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[Zaraki_Kenpachi]

Right. Which isn't necessarily a problem. It really depends on how you present yourself.

I guess... It's something that has bothered me more and more though. They don't really have success in these "excellent" methods but instead just are able to convince people to buy their book. There's enough bullshit that people spread with finances.

 

[Randolph Freelander]

I guess... It's something that has bothered me more and more though. They don't really have success in these "excellent" methods but instead just are able to convince people to buy their book.

I'm going to write a book teaching you how to preserve wealth by avoiding the lure of financial books.

I'll make a killing.

 

[Piecake]

I'm going to write a book teaching you how to preserve wealth by avoiding the lure of financial books.

I'll make a killing.

"The Secret that Investment Gurus Won't Tell You"

 

[Makai]

I've been looking at perhaps making a yearly purchase (maybe $1,000/year) in gold/silver bullion coins to add to my portfolio. Is this strictly for crazy people? Do any of you own gold/silver?

Yes, strictly for the crazy. You've seen the hype videos, right?

Goldnomics

They even fucking show how bad it is compared to stocks and bonds at 3:10. It's like they want to weed out people who are likely to sue.

 

[jkanownik]

In regards to #3, I'm doing a similar thing and was told that I can roll over the costs from starting the business and deduct them from any future profits. They are called start up costs. You can't just claim them as a straight loss; at least that's what my tax person said/recommended. You can roll them over for years, though, so just keep track.

I would double check that. I claimed two years of business losses without any revenue. You just can't do it for three straight years. I also have a friend that writes off all of his music instrument expenses and just produces a few local commercials every other year to generate some revenue. If you combined years it would be an overall loss.

 

[anonymous_abc]

i just want to ask, i want to go the "aggressive" route as you said, but returns on international last year clocked in at 2% vs. canadian bonds at 8%. would it still be wise to forego canadian bonds index and bring over that portion to international? thanks.

Check this out.
Why Diversify? Because Winners Rotate.

 

[Amory]

Ok, no gold for me lol

Thanks for the input, all

 

[Wellington]

Check this out.
Why Diversify? Because Winners Rotate.

This is a pretty amazing graphic.

Look at emerging markets between 2007 and 2014, it's almost a sin wave.

 

[Smiley90]

This is a pretty amazing graphic.

Look at emerging markets between 2007 and 2014, it's almost a sin wave.

what stood out to me even more than the picture is this:

1. Chasing the Winners
Investing in last year’s best-performing asset class, 7.02%
2. Investing with the Losers
Investing in last year’s worst-performing asset class, 7.17%

basically the same, I can't logically make sense of that :lol

 

[Darren870]

Whats the thought about life insurance here? I know we had an all out war with that one poster a while back, but I am wondering where most people stand.

I can get it through my retirement account as a simple monthly fee that comes out of my companies contributions, but I am wondering if its worth it. My missus and I have no dependents, just a mortgage and whatever the monthly cc bill is.

Any thoughts? What are other doing? I suppose if I ever have a kid then that's when I will definitely be getting it.

And no, I wont be buying Universal or Whole life insurance...

 

[anonymous_abc]

Whats the thought about life insurance here? I know we had an all out war with that one poster a while back, but I am wondering where most people stand.

I can get it through my retirement account as a simple monthly fee that comes out of my companies contributions, but I am wondering if its worth it. My missus and I have no dependents, just a mortgage and whatever the monthly cc bill is.

Any thoughts? What are other doing? I suppose if I ever have a kid then that's when I will definitely be getting it.

And no, I wont be buying Universal or Whole life insurance...

It's something I would only even consider if I had children and even then it would be a stretch. Probably never.

 

[Smiley90]

Whats the thought about life insurance here? I know we had an all out war with that one poster a while back, but I am wondering where most people stand.

I can get it through my retirement account as a simple monthly fee that comes out of my companies contributions, but I am wondering if its worth it. My missus and I have no dependents, just a mortgage and whatever the monthly cc bill is.

Any thoughts? What are other doing? I suppose if I ever have a kid then that's when I will definitely be getting it.

And no, I wont be buying Universal or Whole life insurance...

It's something I would only even consider if I had children and even then it would be a stretch. Probably never.

