Need advices for XXX,XXX$ Investment at 21yo.

[regularguy]

Hello everyone!

I am 21 year old and made alot of money really fast. (7 figures in a couple of months). My father and I went to couple of financial planners and we made a 'safe' investment for my retirement which consist of the following:

• A 300,000$+ investment with Manulife RevenuPlus which yeilds a minimum of 5% per year and re-indexed every 3 years
• A 200,000$+ investment splitted between 4 mutual funds who all have a good history behind them, average 8-9% per year.

I have about 300,000$ after paying all the taxes to invest and I want to place it in a more risky securities. I am thinking about going with S&P 500 Companies that give out a good yearly dividend, those companies are not going anywhere and should provide a better return then mutual funds. GE apparently gives out 12% return in dividend. Since I am based in Canada, dividends are very advantageous tax-wise.

I am also thinking about overseas ETFs like Brazil or India.

Since I have a good 'safe' investment base I think it's time to invest in more 'risky' stuff. I am looking to buy & hold those investment in the long run (15 years minimum, probably more like 30 years), I am not a big spender at all, don't own a car and still go to school. I don't plan to buy a house anytime soon.

I keep working on the side so I have a good cash flow coming in all the time. My dream is to open a theatre in the next 5-7 years and to have enough $ generated by the interest to maintain it alive.

Please let me know if I am in the right path, what do you think would be best to do in my situation?

Thanks alot!!!
RegularGuy

 

[haha]

Hello everyone!

I am 21 year old and made alot of money really fast. (7 figures in a couple of months). My father and I went to couple of financial planners and we made a 'safe' investment for my retirement which consist of the following:

• A 300,000$+ investment with Manulife RevenuPlus which yeilds a minimum of 5% per year and re-indexed every 3 years
• A 200,000$+ investment splitted between 4 mutual funds who all have a good history behind them, average 8-9% per year.

I have about 300,000$ after paying all the taxes to invest and I want to place it in a more risky securities. I am thinking about going with S&P 500 Companies that give out a good yearly dividend, those companies are not going anywhere and should provide a better return then mutual funds. GE apparently gives out 12% return in dividend. Since I am based in Canada, dividends are very advantageous tax-wise.

I am also thinking about overseas ETFs like Brazil or India.

Since I have a good 'safe' investment base I think it's time to invest in more 'risky' stuff. I am looking to buy & hold those investment in the long run (15 years minimum, probably more like 30 years), I am not a big spender at all, don't own a car and still go to school. I don't plan to buy a house anytime soon.

I keep working on the side so I have a good cash flow coming in all the time. My dream is to open a theatre in the next 5-7 years and to have enough $ generated by the interest to maintain it alive.

Please let me know if I am in the right path, what do you think would be best to do in my situation?

Thanks alot!!!
RegularGuy

Why not just bet it back on whatever clever thing you did before with such great success?

Ha

 

[regularguy]

Mainly because it takes a lot of time and effort. I am still doing it on the side but I do not want to do this all my life. I'd prefer to do acting then work in front of computer screen all my life.

... and theater actors are paid about 10,000$ per year (and that's good!).

Thank alot for your fast reply!

 

[FUEGO]

How about you share the secrets of making $1,000,000+ in a few months, and I'll give you some tips on where to invest your money aggressively!

 

[eridanus]

Simple. Do whatever you did for another year or two and then put it all in T-bonds. Or you can get together with our trading genius, ReadyToRetire, and make >3000%/yr trading penny stocks. In a few years, you'll have 8 figures and can open multiple community theaters.

 

[regularguy]

I do not really believe in penny stocks. I do not have the knowledge nor the time to read about every company that provides penny stocks.

There are so many scams involved with them too, it is incredible.

Let me know

 

[regularguy]

About the T-Bonds, is this what you are talking about: Bond ETFs: Good Times Coming to an End? | ETF Trends ?

 

[plex]

On a serious note, your plan sounds fine, but be very careful about the cost of the funds you invest in. Obviously, the ETFs that you hold for 30+ years are fine, but the mutual funds, and especially the stable funds you chose could have extremely excessive fees. Any loads, and a maintenance fee much over .5% is excessive. If they aren't within that range, you probably need to do more research, and redeploy your funds, if you haven't been locked in with termination fees (which is another bad sign if you are).

Just guessing, but it sounds like your father involved you in his start-up. That was pretty smart of him, as it spreads the income taxes, and probably avoids triggering any gift taxes, if the Canadian system is anything like the US system. Be very careful about taxes, they matter just as much as your investment strategy.

 

[Rich_by_the_Bay]

"Manulife RevenuPlus which yeilds a minimum of 5% per year and re-indexed every 3 years"

Is that an annuity?

Read Solin's "The Smartest Investment Book You'll ever Read." You might want to be your own advisor.

 

[soupcxan]

"Manulife RevenuPlus"? I guess that means it generates Revenue Plus Fees for the Manulife advisor who sells it. Stay away from any insurance/annuity products.

