Trying to time the market is a Fool's Errand. Unless you get lucky, you end up giving money to the Big Boys.

The key is to diversify your 401(k). If you're close to retirement, or retired, you should have already started transitioning a portion of your portfolio into safer investments.

Or pay for a money manager; that's what I did when I transferred my 401(k) to an IRA. To hedge my bet, I told him not to include the value of my home (which is paid off), or my stock account (which I still manage) in any of his calculations. So I still "manage" more funds than he does...

How do you pay? As needed or do you pay monthly? We had a free offer at work for a money manager. I think it was something like $60 per $100K after the trail. I should have at least taken the trail.

How did you select a money manager? Hard to find someone you can trust.

 

How do you pay? As needed or do you pay monthly? We had a free offer at work for a money manager. I think it was something like $60 per $100K after the trail. I should have at least taken the trail.

How did you select a money manager? Hard to find someone you can trust.

A number of years ago I was listening to the Dave Ramsey show and, naturally, he was pushing his "Endorsed Local Providers" (now called "Smartvester Pros") and his mantra was that he only endorses those that have "the heart of a teacher". So I figured I had little to lose and contacted one of them and we had a nice discussion over the phone (i.e., "free consultation"), he gave me some concrete advice and specific explanations on a couple of questions I had. He then offered to e-mail me some information about one of the things we had discussed. I wanted the info, but was very concerned that if I gave him my e-mail address I would start getting bombarded spam from him. I told him that my e-mail address was to be used only for the purpose of sending that specific information and nothing else and he readily agreed. I received the information and have never received anything else from him. If and when I decide to use a money manager, he will be on top of the list and if he's not available I'll try someone else on Dave Ramsey's list -- at least anecdotally they are as advertised.

 

How do you pay? As needed or do you pay monthly? We had a free offer at work for a money manager. I think it was something like $60 per $100K after the trail. I should have at least taken the trail.

His fee is taken from the account automatically each quarter. As I recall, his fee is a couple percentage of what he's managing. He put half of the funds in variable annuities that he doesn't get a percentage of (or so he says); he got something up front on those.

How did you select a money manager? Hard to find someone you can trust.

I took an early retirement package and, apparently, the company gave/sold the information to money managers because several contacted me and knew that I had retired.

I still don't know if I trust him. That's why I manage my stock account and he doesn't include the value of my home in any of his calculations.

I was looking forward to the fiduciary rule going into effect, but the current Administration removed the rule. I just assume that he's putting his interests before mine...

 

I have a different perspective on money managers. I respect what they can do for people but my wife and I are both MBAs and grew up being very frugal. There's no way we want to pay anyone to handle our money for us. We're completely comfortable doing it ourselves.

I have a nephew that surprised me the other day by complaining his money manager was asking questions about what he wanted to do. My nephew felt like that's what he's paying for, to not have to answer questions. So there is obviously a need for skilled professionals to help people like my nephew.

But it's easy to handle your own money. For most of your life, you want to invest as much as possible into a diversified index fund. Buy and hold. It's that simple. As you approach retirement, and if you need to live on your assets (rather than leave them for your heirs), you need to move increasing amounts into bonds and other, less volatile assets. You don't want to get clobbered by a long recession when you don't have enough time to recover.

Of course there are many other nuances such as setting up trusts, gifting stocks instead of cash, 529 accounts for your kids, and so on. But the basic framework is buy-and-hold a diversified portfolio.

 

Of course there are many other nuances such as setting up trusts, gifting stocks instead of cash, 529 accounts for your kids, and so on. But the basic framework is buy-and-hold a diversified portfolio.

You leave money on the table by taking such a conservative approach when you're young.

My stock balance has tripled in 5 years. You're not going to get those types with a diversified portfolio. Safe for sure, but the rewards go to the risk takers.

In theory, my money manager follows market trends better than I could and he rebalances my portfolio using more information than I have available. Having a business degree doesn't make you an expert in the markets.

 

Having a business degree doesn't make you an expert in the markets.

There's no such thing as an expert. Not one of them can consistently and reproducibly beat the monkey throwing darts. On a risk adjusted basis, actively managed funds perform more poorly than index funds. Of course you can choose funds that risk more and return more but you can do the same thing by just borrowing money to invest in the lower-risk funds (ie. leveraging).

 

As I was looking up some historical information I ran across historical federal budgets and was taken aback by the fact that in 1960 the total federal budget was just $93 billion. So out of curiosity I adjusted that for inflation (which brings it to $800 billion in today's dollars) and then figured it on a per-capita basis (using 1960 population), which works out to under $4500/person. It's now well in excess of $13,000 per person. So our federal spending has grown by a factor of three over that time frame. I had a harder time than I expected tracking down the median household income in 1960 (apparently the Census Bureau starts many of their data sets at 1967 for some reason) but I did finally find a BLS site that gave it as $5,620/year, which adjusts to $48,420/year in current year dollars. The most recent (2017) median income is #61,372, My best estimate of bringing this forward to comparable dollars makes it $63,304. In 1960 the average family size was 3.33 people and now it is down to 2.54 people. So federal spending per household went from about 30.6% of median household income in 1960 to about 53.6% today (a 75% increase).

What's really interesting is that combined federal, state, and local direct spending is currently estimated at $7.6 trillion/year. That works out to 92% of median household income.

 

His fee is taken from the account automatically each quarter. As I recall, his fee is a couple percentage of what he's managing. He put half of the funds in variable annuities that he doesn't get a percentage of (or so he says); he got something up front on those.

That actually sounds pretty expensive.