I have it with my sister as beneficiary. It's probably like 4-5% a year, which obv. isn't great, but eh, it's cheaper the earlier you get it and if something happens my sister gets a nice amount of money at least.

 

[Darren870]

My old companies used to give it to me. Used to be like 5x my salary. However, I don't get it here so I haven't really even thought about it till now. I just noticed I could get it through my retirement account as an additional expense so it made me think.

Suppose my missus would just have to deal with it and take my left over money and then sell the house.

 

[anonymous_abc]

I have it with my sister as beneficiary. It's probably like 4-5% a year, which obv. isn't great, but eh, it's cheaper the earlier you get it and if something happens my sister gets a nice amount of money at least.

This makes even less sense to me unless your sister is financially dependent on you?

 

[Smiley90]

This makes even less sense to me unless your sister is financially dependent on you?

No she's not, but while I don't have a wife my sister is the beneficiary. That'll change, obv.

But why have it at all? Aside from being cheaper now than later, I just like the peace of mind. I'll miss out on potential profit by "only" making 4-5% a year with the money, sure, but eh. Not that bad. I think of it like an extra savings account that's tax-deferred.

 

[EmptySpace]

the mutual funds rep from td called in last night and left a message about my account that i opened online. now i know i have to go there, but how do i just tell them that i just need account activation and easyweb access and how to make transfers from one bank to td?

i don't want to be rude because they could be selling me some other mutual funds, and it'll show how much i do not know about investments. i just wanna go in and get out in 10 mins.

 

[GhaleonEB]

the mutual funds rep from td called in last night and left a message about my account that i opened online. now i know i have to go there, but how do i just tell them that i just need account activation and easyweb access and how to make transfers from one bank to td?

i don't want to be rude because they could be selling me some other mutual funds, and it'll show how much i do not know about investments. i just wanna go in and get out in 10 mins.

Pretty much just tell them that. Hold the line at just needing the account opened, and tell them you know what you plan to invest in. They may pitch stuff but they can't force anything on you.

 

[Mr.Mike]

the mutual funds rep from td called in last night and left a message about my account that i opened online. now i know i have to go there, but how do i just tell them that i just need account activation and easyweb access and how to make transfers from one bank to td?

i don't want to be rude because they could be selling me some other mutual funds, and it'll show how much i do not know about investments. i just wanna go in and get out in 10 mins.

Apparently you're gonna have to open a funds account (and it has to be specifically a "funds" account), which it sounds like you've already started. Then you'll have to mail something in to get it converted into an eSeries account.

There's a big thread over on redflagdeals.com about this. http://forums.redflagdeals.com/td-e-series-funds-megathread-post-all-your-questions-here-1341457/

 

[Harlock]

Don't have kids.

 

[EmptySpace]

Apparently you're gonna have to open a funds account (and it has to be specifically a "funds" account), which it sounds like you've already started. Then you'll have to mail something in to get it converted into an eSeries account.

There's a big thread over on redflagdeals.com about this. http://forums.redflagdeals.com/td-e-series-funds-megathread-post-all-your-questions-here-1341457/

whaaaa...??? i thought i just need to open a direct investing tfsa account, wherein i can purchase e-series, other mutual funds, individual stocks, bonds, etc.? wasn't that the point of a direct investing account?

 

[Mr.Mike]

Someone in the thread does mention that you can just buy the mutual funds through the direct investing. Idk, hopefully someone who has experience with this can chime in.

 

[Smiley90]

Does anyone have any experience with borrowing to invest in Canada?

My Manulife Investment loan (so, a BtI loan) is at 3.85% (Prime +1%), is there anything cheaper out there? prime+1 is already pretty sweet I feel, but hey...

 

[Randolph Freelander]

Does anyone have any experience with borrowing to invest in Canada?

My Manulife Investment loan (so, a BtI loan) is at 3.85% (Prime +1%), is there anything cheaper out there? prime+1 is already pretty sweet I feel, but hey...

Are the returns on maple syrup and bagged milk high enough to cover the interest?

 

[anonymous_abc]

Don't have kids.

Or have many kids?

