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book recommendation for my mom
Old 10-20-2007, 10:54 AM   #1
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book recommendation for my mom

My mom currently has an IRA account at Edward Jones and is invested in loaded funds (5.75%) with ER's ranging from .50 to 1.0. I've been trying to explain why fees are bad, but it's been difficult, because what she has is making her money. I've also tried to explain that she's taking too much risk. I don't know her exact equity/fixedincome ratio, but it's very high in equities.

Unfortunately, she feels happy with what she has, since it has done well for her. This isn't much of a surprise because of the run up in equity markets for the last few years. And then when I talk about how much risk she wants to take, she says none...

So what I'm looking for are book recommendations that explain risk and fees in very basic terms, but is also very readable and short. I was thinking something along the lines of Coffehouse Investor, but I'm not sure she'll care for the writing style.

I'd love to hear any recommendations. Thanks!
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Old 10-20-2007, 05:41 PM   #2
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Are you close enough to sit with her and read the book to her? I think The Four Pillars of Investing has it all but you would probably have to read it to her to make sure she understood it and you could gloss over the complicated parts.
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Old 10-20-2007, 05:51 PM   #3
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Scott Burns has a column on fees this week: How Much Do You Pay For Financial Services? - Financial Investment
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Old 10-20-2007, 07:16 PM   #4
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Good luck with this. Many of us have gone through this. Most likely: she'll read part of the book, but still be sure that her adviser is doing a good job, and you'll be frustrated.

Another outcome: you finally convince her, she switches to Vanguard funds, the market takes a big downturn, and you are blamed.
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Old 10-20-2007, 08:12 PM   #5
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........, but still be sure that her adviser is doing a good job, and you'll be frustrated...........
Amen. I was visiting my MIL earlier this week when she took a call from her broker, obviously churning her portfolio (and my stomach). MIL is sure this guy is her friend.

All I can say is, at least she is solvent....
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Old 10-20-2007, 08:41 PM   #6
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There are a couple chapters in Ray Lucia's first book "Buckets of Money" that might be suitable. The current edition goes beyond 'basic'.

I visited my cuz earlier this week. Their financial advisor happened to be at their dining room table. It was all that I could do not to gag.

Maybe it is because I have always been a big city gal, but the fact that he hadn't heard of Craig's List threw me. I kept far away from the subject of investing but he was obviously uncomfortable with my presence and fled at the first opportune moment.
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Old 10-20-2007, 10:37 PM   #7
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Thanks for the feedback. This is something that I've been avoiding for awhile, but I feel guilty letting it be. I figure if she at least understands what she's doing, then at least she's making a conscious choice.

TromboneAl, you hit on exactly what I worry about and my primary reason for avoiding this situation: a market downturn after she'd reallocate her investments. I'd hate to deal with that one...

Btw, I think I'll avoid finding a single book and instead provide her with specific parts of books to get certain fundamental ideas down (risk, fees, going with average, etc).
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Old 10-20-2007, 10:46 PM   #8
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The advantage of Lucia's approach is that when you approach retirement you set aside cash to cover the first 7 years, and then another "bucket" in very secure investments for the next 7 years. The balance goes into equities which you let ride for 14 years without worrying. Hence the phrase "Buckets of Money". He doesn't dis financial planners (after all he is one), but he doesn't approve of their charging fees or customers paying loads for cash/bond investments.

There are a couple threads where we 'discuss' this approach.
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Old 10-20-2007, 11:02 PM   #9
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DIY investing is not for everybody. In fact, William Bernstein, everybody's favorite author, argues that it's a good fit for very few people:

The Probability of Success

You mom has already paid her front-end load. Let her stick with her advisor.
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Old 10-21-2007, 11:30 AM   #10
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You mom has already paid her front-end load. Let her stick with her advisor.
The problem is that she keeps paying the load. I don't expect her to invest and really my main concern is that she's has too a high percentage in equities.

If I was able to pick an investment for her, then I'd try to keep it extremely simple and choose a targetted retirement fund from vanguard.
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Old 10-21-2007, 12:44 PM   #11
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Agreed, it's kind of touchy - how about this approach?

Put together a portfolio for her on paper. Track it for a while, versus her portfolio. You might need to do some graphs with EOM values to show if her investments are higher volatility (only one measure of risk), but it might get her attention, and it would keep you out of trouble since it was just on paper.

It might be especially effective to show how much is going to fees, versus index funds/ETFs.

-ERD50
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