I also wonder whether he put half your funds in variable annuities because it was the best use of those funds for YOU, or whether it was the best way to generate a big commission for HIM.

 

I also wonder whether he put half your funds in variable annuities because it was the best use of those funds for YOU, or whether it was the best way to generate a big commission for HIM.

I'm pretty sure he got significant benefit from it. Without having the fiduciary agreement, he's under no obligation to put my interests before his.

 

There's no such thing as an expert. Not one of them can consistently and reproducibly beat the monkey throwing darts.

He's more of an expert than me and he has tools and resources not available to individual investors. I sleep better at night not having to worry about whether I made the right decisions with insufficient information.

 

I would just like to be able to talk to someone to see if my investments are appropriate for someone planning in retiring in 3 years. And when to start backing some of the investment into cash.

 

I would just like to be able to talk to someone to see if my investments are appropriate for someone planning in retiring in 3 years. And when to start backing some of the investment into cash.

Things can happen that will change your plans...

I was about 3 years or so away from realistically considering retirement when an auto accident accelerated my plans.

I had just increased 401(k) contributions for my bonuses to 25% the year before and was still trying to decide how much I should put into catch up payments available to people over 55. Didn't get a chance to do that...

 

I would just like to be able to talk to someone to see if my investments are appropriate for someone planning in retiring in 3 years. And when to start backing some of the investment into cash.

My guess is that someone on Dave Ramsey's list might be a good choice for what you are trying to do.

Around here there are always folks giving free retirement seminars (sometimes with a free meal). I haven't gone to any of them but only because it's hard to find one that works with my schedule. I would assume that those folks are primarily trying to sell you something or tease you into making a paid appointment with them. As long as they give me some actual information, especially if they make me aware of issues that I wasn't aware of previously, then they can try to sell me whatever they want -- I'm good at saying, "NO!"

What will really piss me off is if they waste a bunch of my time saying the same vacuous things over and over and over. Virtually every weekend radio investment show now falls into that category -- they simply repeat how there are so many ways to file for social security or how it is so important to structure your withdrawals for tax efficiency or whatever and they never tell you anything specific about any of that, but rather just tell you to call and make an appointment to speak to one of their professionals. I remember the days a decade or two ago when virtually all of those shows actually gave specific details about the topic they were discussing. Not anymore.

 

Things can happen that will change your plans...

I was about 3 years or so away from realistically considering retirement when an auto accident accelerated my plans.

I had just increased 401(k) contributions for my bonuses to 25% the year before and was still trying to decide how much I should put into catch up payments available to people over 55. Didn't get a chance to do that...

IIRC it is claimed that half of people that retire each year are doing so before they had intended to.

We can only plan based on the best information we have at any given time, which is why we need to periodically revisit those plans. As we get closer to the big event (whatever that may be in our particular case), the more frequently we need to revist them.

We also have to make plans to cover a reasonable range of contingencies -- or at least try to be aware of the range of contingencies that fall reasonably close to our plans.

 

I sleep better at night not having to worry about whether I made the right decisions with insufficient information.

And therein lies their value, which I totally understand. A lot pf people would benefit from a little professional help throughout their lives. Even more people don't save a penny, so they really need something.

 

My guess is that someone on Dave Ramsey's list might be a good choice for what you are trying to do.

Around here there are always folks giving free retirement seminars (sometimes with a free meal). I haven't gone to any of them but only because it's hard to find one that works with my schedule. I would assume that those folks are primarily trying to sell you something or tease you into making a paid appointment with them. As long as they give me some actual information, especially if they make me aware of issues that I wasn't aware of previously, then they can try to sell me whatever they want -- I'm good at saying, "NO!"

What will really piss me off is if they waste a bunch of my time saying the same vacuous things over and over and over. Virtually every weekend radio investment show now falls into that category -- they simply repeat how there are so many ways to file for social security or how it is so important to structure your withdrawals for tax efficiency or whatever and they never tell you anything specific about any of that, but rather just tell you to call and make an appointment to speak to one of their professionals. I remember the days a decade or two ago when virtually all of those shows actually gave specific details about the topic they were discussing. Not anymore.

I just went to one on SS. It was a waste of time. Basically a sales pitch.

 

I just went to one on SS. It was a waste of time. Basically a sales pitch.

I've been to a number of those free presentations. I only go to the ones at good restaurants, and lately I skip most of those too. It's rare to actually learn something but it can happen. If you're lucky, the people presenting will impress you and you may decide to use their services. I found an excellent trust lawyer this way but that's the only good to come out of it all, beyond the free meals. More often it just feels like a waste of time.

 

I just went to one on SS. It was a waste of time. Basically a sales pitch.

Not surprised to hear that. Disappointed, but not surprised. I imagine I will have the same experience.

That's why I will probably start with the ones that include meals at good restaurants -- then at least it won't be a complete waste of time.

 

Not surprised to hear that. Disappointed, but not surprised. I imagine I will have the same experience.

That's why I will probably start with the ones that include meals at good restaurants -- then at least it won't be a complete waste of time.

What makes it worse is the "instructor" had some major pit stains. Doesn't exactly instill confidence.

 

So are you all still in? I am and get sick by the day. Don't want to look at my 401K or mutual fund.

Hard to wrap your head around the recommendation to stay put when things are this bad. Though from one of the things I read is that mutual funds managers will be buying stock at a bargain during corrections like this. So if you are out then you don't get in on the bargain. That and the mentioned timing issues. Still hard to watch your funds drop when so close to retirement. I can't imagine what you folks must be going through that are already retired.