 

[PflargBlarg]

whaaaa...??? i thought i just need to open a direct investing tfsa account, wherein i can purchase e-series, other mutual funds, individual stocks, bonds, etc.? wasn't that the point of a direct investing account?

Someone in the thread does mention that you can just buy the mutual funds through the direct investing. Idk, hopefully someone who has experience with this can chime in.

Yes, everything I have read says that you can buy them just like normal through TD's Direct Investing accounts. Obviously I haven't done it myself, but I would believe that Canadian Couch Potato knows what he's talking about when he recommends buying them via that method. It's also mentioned in this article http://www.theglobeandmail.com/glob...funds-easy-to-love-hard-to-buy/article624596/

 

[PFD]

Does anyone have any experience with borrowing to invest in Canada?

Isn't this extremely risky?

 

[Smiley90]

Are the returns on maple syrup and bagged milk high enough to cover the interest?

Isn't this extremely risky?

As long as I on average make more than 4% investment income a year I make a profit, and given that the average over the last 100 years was more than twice that... not really? I mean, the biggest "risk" so to speak is if I lose my job, my investment suddenly tanks and I can't afford to keep paying the interest each month anymore, but that's not happening, 4% isn't all that big.

It's basically the same as people that choose to invest their money instead of paying back their student loans and pay the interest on the student loan instead. (not sure what the interest on th student loan is though tbh)

 

[Piecake]

As long as I on average make more than 4% investment income a year I make a profit, and given that the average over the last 100 years was more than twice that... not really? I mean, the biggest "risk" so to speak is if I lose my job, my investment suddenly tanks and I can't afford to keep paying the interest each month anymore, but that's not happening, 4% isn't all that big.

It's basically the same as people that choose to invest their money instead of paying back their student loans and pay the interest on the student loan instead. (not sure what the interest on th student loan is though tbh)

Is this going to be a long term investment? I think it kind of has to be if you plan to beat that 4% interest rate. If so, are you planning on paying the interest rate with your earned income?

I think it is very important to also understand the difference between compound/geometric returns and arithmetic returns.

For retirement investing, this sort of thing is mitigated because you continually invest basically throughout your life. If you take out a loan, you pretty much have to dump it in the market all at once or at least in a short period of time so that you don't get fucked over by the interest rate. Well, getting unlucky with that and having a market crash afterwards can fuck you over rather harshly if we are just considering your loan/borrow/invest investment thanks to compound/geometric returns. I just want to make it clear to you that there IS risk.

http://www.investopedia.com/ask/answers/06/geometricmean.asp

http://www.marketwatch.com/story/debunking-the-myth-of-the-8-return-2013-02-27

 

[numble]

As long as I on average make more than 4% investment income a year I make a profit, and given that the average over the last 100 years was more than twice that... not really? I mean, the biggest "risk" so to speak is if I lose my job, my investment suddenly tanks and I can't afford to keep paying the interest each month anymore, but that's not happening, 4% isn't all that big.

It's basically the same as people that choose to invest their money instead of paying back their student loans and pay the interest on the student loan instead. (not sure what the interest on th student loan is though tbh)

Well, student loan interest is tax-deductible (in the U.S.), and interest on a private loan is not necessarily tax-deductible.

Remember to factor in income tax on the gains you make, since you need to cash out of investments constantly (unless you're investing in something that constantly pays you without exiting the investment) in order to pay the interest each month. It probably cannot qualify for lower tax rates for capital gains income unless you hold the investment for a long period of time.

It's potentially a lot different from long-term tax-deferred investing (which often includes tax benefits in the short or long term).

 

[EmptySpace]

just came back from td and the very nice girl in the help & services desk assisted me with completing the application. apparently there was no pending application (which was odd, since the investment rep left a message on my voicemail last night saying he'll be at his office wherever it is til 10pm yesterday), so i think she made an application and also completed it. i just need to wait a week for td to email me my webbroker account info and i can probably start investing. i had to wait for quite some time, but at least i didn't get a sales pitch from an investment rep.

also, i was reading on the website that there is a $10 fee for buying and selling? is that true for the e-series? i thought it was gonna be $5.

also, mer is calculated by adding all and then using the corresponding % distribution as weight then average, right? and is that annual or quarterly?


aapl? goog? nah...brk-a here i come. ahahaha.

