Most Americans clueless about market performance (best, travel, taxable, 401k)

[Utopian Slums]

Originally Posted by tommy64

There seems to be a lot of deliberate misinformation out there designed to keep the masses ignorant and dependent on the "Wall Street Marketing Machine".

IMHO.

YES! I am no where near retirement but do own stocks and was intrigued by this post. I'm big on reading the comment section of all articles. Whenever I read someone knocking a story k, all I can think is "they want to lower the price so they can hop in." Conversely, when I see a stock praised, i assume they are "selling it to me" because it's underperformed and they need it to rise.

To much noise. I feel I should be better at this by now having lost a lot of money in the crash of 2009.

[StealthRabbit]

Originally Posted by TuborgP

Load fees are the actual name of the fees often charged to buy a mutual fund. ... .

for the financial EDU part of your post (informational) U might want to continue to explain while a 'Load' on an 'Index Fund' is pretty bogus.

I see some 'target date' etfs are biting the dust. (they claim not enough buyers). While other ETFs are capping (no more sales to new investors).

Life in the markets...
Always gleaning the offerings
and
Fleecing the Sheep. (I.e.... don't blindly follow ANYONE)

One of my most financially astute friends was REALLY happy with the yield from his 'managed' accts from a hedge fund, they were SO nice that he eventually was SO rich ... that he bought a new Corvette and pulled his Fidelity and Vanguard stuff and gave it to the manager.

The came Madoff... my friend has sold his Corvette and is now a 75 yr old 'handyman' (i.e. had to get a job after being retired since age 53)...

Oh well, he really had a lot of fun in his very healthy 22 yr 'retirement'.

Lesson... know your stuff... or at least WHERE is your STUFF!

I don't watch mine as careful as I should. (missed a lot of this 'upside' by staying 40% in Cash.) My kids said "Really? How smart is CASH? Why didn't you have it in a QQQQ or SPY Index with appropriate covered calls / stop loss ?..." makes my THINK (rare).

[Utopian Slums]

Originally Posted by saralvr

That is why my smartest finanacial move was to hire a professional. The way I explain it to people is that if I needed medical help I seek out a dr, if I need legal help I hire a lawyer. This is not much different.

I learned quite a lot from my advisor. It took a long time to find someone I truly trusted and I felt extremely comfortable with. He is patient as he explains everything.

We did "ok" through the years on our own but circumstances changed for us and we felt we needed a professionals help.

I had one for a very short time. He taught me nothing new that i hadn't already been self educated on. I'll probably use one in the future, but never one that works off the commission of your initial investment only.

We live in an incentive based economy. It boggles my mind people would ever pay an up front commission prior to any proven performance.

[mathjak107]

you do that on every product you buy in life. it is already built right in to the price.

don't you buy things you never tried before ,whether you end up liking what you bought or not ?

fees ,commisions and expenses are all figured in everything.

the issue i have is if an advisor allocates me and we change little why are you charging me another 1% for what you already did.

the other issue is both a 1 million account and a 2 million account both can get the same financial advice as far as other aspects in your plan yet the 2 million account is paying far more for the exact same advice.

while having an advisor manage your money may be for some i think pay as you go is the best way .

far to many seek no advice at all and shoot themselves in the foot being penny wise and very pound foolish.

as much as i know about investing had i seeked knowledgable help decades ago today at retirement my tax situation would have been very different. had i sprung for that advice i could have seen as much as 100k in income today at about 1800 bucks in taxes.

i knew about the investing end and did very well but i didn't know, i didn't know, the tax structuring end since i only knew what i knew and nothing about what i didn't know

so i did great investing and will lose part of that to the fact i blew the part about keeping it because i thought i knew better and didn't need to pay someone..

[LookingatFL]

It isn't always easy to find a financial planner who charges hourly rates. I've been trying for 2 years. As soon as I tell them my total net worth they tell me they aren't interested in working with me. On the other hand, I am working with 3 different financial planners who all charge commissions and so far I find two of the three are all about the commission they will earn. I'll see what I feel about this third person. Meanwhile, I am learning and being careful.

