SWR for a $2.5 million nest egg...

[REWahoo]

Ruth is looking for someone to help her manage her remaining savings:

Living Off a Scant $2.5 Million

FinanceDude, Sarah - you have any openings for a new client? Can you get her a consistent 10-15% annual return like Bernie did?

 

[ziggy29]

From the article:

When you cast aside the sort of smoke and mirrors used by her husband, a conservative investment portfolio may only earn about 3% a year over inflation. At that rate, and if Mrs. Madoff wants to make sure she doesn't outlive her money, her $2.5 million settlement should give her an annual income of maybe $125,000 a year. That would make the money last all the way to age 100.

My heart bleeds. Though they are using a 5% withdrawal rate here.

 

[JOHNNIE36]

I feel so sorry for all the investors that fell into the Bernie scheme. I'm as conversative as they come and I shy away from the advertized CD's at 6.5%. What kind of return were these investors promised? I hear that some people had their life savings tied up with this guy. I just can't believe people are that gullible. Am I wrong or stupid or just plain conservative?

 

[kombat]

I just can't believe people are that gullible.

I dunno. To be honest, I can kind of see how they'd get sucked in. I mean, for several years, people were receiving double-digit returns. Real money was paid out. I can see how if you've got a buddy who's raking in 15% returns, year after year, and you see him spending the cash, and he's doing it through a very well-known investor, operating in broad daylight for over a decade, you might start to believe it's legit. I certainly wouldn't call someone who fell for it stupid or "gullible," given the circumstances. The scam was unprecedented, I don't think due-diligence was enough to protect people in this case.

 

[Bikerdude]

She will have a hard time living in Manhattan on $125,000 a year. As the article says FL. is her best bet. $200K will buy a nice condo in Naples. I saw a picture of her on the NYC subway. I guess no more chauffeured limo's for her. She does have some children she might live with unless they have disowned her.

 

[mickeyd]

Mrs Madoff is 68. She will need income to live on for maybe 30 years or more.

The way that I see it is that since she will probably be doing hard time in the graybar hotel, along with the boys and Bernie's brother, she will not have to stretch it out for too long. If I were Ruth, I'd plan on blowing it all during the next couple of years and the taxpayers will be funding the rest.

 

[FUEGO]

With luck she could write a tell all book about being married to the biggest liar ever. Maybe score a couple million in advances. I'd like to invest that money for her!

 

[Bikerdude]

With luck she could write a tell all book about being married to the biggest liar ever. Maybe score a couple million in advances. I'd like to invest that money for her!

I'm sure the plaintiffs lawyers would jump all over that. However, being just the wife, maybe she can get away with it.

 

[Texas Proud]

I feel so sorry for all the investors that fell into the Bernie scheme. I'm as conversative as they come and I shy away from the advertized CD's at 6.5%. What kind of return were these investors promised? I hear that some people had their life savings tied up with this guy. I just can't believe people are that gullible. Am I wrong or stupid or just plain conservative?

I am in your camp here also... how many people here have all, or almost all of their money invested at Fidelity or Vanguard...

Now, you can say 'well, they are different, they are mutual funds etc. blah blah blah'.... but most of the investors would not know the difference... so I am one that would not blame anyone who had all their money there.... they were swindled... and not from a get rich quick scheme...

 

[Khan]

I feel so sorry for all the investors that fell into the Bernie scheme. I'm as conversative as they come and I shy away from the advertized CD's at 6.5%. What kind of return were these investors promised? I hear that some people had their life savings tied up with this guy. I just can't believe people are that gullible. Am I wrong or stupid or just plain conservative?

I read something about this that suggested that Madoff and his 'investors' were all part of the same social and economic circles. He was 'one of them' so of course they trusted him.

 

[Independent]

Maybe she could get a better return if she invests with with this organization, I hear they have pretty good CD rates.

Stanford Financial Group - Wikipedia, the free encyclopedia

 

[Moemg]

As the article says FL. is her best bet. $200K will buy a nice condo in Naples. .

With that income Naples is out , plus she will be ostracized from all the wealthy investors . I think she needs to look at Ocala or Port Charlotte. I'm also going to send her a link to ebay since her shopping budget has taken a hit .

 

[M Paquette]

how many people here have all, or almost all of their money invested at Fidelity or Vanguard...

Now, you can say 'well, they are different, they are mutual funds etc. blah blah blah'.... but most of the investors would not know the difference...

There's that pesky 'due diligence' that an investor or their hired advisor is supposed to do. Of course, there were a bunch of advisors and even fund managers who took a cut off the top and fed the money right along to Bernie Madoff. They failed in their professional responsibility, or possibly were involved as outright criminals, and should be called to account.

There are a couple of differentiators between the crooks and honest operations.

Honest broker-dealers and mutual funds will put the money in separate custodial accounts. They won't ask for checks to be made out to themselves or a company they control. There should be a separate custodial firm to hold the assets of a mutual fund.