 

[PflargBlarg]

just came back from td and the very nice girl in the help & services desk assisted me with completing the application. apparently there was no pending application (which was odd, since the investment rep left a message on my voicemail last night saying he'll be at his office wherever it is til 10pm yesterday), so i think she made an application and also completed it. i just need to wait a week for td to email me my webbroker account info and i can probably start investing. i had to wait for quite some time, but at least i didn't get a sales pitch from an investment rep.

also, i was reading on the website that there is a $10 fee for buying and selling? is that true for the e-series? i thought it was gonna be $5.

also, mer is calculated by adding all and then using the corresponding % distribution as weight then average, right? and is that annual or quarterly?


aapl? goog? nah...brk-a here i come. ahahaha.

Nah dude, you won't pay anything for buying or selling the e-series since they're mutual funds. Transactions fees only apply to equity trades (stocks, etfs, etc.)

 

[Smiley90]

Is this going to be a long term investment? I think it kind of has to be if you plan to beat that 4% interest rate. If so, are you planning on paying the interest rate with your earned income?

I think it is very important to also understand the difference between compound/geometric returns and arithmetic returns.

For retirement investing, this sort of thing is mitigated because you continually invest basically throughout your life. If you take out a loan, you pretty much have to dump it in the market all at once or at least in a short period of time so that you don't get fucked over by the interest rate. Well, getting unlucky with that and having a market crash afterwards can fuck you over rather harshly if we are just considering your loan/borrow/invest investment thanks to compound/geometric returns. I just want to make it clear to you that there IS risk.

http://www.investopedia.com/ask/answers/06/geometricmean.asp

http://www.marketwatch.com/story/debunking-the-myth-of-the-8-return-2013-02-27

a) yes, like all my investment it's more meant for the very long term
b) not really, but I believe dividends go towards paying my interest automatically. Capital gains obv. don't.
c) isn't that the same thing for ANY investment upon start, though? Assuming you start off investing as much as is available when you start off instead of "waiting for the markt to tank" before investing, which I thought was a terrible idea in the first place.
d) From how I see it, I'm making capital gains with money that's not mine, so anything I gain is something I wouldn't have had otherwise. I'm obv investing the majority of my savings myself to not have to pay interest, but for 4% it's worth it to make that extra x% from "nothing".

Well, student loan interest is tax-deductible (in the U.S.), and interest on a private loan is not necessarily tax-deductible.

Remember to factor in income tax on the gains you make, since you need to cash out of investments constantly (unless you're investing in something that constantly pays you without exiting the investment) in order to pay the interest each month. It probably cannot qualify for lower tax rates for capital gains income unless you hold the investment for a long period of time.

It's potentially a lot different from long-term tax-deferred investing (which often includes tax benefits in the short or long term).

It is in Canada! And I don't cash the investment out, the dividends I make lower my interest payments (I'm pretty sure), so nothing is getting cashed out. There is income tax on capital gains with the account (I have my own TFSA) but I have tons of unused deductibles from tuition so that won't be an issue for a while.

 

[Piecake]

hing for ANY investment upon start, though? Assuming you start off investing as much as is available when you start off instead of "waiting for the markt to tank" before investing, which I thought was a terrible idea in the first place.

True, sufficient time will naturally lead to you beating that 4% interest. For sufficient, I am thinking like 20-30 years. I don't think 10 years would cut it and you could get screwed by geometric return. I think this is especially relevant in your case considering that you plan on taking out a loan and likely investing it all at once.

I am not trying to discourage you from doing this. You just seemed like you thought this was a no-brainer, but there are risks. If you have a stable job, can cover the interest rates with your job income and can invest the loaned money for 30 years then you will greatly mitigate that risk. I sure wouldnt do it if the investment time was 10 years though.

 

[numble]

It is in Canada! And I don't cash the investment out, the dividends I make lower my interest payments (I'm pretty sure), so nothing is getting cashed out. There is income tax on capital gains with the account (I have my own TFSA) but I have tons of unused deductibles from tuition so that won't be an issue for a while.

The dividends should be taxable income (following basic tax principles, not necessarily Canada rules). The reverse should be happening if loan interest is deductible--the dividend income is decreased by the interest on the loans, so you pay a income tax on the net dividend income.

