this person to put money into an IRA until he has at least 6 months of liquid cash savings set aside.
My advice in order of importance is :
1) 6 months living expenses in a liquid investments not subject to market volatility-savings account or short term cd say 1 month
2) Retirement Accounts - Pre Tax -First-(IRA, SEP, 401k) , After tax -second-(Roth)
3) Investment Accounts
4) College planning for children

The idea is once you have maximized each step you are ready to move onto the next, this is of course if you can contribute to the respective plans in part 2.

That being said American funds have some really nice funds with great track records and some of the lowest if not the lowest expenses in the industry.
Personally I would not go to an Edward Jones broker , or any of the big guys for that matter. Look for a small outfit with a broker which you can make a long-term relationship with. But first seriously think about getting the license yourself , call HD Vest today. It will do wonders for your practice g*d only knows we could use someone like you.

[Bees Knees]

I have a suggestion. If you're trying to convince someone about a particular financial planning technique, stop saying a home is not an investment. That might sound fine in financial planning parlance, understood at professional seminars and conferences, but I'll bet it sounds very unusual to people you're trying to assist with financial planning.

Well, doing a Google search on "your home is an investment", I come across tons of financial planning sites that talk about your home as an investment.

Such as CCH's Financial Planning Toolkit, that features an article entitled: "Your Home as an Investment." http://www.finance.cch.com/text/c20s15d440.asp

I'll agree that in this current market, your primary residence may not be the best investment, but it is an investment, according to the financial planning industry.

You can also find tons of financial planning articles on whether it is a good idea to payoff your mortgage as part of your financial plan, such as this one from the AARP Retirement Planning site written by The National Endowment for Financial Eduction, http://www.aarp.org/money/financial_...fmortgage.html

There are pros and cons, but it is a topic and has its place under certain circumstances.

[veritas]

The hypothetical

I posted earler was using American Funds.

I understand there was a write up recently in Wall Street Journal. Has anybody read it?