Hi All
I'm SURE this question has been addressed somewhere, but I'm not sure how to search it.
1. We have a great FA - but ... like many, he takes an index approach, maybe tweaked a bit -- like he might weigh heavier in large cap value if their research shows this segment is poised to grow faster, etc. But overall, we pay .9% of assets for them to manage us in what amounts to "indexing". The advantage is that my wife feels better knowing if something happens with me, there is someone there to sort it all out.
2. Our "neatly indexed" SMA with them has dropped, like most, 35-40%. Which of course leads me to the annoying place of "hey, I'm paying $7-9K per year for someone to make investments that I could make myself just to make my wife feel more comfortable. Hmmmm... how can I make my wife more comfortable, without spending 7-9K per year??
3. I have decided to begin doing what I have wanted to do for years. Conservatively invest in single family rental houses. Set aside 100K, spend 70K on DPs, use 30K as cushion, not MUCH current CF, but good principle paydown, better appreciation than multi units and THEN belated cash flow when paid off. We have plenty of assets to use for living expenses between FIRE date and mortgage amortization date(s) (This is not in lieu of all my other investements, just in addition to)
4. MY QUESTION is in the line of other investment choices. The question has haunted me for years ... I see people show the long term return of stocks vs. bonds vs. xxx over lng periods of time. I'm beginning to question the validity of this, expeically considering the "price" paid to have a high equity exposure is sometimes losing half your money or more in a few months!!! Why would it not be wiser to assemble an extremely diversified, good quality portfolio of income investments that yield above your safe withdrawal rate? In other words:
1. All investments would be highly secure (stocks would have payout ratios of 50-60% max. bonds would be highly rates, prefferred stocks would come from companies with good solid prospects, etc.)
2. Invest in preferred stock, high div. paying common stock, bonds, international bonds, reits, MLPs, Tax Lien Certificates, Prosper.com etc. etc. I mean just really have it spread out, and just do nothing but seek good, high yields with as little risk as possible. As long as the bonds are held to maturity, the risk is nil other than corportate bonds whose companies might experience downturn - but that risk might be mitigated bykeeping higher quality, etc. If a bond returns an above average return for a year or two, and the prospects aren't above average ... sell. In other words, I'm questioning whether one really has to involve themselves in indexing and common (low or no dividend) stocks at all ... Yes, there are still stocks, but they're "looked at" as income producing and if you're counting on x amoutn per month from xyz company trading at 25 and it goes down to 18, it's no biggie, becuase they've increased or maintained their div for 38 years and you know you can still count on your x amoutn per month....
Any thoughts?? Is my logic faulty??
I'm SURE this question has been addressed somewhere, but I'm not sure how to search it.
1. We have a great FA - but ... like many, he takes an index approach, maybe tweaked a bit -- like he might weigh heavier in large cap value if their research shows this segment is poised to grow faster, etc. But overall, we pay .9% of assets for them to manage us in what amounts to "indexing". The advantage is that my wife feels better knowing if something happens with me, there is someone there to sort it all out.
2. Our "neatly indexed" SMA with them has dropped, like most, 35-40%. Which of course leads me to the annoying place of "hey, I'm paying $7-9K per year for someone to make investments that I could make myself just to make my wife feel more comfortable. Hmmmm... how can I make my wife more comfortable, without spending 7-9K per year??
3. I have decided to begin doing what I have wanted to do for years. Conservatively invest in single family rental houses. Set aside 100K, spend 70K on DPs, use 30K as cushion, not MUCH current CF, but good principle paydown, better appreciation than multi units and THEN belated cash flow when paid off. We have plenty of assets to use for living expenses between FIRE date and mortgage amortization date(s) (This is not in lieu of all my other investements, just in addition to)
4. MY QUESTION is in the line of other investment choices. The question has haunted me for years ... I see people show the long term return of stocks vs. bonds vs. xxx over lng periods of time. I'm beginning to question the validity of this, expeically considering the "price" paid to have a high equity exposure is sometimes losing half your money or more in a few months!!! Why would it not be wiser to assemble an extremely diversified, good quality portfolio of income investments that yield above your safe withdrawal rate? In other words:
1. All investments would be highly secure (stocks would have payout ratios of 50-60% max. bonds would be highly rates, prefferred stocks would come from companies with good solid prospects, etc.)
2. Invest in preferred stock, high div. paying common stock, bonds, international bonds, reits, MLPs, Tax Lien Certificates, Prosper.com etc. etc. I mean just really have it spread out, and just do nothing but seek good, high yields with as little risk as possible. As long as the bonds are held to maturity, the risk is nil other than corportate bonds whose companies might experience downturn - but that risk might be mitigated bykeeping higher quality, etc. If a bond returns an above average return for a year or two, and the prospects aren't above average ... sell. In other words, I'm questioning whether one really has to involve themselves in indexing and common (low or no dividend) stocks at all ... Yes, there are still stocks, but they're "looked at" as income producing and if you're counting on x amoutn per month from xyz company trading at 25 and it goes down to 18, it's no biggie, becuase they've increased or maintained their div for 38 years and you know you can still count on your x amoutn per month....
Any thoughts?? Is my logic faulty??