Managed Investing Advice Sought

[Patient Investor]

A relative of mine just sold her house. She wants to invest the money from this sale but wants someone else to manage the investment. In the past she had investments with Merril Lynch but no longer does.

I suggested that she look into a Dodge & Cox fund but I just checked the website and the stock fund and balanced fund are closed to new investors.

I guess that my next recommendation will be to put the money in a Vanguard account even though she really does not want to "manage" the investment.

Any good advice/experience on managed investing?

 

[travelover]

Perhaps you could guide her into a "lifestyle" or target retirement account based on what you know her needs / goals are. These are pretty low cost and would require a minimum guidance from her.

 

[audreyh1]

I invested the money from the sale of my house in OAKBX which is still available if you open the account directly with Oakmark Funds. This is a balanced fund and it's a reasonable alternative to the Dodge and Cox Balanced fund which is indeed closed.

OAKBX fluctuates, of course. If she needs the money within say 3 years, she might be taking too much risk by having it partly invested in equities. Otherwise, odds are in her favor that a balanced fund will outperform a CD.

I had a 10 year time horizon for needing the funds, so I was comfortable taking this investment approach.

There should be the equivalent type of Vanguard fund available and it will have a lower expense ratio.

Audrey

 

[LOL!]

Here is a synopsis of managed investing as espoused here on this message board and others. I make no apologies to those possibly offended by the following.

If you have less than a million dollars, you should learn enough to manage your own investments. It will take a weekend or two. You will need to learn all this anyways since you will not know if your manager/advisor is ripping you off or not without this knowledge anyways. See Investment Guide for an easy introduction to this.

You are going to use Vanguard for your assets and sometimes use their financial planning services for free if you have $250K with them or can deposit $100K with them. If you have less than $100K, you are really on your own and must read some books. But you can get free advice by reading the articles at FundAdvice.com - Home . You can also get expert personal free advice at Guide to the Vanguard Diehards Forums If you don't like the web for knowledge, you can read some books like The Bogleheads Guide .... and The Four Pillars of Investing.

If you have a million or more, then you are allowed to use a DFA-sanctioned provider, but only a low cost one like Rick Ferri at Portfolio Solutions or Evanson Asset Management - Main Page or Welcome to Cardiff Park Advisors and some others.


That's it in a nutshell.

 

[kaudrey]

I agree that looking into a Vanguard (or Fidelity) target retirement fund might be good for her - invest it and forget it, and it will rebalance over time for her.

 

[REWahoo]

There should be the equivalent type of Vanguard fund available and it will have a lower expense ratio.

Audrey

Vanguard's Wellington fund (VWELX) is similar to OAKBX and D&C Balanced.

I second Audrey's recommendations.

 

[Brat]

Vanguard's Wellington fund (VWELX) is similar to OAKBX and D&C Balanced.

I second Audrey's recommendations.

I third.

 

[Olav23]

It sounds like this is in a taxable account, if she received the money from sale of a house. Did she downsize to another house? Does she need this money available to pay rent monthly?

I wouldn't recommend a target retirement fund in a taxable account, as it can pretty inefficient for tax purposes. And depending on how soon she needs to touch the money, I'd say anything from an efficient stock index fund, or tax managed fund, ladder of CDs, to tax exempt Munis if she is in a high tax bracket.

I think you can get 6% CDs at a few credit unions now!

It all depends.

 

[Patient Investor]

THANK YOU ALL for the input!

I will discuss this further with her and see what develops . . .

(btw this would be in a taxable account, she is downsizing and will need the money in perhaps 4-10 years)

 

[Brat]

There is a BIG difference in the market risk when investing for 4 vs 10 years.

Also, when she needs the money will she need it all at once or will she convert it to an income stream?

If an income stream starting in 4 years then maybe some should be in a CD ladder to take care of those first withdrawal years.