New answers tagged

8

First off, we should clarify what you mean by "529 - money in the kid's name". Usually, this means that the parent sets up a 529 account in their name, but puts down their kid as the beneficiary. Therefore the parent is the custodian, or the "owner" of the account. However, if the student is both the beneficiary and the custodian of their own account, that ...


3

There are long articles, and full books that address this topic. In general, the answer is yes. Money available is treated according to how it's owned. And your retirement accounts don't count towards that formula, but money in a child's name does. Keep in mind, your income and other assets also count towards the expected parental contribution. This is why ...


1

Adding my own answer as I've thought about it more and adding a piece that probably should have been included in the question. First off, I think it is correct (in agreement with the other nice answers) that the actual dollar amount in the nest egg must be related to your actual expenses in the year of retirement. So you must use inflation adjusted spending ...


3

You are correct. Better explanations of the 4% rule don't say "current expenses," rather they say expenses needed in retirement, expenses right before retirement, or some other wording to help address the issue you just highlighted. Simply applying the inflation rate for the number of years until retirement is probably a pretty good approach to keeping ...


4

Spreadsheets are really handy for this!! I calculated my hypothetical initial retirement budget based on my current budget adjusted for: what my father currently pays for Medicare Advantage (we're in the US), what expenses I think might disappear, what new expenses I think might appear, how taxes are calculated, years until retirement, and estimated ...


3

Trying to succeed at something that you are unfamiliar with is a daunting proposition and AFAIC, investing based on the advice of anonymous strangers on the web isn't the best approach. My generic advice would be to start the process of becoming financially literate. To do so, start by reading beginner level introductory material. There are a lot of "XYZ ...


0

You don't mention Mom, so I'll talk about single filers. In 2019, the standard deduction is $12,200. The key thing, in my opinion, is his marginal rate. After the deduction, say his taxable income is $35,000. This is an opportunity to convert $4,475 from the 401(k) to Roth, to "top off" that bracket. Paying 12% on this conversion, and accumulating tax free ...


-3

It would be almost impossible to diversify with 50% in one stock. The risk is extremely high. Another 2008-like collapse would cost her roughly $1.5m. That may seem unlikely but keep in mind the Democrats are leading in the polls and they could very likely win like they did in 2007. At 80 with a fairly decent amount of wealth the goal should be ...


1

There is the question of what your mother's tax bracket is. If it's low, you might want to slowly rebalance the portfolio, i.e., sell a small portion of the JPM each year. This will generate a tax hit, with the offsetting benefit that you will be increasing the diversification of her portfolio. Don't forget that these are long term capital gains we're ...


0

Mismanagement by Morgan Stanley? Only if they bought that much JPM stock for her. I don’t think their integrity is what you should be questioning but rather the choices you will make. Personally, I bet that there's a high chance that your return will be within 2% over 5-10 years whether hold JPM or you diversify. Ask your mother what she wants. That’...


1

Is this a suitable allocation of assets? All allocation of assets are of course up to the investor, the risks they are willing to take and the companies they want to support. To me it looks like borderline mismanagement, but I'm willing to be convinced otherwise. This is definitely strange, but large corporations are fairly stable. And $3.5M is a lot. ...


1

I'm 62, getting ready for retirement, and in a similar situation. I worked for a dozen years at Microsoft, purchasing ESPP, getting stock grants, etc. My stay there nearly exactly coincided with Steve Ballmer's turn at CEO. During that time (except a large drop right after I started and a dip/recovery in 2008-2009), the stock remained completely flat. ...


5

Given the capital gains basis on the stock, it would be practical for her to continue to hold it. It is potentially possible that JPM grow so much over the past 10 years that it went from a moderately weighted position (10-15%) to 50% and was not sold for tax reasons. With that in mind it is hard to tell if this is mismanagement as the adviser could be ...


9

Yes, this is terrible in terms of lack of diversification and concentrated risk. Conflict of interest? No, because there's no benefit to Morgan Stanley if a client owns shares of JPM. Mismanagement? Maybe, maybe not. This might be a violation of FINRA's "Know Your Client Rule" which requires a broker to assess each customer's financial situation, ...


49

This seems to me irregular both in terms of risk, lack of diversification Me too. Is this a suitable allocation of assets? Putting 50% in one stock is acceptable, I think, if that one stock is a highly diversified and well-run investment company like Berkshire-Hathaway. (Apparently, half of Bill Gates' wealth is in B-H.) Of course, a giant bank isn't ...


2

Starting with a simple demonstration saving over 3 years With c = initial salary contribution i = salary increase r = rate of return c = 48060*0.06 i = 0.026 r = 0.1 The deposits over years grow with salary increases d0 = c = 2883.60 d1 = d0 (1 + i) = 2958.57 d2 = d1 (1 + i) = 3035.50 The accumulated savings with interest r are s = d0 (1 + r)^...


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