[mathjak107]

we were interested in long term care insurance and found a guy who is quite good and heaven forbid commissioned.

[GeneR]

I've often questioned the use of popular retirement vehicles such as tax deferred 401k and IRA. We employees are sold these vehicles as a way to save for retirement so we spend decades deferring taxes on this income (and its growth). So here's my question; do you think tax rates will be higher or lower in your future? Government doesn't have a great record of lowering tax rates. So why would we put off paying taxes on this income now so we can pay higher rates in the future? Secondarily, not only are we saving money for future, probably higher, tax rates but we're also told to pay off our mortgages. So, when we retire we start pulling taxable income out of these "savings" vehicles and we no longer have a deduction for mortgage loan interest so 100% of our income is taxable. The government must love the invention of these "savings" vehicles!

[TuborgP]

Originally Posted by GeneR

I've often questioned the use of popular retirement vehicles such as tax deferred 401k and IRA. We employees are sold these vehicles as a way to save for retirement so we spend decades deferring taxes on this income (and its growth). So here's my question; do you think tax rates will be higher or lower in your future? Government doesn't have a great record of lowering tax rates. So why would we put off paying taxes on this income now so we can pay higher rates in the future? Secondarily, not only are we saving money for future, probably higher, tax rates but we're also told to pay off our mortgages. So, when we retire we start pulling taxable income out of these "savings" vehicles and we no longer have a deduction for mortgage loan interest so 100% of our income is taxable. The government must love the invention of these "savings" vehicles!

Think about tax free compounding of your tax deferred investments. That is part of the possible strength of your 401/403. Your annual return on investment is compounded without you paying taxes on it until down the road. Even at 70 1/2 you are only beginning to withdraw a percentage leaving the rest to grow with compounding until you take it out. Roth's give you the chance to pay taxes first and then receive tax free compounding.

[mathjak107]

it isn't about tax rates off in the future.

for older workers it is about only about whether you will be in a higher or lower bracket with no pay check or possibly 2 paychecks now.

rates can stay the same but what it means for you can be different for each one of us.

interaction with social security ,rmds,and medicare surcharge taxes can make deferring a real issue for some even with no tax rate increases.

for younger workers it is a different story , it is about your average tax bracket over decades of your working career.

most workers ramp up to their final pay over decades . there average tax rate while doing a roth can be very low compared to retirement income even if rates do not rise.

the problem is most people only look at their peak years at the end and try to calculate off that.

that would not be accurate. the reality is even if rates do not go up the average worker will be in a higher bracket at retirement because income and lifestyle will be based somewhere around those final numbers.

it is all the decades of ramping up pay that make your average tax rate over your career a lot lower then you think it is just looking at your final years.

those that do a roth early on can see 20% more spendable income at retirement even if rates do not go anywhere.

[LookingatFL]

It's not about whether or not someone is commissioned, because they are going to earn compensation one way or another. The question is are they looking at what is best for me, or are they looking at what makes them the most money. In two cases I had financial planners offer me products that were not meeting the needs I stated I had. I've always liked this third financial planner best, I meet with him next week to go over his ideas.

In a separate thought: The use of Traditional vs. Roth IRA are complicated. An investment into a Roth IRA results in a lost opportunity to invest postponed income tax. Usually, Traditional IRA's will result in higher ending balances because the postponed income tax had the opportunity to grow inside your Traditional IRA account. The Traditional IRA works really well if you are using it to decrease your marginal tax rate now, and when you retire you will have a lower or identical marginal tax rate, and the rmd will only minimally (or not at all) impact the amount of Social Security that is taxable.

If you start out in a higher tax bracket and your tax bracket drops, conversion to ROTH IRA makes a great deal of sense. If your marginal tax rate is going to remain relatively constant throughout your life, the ROTH might be a better vehicle.

The purpose of tax planning is to postpone income tax now while making sure that in the future you are not negatively impacted by that postponement. A good CPA or EA will be able to help with tax planning.