Following general tax principles again, capital gains income can only be offset by capital gains losses. Tuition deduction usually is a deduction against ordinary income (not capital gains income).

 

[Anthony2035]

So I just signed up for retirement with my current job and kind of confused. Anyone know anything about PERS in Washington? I can pick from plan 2 or plan 3. I also did a 457 and I allowed the ICS to manage it as aggressively as they need to for hitting my target retirement.

 

[Darren870]

My missus took out a loan here in AUS to invest in shares. I thought it was odd, but it helped her reduce her tax as she could write off the loan and bring her to a lower tax bracket for her high income. This was about 10 years ago though.

To me, it seems odd. I probably wouldn't do it, but that's just me. I don't like taking out loans to make money. If I have an investment I want it to grow with the money I put into it. I hate debt so would never want to get more of it.

 

[Smiley90]

Well, student loan interest is tax-deductible (in the U.S.), and interest on a private loan is not necessarily tax-deductible.

Remember to factor in income tax on the gains you make, since you need to cash out of investments constantly (unless you're investing in something that constantly pays you without exiting the investment) in order to pay the interest each month. It probably cannot qualify for lower tax rates for capital gains income unless you hold the investment for a long period of time.

It's potentially a lot different from long-term tax-deferred investing (which often includes tax benefits in the short or long term).

That's not a thing in Canada, for what it's worth.

50% of realized capital gains is taxed
those 50% are taxed at the marginal tax rate (which for me atm is only 15% at the lowest tax brackets - big part of that is that as a grad-student, most of my income is non-taxable scholarship income ) and I haven't realized it yet anyway, so that's gonna be an issue for when I cash out - Which I'd probably have to time for a year when I have tons of deductibles.

Also, tuition DOES go towards that deduction - I still have... uh... about 43k of unused tuition deductible atm :lol

also, if push comes to shove, I can always cash out now/transfer the investment into a tax-free savings-account, where capital gains aren't taxed (even when you cash out & remove the money from the TFSA)

so... I have options.

 

[numble]

That's not a thing in Canada, for what it's worth.

50% of realized capital gains is taxed
those 50% are taxed at the marginal tax rate (which for me atm is only 15% at the lowest tax brackets - big part of that is that as a grad-student, most of my income is non-taxable scholarship income ) and I haven't realized it yet anyway, so that's gonna be an issue for when I cash out - Which I'd probably have to time for a year when I have tons of deductibles.

Also, tuition DOES go towards that deduction - I still have... uh... about 43k of unused tuition deductible atm :lol

also, if push comes to shove, I can always cash out now/transfer the investment into a tax-free savings-account, where capital gains aren't taxed (even when you cash out & remove the money from the TFSA)

so... I have options.

Are you sure that tuition is deductible against capital gains and not ordinary income?

 

[Smiley90]

Are you sure that tuition is deductible against capital gains and not ordinary income?

It's all the same in my tax return -shrugs- I'd have to look more closely into it, but they're listed in the same row where all the deductibles go.

 

[numble]

It's all the same in my tax return -shrugs- I'd have to look more closely into it, but they're listed in the same row where all the deductibles go.

http://www.cra-arc.gc.ca/tx/ndvdls/...ns101-170/127/lss-ddct/gnrl/smmry-pf-eng.html
http://www.cra-arc.gc.ca/E/pbg/tf/5000-s3/5000-s3-14e.pdf
Only capital losses can reduce capital gains, which makes sense.

 

[Smiley90]

http://www.cra-arc.gc.ca/tx/ndvdls/...ns101-170/127/lss-ddct/gnrl/smmry-pf-eng.html
http://www.cra-arc.gc.ca/E/pbg/tf/5000-s3/5000-s3-14e.pdf
Only capital losses can reduce capital gains, which makes sense.

Capital losses reduce capital gains pre-tax eligibility, but tuition reduces it post-tax eligibility as far as I can tell?

E.g.

Capital gains - capital losses = net taxable capital gains

net taxable capital gains + net income = total income

total income - interest paid on investment expenses = total taxable income

total taxable income - basic amount - deduction (INCLUDING tuition, if needed) = net federal tax

at least that's how my tax return is laid out.