 

[regularguy]

Manulife IncomePlus: The high cost of peace of mind | Canadian Capitalist

This is what I got... damn, did I just got scammed? Should I run to this 'advisor' to get my money back?

Since he recommended that product so heavily, I guess that the mutual funds that I bought from him are shitty too. ****!

I should have found this forum before!

 

[stevenst]

Hi Regularguy: I doubt your advisor will give the money back, but maybe the thing to do is to run FROM your advisor. Is this a 'fee-only' advisor, that is, he/she makes no money from your investment choices? If not, they are not an advisor. They are a salesperson.

One spot to get good knowledge on investing (in addition to here) is Bogleheads Investing Advice and Info. Check in there and see if you like the place. The Wiki alone is better than most advisors.

Steve

 

[RunningBum]

I hesitate to use the word "scammed" for an investment like that, since it is basically legit but with a high fee. They also don't seem too clear about where they are investing your money. I personally would stay away, but there are worse investments. Make sure you understand the fees of both selling and staying in the fund, and make your best decision going forward. Don't beat yourself up over mistakes, treat them as learning experiences.

Your overall plan, and investing in dividend producing stocks sounds reasonable, but GE is nowhere close to 12%. Right now the yield is 2.5%. Just looking at the stock profile on Yahoo or any simple finance site tells you that. There's no guarantee that just because a stock pays a dividend that it always will, or will even stay in business, so do some research on your stocks. I own some GE stock, so I'm certainly not warning against it, but I'm just pointing out the reality of the dividend yield.

Congrats on your early success. Put some of that same effort into your education on investing now, and it'll go a long way. Like stevenst says, learn the difference between an advisor and a salesperson.

 

[Rich_by_the_Bay]

Manulife IncomePlus: The high cost of peace of mind | Canadian Capitalist

This is what I got... damn, did I just got scammed? Should I run to this 'advisor' to get my money back?

Since he recommended that product so heavily, I guess that the mutual funds that I bought from him are shitty too. ****!

I should have found this forum before!

Some jurisdictions in the US allow a 30 day "look back" during which you can cancel the purchase.

Salespeople for annuities can get 6% commision or higher on the total initial investment. See if you can get out. If not, at least take the max allowable surrender amounts every year (for 7? or more years, typically).

We all make bad calls once in a while; just do what you have to do and start reading some of the stuff which has been recommended. You'll be fine, and there are some scenarios where annuities can be OK.

 

[plex]

Ouch, 3.5% expense ratio (as i mentioned, 0.5%+ is excessive, considering the options out there). Since it is a conservative fund meant for those in retirement, it is likely allocated in conservative, less volatile, investments to begin with. So, likely around 40-60% of the returns will get eaten up by fees.

 

[regularguy]

Thanks alot for your serious awnsers guys, much appreciated.

I am reading investopedia on a daily basis, any other sites that provide good info and tips? (Thanks alot for the bogleheads link)

 

[Mill]

OP,

Congrats on your fortune, and best of luck in the future. As far as advice, I would recommend the following.

-First off, be very very careful about who you listen to regarding your finances. There are many people who only see you as a cash cow to be milked, and by using their sales tactics, they can steer you in a direction that is directly beneficial to their own well being. Being a young kid with a lot of money, and a perceived lack of financial education, some people will do whatever they can to slowly transfer your assets to themselves. No one will ever care about your money more than you. Obvious statement...but remember that, and consider being your own financial advisor.

-That being said, get as much education and knowledge as possible. This board here is a good resource, as well as the Bogleheads website. Read a lot of books. It will take a lot of time and effort, but it will be well worth it, as the sums of money are so large that the more mistakes you avoid, the better off youll be in the long run, and the more money you will save. I would suggest adopting a bogleheads philosophy to investing. (Also, you might want to try to get out of that annuity)

-While youre learning, dont do anything with your money. Let it sit in a (or multiple) liquid savings account(s). The last thing you want to do is have your investments locked up in expensive, tax-inneficient, improper investments for your personal situation, before you are aware of, and comfortable with all of your options.

-Defend yourself...from yourself. Everyone wants to talk about offense, and making money, and increasing income investment. By doing that you add risk. Defense is just as important. Diversification is a good method of defense and wealth preservation. You do not want your portfolio value to get crushed because of one illadvised bet on one stock. Long term investing is not the time or place for gambling.

-Stop looking at the market, and what it did yesterday, or last year. Stop looking at the the mf's that have beaten the market. Dont assume that the past performance of a mf means that its manager is smarter than the market. He can not beat the market. You can not beat the market. But dont feel bad. No one else can either. You cant control how your stocks or mf are going to perform, but you can control their expenses. Youre investing for your long term security, not competing against other mutual funds.