Check on your advisers. The SEC actually tracks adviser information, including problems.

Investment Adviser Search

 

[FUEGO]

I am in your camp here also... how many people here have all, or almost all of their money invested at Fidelity or Vanguard...

Now, you can say 'well, they are different, they are mutual funds etc. blah blah blah'.... but most of the investors would not know the difference... so I am one that would not blame anyone who had all their money there.... they were swindled... and not from a get rich quick scheme...

Well, VG and FIDO are actually placing institutional orders to buy and sell securities. I know that for a fact. So they are doing something with someone's money to some extent (and I have heard they do lot of volume with at least one local investment bank).

Plus they are SEC regulated and not strictly for high income accredited investors like Bernie's little fund.

I guess VG and Fido could be chock full of fraud, but I would (actually I am) betting that they are legitimate. Some other lesser known names and mutual fund sponsors - who knows??

 

[Arif]

She'll be alright with 2.5 million. All she has to do is hand it over to Bernie to manage for her! LOL

 

[CuppaJoe]

I have one piece of advice: move the money before senility sets in and you forget the Swiss Bank account numbers. Tony Soprano can help you hide it.

 

[growing_older]

I think there are reasons many Madoff investors failed to exercise caution or normal due diligence. Many of them believed they were skirting the normal laws of investment, but that Bernie was sufficiently well connected that he could get away with it.

Bernie Madoff: Ponzi squared | The Economist

I still find it hard to believe that he acted alone and his family will be able to walk away with money in their names - albeit "only" 2.5 million for Mrs. Madoff. It's a lot more than many victims were left with. It's a lot more than many of us accumulated playing by the rules.

According to reports, some of those who put their faith in Mr Madoff suspected that he was engaged in wrongdoing, but not the sort that would endanger their money. They thought he might be trading illegally for their benefit on information gleaned by a separate business within his group, which made a market in shares. The firm had been investigated for “front-running”, using information about client orders to trade for its own account before filling those orders.

 

[Leonidas]

Oh, I love this:

According to reports, some of those who put their faith in Mr Madoff suspected that he was engaged in wrongdoing, but not the sort that would endanger their money.

That's one of the oldest scams around. I loved it when some idiot would call in to report that he had been ripped off buying a brand new 21" color TV in a box that turned out to be an old black and white or just a rock. It was always the same scenario, they met some guy at the car wash who offered them a heck of a deal on something that "fell off a truck".

So, you want to report that you got ripped off when you were buying something that you thought was stolen from somone else. Have you ever heard of theft by receiving? Why shouldn't I just arrest you? To me, you sound like a thief who got burned by another thief.

They always hung up after that.

 

[Lawrence of Suburbia]

[...] [H]ow many people here have all, or almost all of their money invested at Fidelity or Vanguard... [...]

The "other shoe" I dread: waking up some morning, turning on CNBC and finding out one of the big mutual fund companies implicated in fraud, and in receivership or going under...with my money in it.

Don't think it can happen?

 

[Kroeran]

I am not a stock guy, but if I was forced to have exposure to the market, why would you not just buy a handful of stock directly?

You don't actually believe the mutual fund guys can make better guesses than you, do you?

 

[W2R]

I am not a stock guy, but if I was forced to have exposure to the market, why would you not just buy a handful of stock directly?

You don't actually believe the mutual fund guys can make better guesses than you, do you?

In my case, yes!! 99.44% of Americans over age 13 could make better [-]guesses[/-] individual stock investment choices than I could.

 

[ERD50]

You don't actually believe the mutual fund guys can make better guesses than you, do you?

The index fund guys don't make any guesses at all.

-ERD50

 

[FUEGO]

I am not a stock guy, but if I was forced to have exposure to the market, why would you not just buy a handful of stock directly?

You don't actually believe the mutual fund guys can make better guesses than you, do you?

I'm buying in bulk - I get thousands of stocks for a $100 minimum purchase and no transaction fee, plus they'll manage the portfolio for under .10% in some cases. That is $100 per year on a $100,000 investment. And it is easier to track for tax purposes when I own the one fund vs. many stocks held within it.

 

[FinanceDude]

The index fund guys don't make any guesses at all.

-ERD50

The only guesses they are exposed to are the ones from the committee who decides which stocks go in and which go out of the index........

 

[Kroeran]

I'm buying in bulk - I get thousands of stocks for a $100 minimum purchase and no transaction fee, plus they'll manage the portfolio for under .10% in some cases. That is $100 per year on a $100,000 investment. And it is easier to track for tax purposes when I own the one fund vs. many stocks held within it.

sounds good in principle. Can the expense ratio be verified, or does one take that on trust? One has to operate on the assumption that the very best Chicago school minds will be trying to figure out how to game the game for their benefit.