So yes, capital losses are needed to reduce the taxable capital gains... BUT tuition deductions reduce the taxable capital gains in a later step.

 

[v0yce]

Can anyone provide advice for my Mom? She's in a tough spot.

She's 70 and in good health and unfortunately just divorced. She has about $250k and a house worth about another $250k.

I'm sure there's no real good options, but what's her best play to try and make that stretch as long as she can?

 

[Smiley90]

Can anyone provide advice for my Mom? She's in a tough spot.

She's 70 and in good health and unfortunately just divorced. She has about $250k and a house worth about another $250k.

I'm sure there's no real good options, but what's her best play to try and make that stretch as long as she can?

Does she need access to the money at all times?

Her safest bet would probably be either Bond Funds/High-Dividend bonds or GIC's that you can lock your money in for x years and make more interest off than a savings account. Definitely don't put any money in stocks though, since if the market tanks soon she'll lose a lot.

Pay a CFP an hourly fee to seek appropriate advice. Asking for blanket advice here about someone we do not know is not a service to your mom.

EDIT: Also, this. But there's free, solid financial advise companies out there too, not necessarily have to even pay a fee.

 

[Piecake]

Can anyone provide advice for my Mom? She's in a tough spot.

She's 70 and in good health and unfortunately just divorced. She has about $250k and a house worth about another $250k.

I'm sure there's no real good options, but what's her best play to try and make that stretch as long as she can?

I think the first step is obviously figuring out her budget. How much does she spend a month? How much does she get in social security benefits? It is rather morbid, but guessing an endpoint is important as well to determine how much of that 250k she can use. You don't have to tell us if you don't want to. These are just questions that you should be thinking about.

That way you can determine if he expenses are exceeding her income. If her expenses are exceeding her income, is selling the home an option? If so, she can either move into a cheaper place and/or move to a cheaper area.

I am a bit hesitant to give investment advice since I honestly haven't really looked into investing while you are retired all that much, and I think it is more complicated than investing for retirement while you are still working.

But yea, like groovy said, it would be a good idea to talk to financial adviser about this so you can really get into specifics. I think having a very good idea of what your mom's budget is and what your available options are will make that meeting more productive.

 

[numble]

Capital losses reduce capital gains pre-tax eligibility, but tuition reduces it post-tax eligibility as far as I can tell?

E.g.

Capital gains - capital losses = net taxable capital gains

net taxable capital gains + net income = total income

total income - interest paid on investment expenses = total taxable income

total taxable income - basic amount - deduction (INCLUDING tuition, if needed) = net federal tax

at least that's how my tax return is laid out.

So yes, capital losses are needed to reduce the taxable capital gains... BUT tuition deductions reduce the taxable capital gains in a later step.

That's not how it should work, because capital gains are subject to a different tax rate.

Edit: I see how Canada works, you do capital gains * 1/2 to get to taxable capital gains, and you include that amount in ordinary income, which can utilize ordinary deductions. It's a very preferential system compared to the US.

 

[v0yce]

Does she need access to the money at all times?

Her safest bet would probably be either Bond Funds/High-Dividend bonds or GIC's that you can lock your money in for x years and make more interest off than a savings account. Definitely don't put any money in stocks though, since if the market tanks soon she'll lose a lot.

Pay a CFP an hourly fee to seek appropriate advice. Asking for blanket advice here about someone we do not know is not a service to your mom.

I think the first step is obviously figuring out her budget. How much does she spend a month? How much does she get in social security benefits? It is rather morbid, but guessing an endpoint is important as well to determine how much of that 250k she can use. You don't have to tell us if you don't want to. These are just questions that you should be thinking about.

That way you can determine if he expenses are exceeding her income. If her expenses are exceeding her income, is selling the home an option? If so, she can either move into a cheaper place and/or move to a cheaper area.

I am a bit hesitant to give investment advice since I honestly haven't really looked into investing while you are retired all that much, and I think it is more complicated than investing for retirement while you are still working.

But yea, like groovy said, it would be a good idea to talk to financial adviser about this so you can really get into specifics. I think having a very good idea of what your mom's budget is and what your available options are will make that meeting more productive.