All that being said, I would seriously consider passive investing through index funds for a large portion of your portfolio. Remember, keeping costs low is the goal here. That goes beyond expense ratios. Get comfortable with tax-efficient investments and tax-inefficient investments and place them in the proper (shielded or unshielded) accounts. Figure out the percent you want in bonds, and rebalance periodically to keep properly diversified.



Since youre in Canada, you might want to look into this article. It looks like all Canadian mf's are going to be expensive for ya, so even more of a reason to index.


If Bogle thinks U.S. mutual fund fees are excessive, he should visit Canada - The Wealthy Boomer

 

[regularguy]

So here is what my portofolio looks like right now:

2419 - MANULIFE MONTHLY HIGH INCOME
2468 - MANULIFE FIDELITY CANADIAN BALANCED
2485 - MANULIFE MAWER DIVERSIFIED INVESTMENT

151 - Signature Select Cdn Corp Class
790 - HARBOUR CORPORATE CLASS
429 - IA CLARINGTON DIVIDEND GROWTH FUND SERIES T6
441 - IA CLARINGTON TACTICAL INCOME FUND SERIES T6

What do you guys think?

(I feel bad not asking for advices before buying into these... I will never make the mistake of trusting an 'advisor' 100%)

 

[Texas Proud]

Just curious.... where was dad when you invested in the annuity

I have not read your specific one, but more than likely it was a bad decision and you should get out ASAP... and get RID of your 'adviser'...


Also, be very careful about going forward with your plans... you hopefully have a long life ahead of you and some things will look very appealing to you... and you will think "I got a lot of money, I can afford that"... which will soon mean you do not have a lot of money...

Look out for gold diggers.... they can get you broke faster than almost anything...

Good luck...

 

[regularguy]

The whole guaranteed at least 5% for life was very appealing to me. And the indexing every 3 years made it even better to my eyes, that is exactly why I felt for it. Not really knowing about the fees other stuff.

Better then nothing I guess?

 

[Mill]

So here is what my portofolio looks like right now:

2419 - MANULIFE MONTHLY HIGH INCOME
2468 - MANULIFE FIDELITY CANADIAN BALANCED
2485 - MANULIFE MAWER DIVERSIFIED INVESTMENT

151 - Signature Select Cdn Corp Class
790 - HARBOUR CORPORATE CLASS
429 - IA CLARINGTON DIVIDEND GROWTH FUND SERIES T6
441 - IA CLARINGTON TACTICAL INCOME FUND SERIES T6

What do you guys think?

(I feel bad not asking for advices before buying into these... I will never make the mistake of trusting an 'advisor' 100%)

I have to qualify this by saying that all Ive done was ...Ive taken those funds, googled them, and came up wth the following expense ratios (MER). Some have load fees, in fact they all may have, but I dont feel like doing the extensive searching for them. Either way, the MER is way too high on every one of them.


MANULIFE MONTHLY HIGH INCOME expense ratio: 2.09% with a 5% load fee.
MANULIFE FIDELITY CANADIAN BALANCED MER 2.09%

MANULIFE MAWER DIVERSIFIED INVESTMENT MER 2.45% Management fee 2%

Signature Select Cdn Corp Class MER 2.31%

HARBOUR CORPORATE CLASS 5% initial, 5% deferred, 2% management fee, 2.35% MER

IA CLARINGTON DIVIDEND GROWTH FUND SERIES T6 MER 2.56%

IA CLARINGTON TACTICAL INCOME FUND SERIES T6 MER 2.4%

I hate to encourage violence, but I hate to see people being taken advantage of, so I wouldnt mind seeing your financial advisor be punched in the face!

Read up all you can about Index funds. Expense ratios generally fall below .4%


GL

 

[regularguy]

Oh man... I am not so sure it was a good idea to ask for advices on this forum, I will have trouble sleeping at night from now on! (just joking, thanks alot for helping me opening up my eyes on the situation)

So let's say I want to cash out the investments I made, am I going to loose alot 5% load/deferred fees?

Damn, I should have asked earlier on, I feel really bad right now.

 

[regularguy]

Just took a look at my account transaction report and looks like I already spent 4k$ on fees of all kind.

****!

 

[Mill]

Well, the good news is that youre doing way better than everyone else your age, and you realize the importance of saving for the future. So you shouldnt let all this keep you awake at night. Another poster pointed out that weve all made mistakes. This is a learning process, so just keep doing research before making any more moves.

As far as getting back the money, the front end load fees are gone. The MER is an annual percentage of what they are charging you. You can probably get out of any of those funds whenever you want (maybe not the annuity, and this also might incur fees.) but Id just take a step back for now, and do some research on exactly how much $ you want- going into exactly what investments.

Personally, if I were you, Id just do whatever it was to make you that kind of money-for another 5 years, then youre all set.

 

[regularguy]

Ok, I will research out I can get out of this mess as soon as possible.

@Mill: Thank you very, very much, you do not know how much I appreciate it!

I will keep you guys updated on what happens...