If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at http://www.rwinvestmentstrategies.com. If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.
Thursday, February 19, 2015
That's how I feel sometimes when I meet with new clients. We go over the principles underlying low-cost well-diversified index investing. We cover the thinking behind different asset allocation models and the importance of sticking with an asset allocation strategy through the ups and downs of the market.
Then we look at their investments. More times than not they include several bank accounts, multiple 401(k)s, IRAs and taxable accounts. The taxable accounts include inherited stock, and they look at me quizzically when I ask about cost basis.
The Funds they hold include front load, back load, and everything in between. Some hold private collective funds on which it is difficult to understand the management fees.
The bottom line is we need to go from a smorgasbord of investment vehicles to a well-structured basic asset allocation comprised of low-cost index funds. Sometimes I feel like the Maine farmer.
But usually it is best to proceed slowly. Take one account at a time. Know exactly where you are headed and take baby steps if necessary. Understand each investment. If it's a taxable account, look at capital gains - are they long term or short term? Look at the Funds - are they load Funds? Does it make sense to hold for a while to lessen the deferred charge?
If moving accounts to a new broker, can the Funds be moved "in kind"? If not, how will your overall asset allocation look over the transition period?
Sometimes it pays to have an advisor take over during this set-up period. An advisor knows how to get from where you are to where you want to go on a tax-efficient basis. In many instances, once the account is finally set up so that the asset allocation is clearly understood and assets are invested in low-cost index funds, the advisor can bow out and the client take over.