Suze Ormans portfolio

[Scrapr]

Apparently Suze was on Tv Sunday. I guess she "came out". (who cares)But apprently she also divulged her portfolio. And now it all becomes clear why her advice is so poor.

Apparently 25 million in liquid assets.

Stock allocation?

1 million.

Bonds?

24 million.


LOL. One planner in this article called her a grandmother portfolio.

http://articles.moneycentral.msn.com/Investing/Extra/IsSuzeOrmanOutOfTouch.aspx?GT1=9215

edit: spellun

 

[Spanky]

Well, when you have so much assets -- you want to protect it. Income from a $24 mil bond portfolio should be adequate even for an upper class family/person.

 

[Zathras]

Very true. I haven't seen her portfolio, however, if I had 25 million, I wouldn't need more income than bonds would supply.

 

[Empty Pockets]

Yea, but wouldn't you at least want to try ??

I think your advice would have more credibility if you held a portfolio closer to what you recommend.

 

[Spanky]

The most important aspect of investing to determine the objective. If you can accomplish your objective with minimal risk, that's the correct approach. Why take on unnecessary risk just to get more?

 

[Sue J]

Did anyone else see her on the Tim Russert show on CNBC on Saturday? She said that 90% of her money is in zero coupon municipal bonds.

She also gave the code for an offer through TD Ameritrade. She's encouraging women (but anyone can do it) to start their own savings accounts in their own names and get in the habit of saving on a regular basis. If you open an account and add $50 a month for 12 months, TD Ameritrade will add an extra $100 to your account.

http://www.tdameritrade.com/saveyourself/ The code is 701 if anyone wants it.

 

[MasterBlaster]

well to be fair to Ms Orman of whom I am no big fan...

If you are a fifty something year old with upwards of 25 million why not keep it in zero coupon municipal bonds. She doesn't need to let her money grow - she's pretty much covered. The interest on the bonds will almost keep up with inflation and the risk of default is really small.

So for her situation, her holdings just may be OK.

I think that the media, once again, has over-reacted to the story to get a good headline.

 

[saluki9]

Other than buying some real estate (not securitized RE) actual buildings I would do nothing different.

 

[FinanceDude]

Other than buying some real estate (not securitized RE) actual buildings I would do nothing different.

 

[cute fuzzy bunny]

Looks just like the portfolio of most very wealthy people.

Last time I saw it, Bill Gates had an awful lot of money tied up in very stodgy bonds...

 

[Texas Proud]

Ross Perot was another rich guy that had almost all bonds..

BUT, only having 1/25th in stocks is not good investing no matter her 'needs'... closer to a 40% stock is even conservative for her age and earnings.. she can give the rest she earns to charity...

 

[retire@40]

Other than buying some real estate (not securitized RE) actual buildings I would do nothing different.

I had a conversation with someone the other day about winning the big lottery of $300 million. They said they would use the money to invest in hotels and commercial buildings. I asked why not just put the majority of the money in more secure, tax free funds that won't give you a headache. They said because real estate would pay more. I said, you realize that $300 million at 4% is $12 million a year, right?

 

[FinanceDude]

I had a conversation with someone the other day about winning the big lottery of $300 million. They said they would use the money to invest in hotels and commercial buildings. I asked why not just put the majority of the money in more secure, tax free funds that won't give you a headache. They said because real estate would pay more. I said, you realize that $300 million at 4% is $12 million a year, right?

Good point...........

However, the lump sum after taxes is probably "only" about $130 million...............

 

[saluki9]

Ross Perot was another rich guy that had almost all bonds..

BUT, only having 1/25th in stocks is not good investing no matter her 'needs'... closer to a 40% stock is even conservative for her age and earnings.. she can give the rest she earns to charity...

Wealth maximization isn't the point here. Going from 99% insured muni's to 40% equities would raise her risk by a lot and she doesn't need it.

This is a very common asset allocation for people of this size. Our firms deals with a bunch of them and this isn't out of the ordinary at all. What a lot of people in this situation do is split the money into two pots (I'd be forced to vomit if the word "buckets" was used again here) The first is all munis to fund the living expense. The other part is used to invest in deals, RE, hedge funds and other risk endeavors, mostly for fun.

 

[haha]

Ross Perot was another rich guy that had almost all bonds..

BUT, only having 1/25th in stocks is not good investing no matter her 'needs'... closer to a 40% stock is even conservative for her age and earnings.. she can give the rest she earns to charity...

I guess when you have $25 million you can follow your advice. Meanwhile, since she has it she gets to do what she wants with it.

Ha

 

[audreyh1]

Well, when you have so much assets -- you want to protect it. Income from a $24 mil bond portfolio should be adequate even for an upper class family/person.

I agree. I notice that folks often think someone with a huge asset base would take more risk "because they can afford to" and attempt to maximize gains (i.e. be greedy). But it is actually far more likely that such a person who already has more than they need seek to preserve capital - be super conservative.

Gosh - 3% of $24M (assuming tax-free municipal bonds) throws off $720,000!!!! I'd say that's a heck of a lot more than an "upper class family" would need for an annual income!

There is nothing wrong with her approach.

Audrey

 

[Bikerdude]

Yeah with Muni's she's dodging State & Federal taxes. I don't know how AMT would affect her though. I think with that much money she could get closer to 4% yield or almost a mil per year.

I think it was John Jacob Astor that said " A man with a million dollars is as well off as if he were rich" I think he said that in 1910.

 

[d]

if she has no need to take the risk inherent in equities, she shouldn't!

 

[Moemg]

I agree she can do what she wants with her money but she tends to preach the same philosophy to others .

 

[audreyh1]

Yeah with Muni's she's dodging State & Federal taxes. I don't know how AMT would affect her though. I think with that much money she could get closer to 4% yield or almost a mil per year.

There are AMT-free municipal bonds.

Audrey

 

[haha]

I agree she can do what she wants with her money but she tends to preach the same philosophy to others .

She probably does to any of her listeners who have $25 million.

Ha

 

[saluki9]

Yeah with Muni's she's dodging State & Federal taxes. I don't know how AMT would affect her though. I think with that much money she could get closer to 4% yield or almost a mil per year.

I think it was John Jacob Astor that said " A man with a million dollars is as well off as if he were rich" I think he said that in 1910.

You would need an avg maturity of 20 years, but with insureds you could be over 4% as of right now.

 

[Empty Pockets]

Oh I'd bet that Buffett, Gates, Soros and others on the Forbes list maybe have a little more than equities than 4% of their portfolios.

I'm not near as well read as most on this forum, but isn't a portfolio this high in bonds actually more risky than one that is closer to 50-50 stocks & bonds ? such as the couch potato portfolio that Scott Burns advocates ?

It's none of my concern what she does, I just wouldn't want to see someone follow what she is doing thinking it is best for them too.

 

[Jane_Doe]

Wealth maximization isn't the point here. Going from 99% insured muni's to 40% equities What a lot of people in this situation do is split the money into two pots (I'd be forced to vomit if the word "buckets" was used again here)

Saluki-

Personally, I find a bucket to be very usefull when vomiting.

Have a great day!

Jane

 

[ScaredtoQuit]

I don't mean to be naive, but I wonder how she accumulated all that money. She came from a blue collar background so it wasn't inherited. Are those books and TV programs THAT lucrative??