Thanks guys.

She actually has researched her budget and spoken with a financial advisor. I don't know all the details, but he suggested some sort of insured plan where the majority of her savings are invested and she gets a yearly amount that combined with her SS covers her essentials. They would add any gains to that amount as well. And there was about 60k that would be up to her to use for non essential spending or investing.

I believe she said all the fees from the plan and the advisors would be 3%-ish.

And she is planning on selling the house and downsizing. We live in the south where housing is really cheap so she should be able to help herself out some in that regard.

I realize without having the exact details you can't really know but I'd appreciate it if any of that, at least on a high level, strikes you as a bad idea.

 

[Darren870]

Thanks guys.

She actually has researched her budget and spoken with a financial advisor. I don't know all the details, but he suggested some sort of insured plan where the majority of her savings are invested and she gets a yearly amount that combined with her SS covers her essentials. They would add any gains to that amount as well. And there was about 60k that would be up to her to use for non essential spending or investing.

I believe she said all the fees from the plan and the advisors would be 3%-ish.

And she is planning on selling the house and downsizing. We live in the south where housing is really cheap so she should be able to help herself out some in that regard.

I realize without having the exact details you can't really know but I'd appreciate it if any of that, at least on a high level, strikes you as a bad idea.

3%? Thats too high. I'd suggest checking out the boglehead forums. You will probably find better advice there then hear. Most of us are in our 20-30's so don't have much knowledge for what to do in that situation. You will find much better (and cheaper) advice there.

http://www.bogleheads.org/forum/index.php

 

[Piecake]

Thanks guys.

She actually has researched her budget and spoken with a financial advisor. I don't know all the details, but he suggested some sort of insured plan where the majority of her savings are invested and she gets a yearly amount that combined with her SS covers her essentials. They would add any gains to that amount as well. And there was about 60k that would be up to her to use for non essential spending or investing.

I believe she said all the fees from the plan and the advisors would be 3%-ish.

And she is planning on selling the house and downsizing. We live in the south where housing is really cheap so she should be able to help herself out some in that regard.

I realize without having the exact details you can't really know but I'd appreciate it if any of that, at least on a high level, strikes you as a bad idea.

3% is an absolute rip-off.

This is basically why I think most financial 'advisers' are blood-sucking scum. There are good ones out there, but no good one will stick you with a plan with 3% in fees. I mean, what the hell are the advisers doing to be worth that fee? Very very little. Was this a pay by the hour type of adviser? It doesnt sound like it, and that might be the problem since I don't there are very many 'good' financial advisers who are paid though investment fees since the conflict of interest is just so huge.

I mean, how the hell is there going to be any return after 3% fee when your mom is likely investing in a very conservative insured plan? 3% might not sound like much, but ends up being a HUGE number. Say that insurance thing makes 5% interest for your mom. She will actually only get a 2% return thanks to fees. Meaning that 2/5s of the earnings will go to your mother while 3/5s will go to the plan and her 'advisers'. Fuck, she'd probably be better off just leaving it in the bank.

http://www.daveramsey.com/blog/investing-calculator/#/entry_form

Stick 250k and compare a 5% return in 25 years to a 2% return in 25 years. You won't like the resuts.

I would strongly consider finding another adviser to talk it over or simply helping her come up with her own plan investment plan and possibly have you help her manage it. Maybe something like 10% cash, 40% Total Bond and 40% TIPS bonds. Obviously, research this more and put some more thought into it.

Yea, bogleheads would be a good idea. There should be people there who are actually in retirement that can help you out.

 

[Smiley90]

That's not how it should work, because capital gains are subject to a different tax rate.

Edit: I see how Canada works, you do capital gains * 1/2 to get to taxable capital gains, and you include that amount in ordinary income, which can utilize ordinary deductions. It's a very preferential system compared to the US.

indeed. Also, capital gains are taxed at the same rate as regular income here, that's why it works more simply

 

[GhaleonEB]

A 3% fee is truly awful. The adviser is taking advantage of your mother to siphon away the returns on her money, not offering her advice. She should get away from him and any adviser that is not paid by the hour for their advice, rather than a return on her money. This is a textbook case of what is wrong with the financial advice industry.