Announcement

Collapse
No announcement yet.

Terrible portfolio needs an update!

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Terrible portfolio needs an update!

    After years of leaving our investment decisions to my husband (the physician), I've finally gotten around to educating myself on the subject and going through our investments with a fine toothed comb.  What I've uncovered are investments that are WAY too stock heavy with pretty much no diversification.  After discussing the merits of asset allocation, backed up with books I've borrowed from the library and articles that I've forwarded to him, he is still not very enthusiastic about making this change.  We started really putting money away after the great recession, so of course, our returns look great thus far.

    We're pretty much on the same page with savings and debt repayment, thankfully.  Due to his income and our saving habits, we have the opportunity to invest a sizable amount of money, and I am NOT okay with the possibility that all of his hard work and the sacrifices he's making for our family could potentially be incredibly costly due to how we're managing our investment accounts.  I am fully on board with doing all of the work needed to overhaul our portfolios, and I do not want to outsource this to an advisor.  Any tips on how to convince him that I may actually know more about this subject than he does?

  • #2

    What's your batting average so far convincing your physician husband that you know more than he does? Might be better to introduce him to WCI. Maybe give him the book?

    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

    Comment


    • #3
      Hi there, good that you are taking an interest. Hard to give advice/comments without more information. If you can list what these investments are, that would be helpful. I'm 40 and invested in 100% stocks and many of us do.

      Comment


      • #4
        Why not post some more detail here so folks can give you specific feedback?  Including details like type of accounts (Roth, 401k, taxable, etc), specific holdings in those accounts, and expected annual contributions would let folks on here opine.  You could then point your husband to this thread.  That could help change his mind while also reinforcing whether the changes you are contemplating make sense to folks on this forum.

        You could also consider going to a fee only financial planner.  Third party input could also be helpful to you.  Managing your finances yourself is great.  However, even if you make the right decisions, no one has a crystal ball.  Your husband could resent you if the changes end up doing apparent harm to the portfolio by underperforming whatever your current portfolio is.  Could be helpful to point to a third party to deflect that resentment.

        Comment


        • #5




          After years of leaving our investment decisions to my husband (the physician), I’ve finally gotten around to educating myself on the subject and going through our investments with a fine toothed comb.  What I’ve uncovered are investments that are WAY too stock heavy with pretty much no diversification.  After discussing the merits of asset allocation, backed up with books I’ve borrowed from the library and articles that I’ve forwarded to him, he is still not very enthusiastic about making this change.  We started really putting money away after the great recession, so of course, our returns look great thus far.

          We’re pretty much on the same page with savings and debt repayment, thankfully.  Due to his income and our saving habits, we have the opportunity to invest a sizable amount of money, and I am NOT okay with the possibility that all of his hard work and the sacrifices he’s making for our family could potentially be incredibly costly due to how we’re managing our investment accounts.  I am fully on board with doing all of the work needed to overhaul our portfolios, and I do not want to outsource this to an advisor.  Any tips on how to convince him that I may actually know more about this subject than he does?
          Click to expand...


          A lot of men don't want to be told they know less than their wives about finances.  They feel should be an expert even though it doesn't make them any less of a man that they aren't.  Even though you know more than your husband, you may find taking another approach might be more helpful.  If you have been primarily invested in US Stocks the past 9 years, congrats!  You had the best asset allocation you could have possibly had over that time period.  You may want to lead with that when discussing this with him.  It sounds like he is on the defensive and the best way to discuss any change will involve reiterating all of the great things the two of you (and he) has done in saving and investing.

          I can speak to this from working with clients and from my own personal experience.  Usually, we guys are stubborn in areas we are insecure about.  Help relieve his insecurities and I'm guessing you will have an easier time talking about it.

          Comment


          • #6
            I encourage you to post specifics including your ages.  It might be a male-female thing.  Getting some advice from both sexes might be useful.

            Comment


            • #7




              What’s your batting average so far convincing your physician husband that you know more than he does? Might be better to introduce him to WCI. Maybe give him the book?
              Click to expand...


              Good point. The Grateful Dead said it best in Scarlet Begonias:

              "I ain't often right but I've never been wrong. It seldom turns out the way it does in the song. Once in a while you get shown the light in the strangest of places if you look at it right."

              If sound financial advice comes from Mrs. Vagabond, it will be a strange place, indeed!

              I agree, turn him on to WCI, and let the rest of us do the heavy lifting.

              Comment


              • #8
                Hi, I'm a spouse who found myself in the same position a few years ago. Before the end of training, my husband was mostly in charge of the finances, but once he started his post-residency job, he had less time to focus on it and more decisions to make because of the increased amount of money. He also was seldom available to do transactions during market hours. So he asked me to educate myself to the point I'd feel comfortable taking over. He kind of envisioned me becoming something of a day trader and making some big bucks from home, but the more I learned, the more comfortable I was with more of a Boglehead-style plan based on index funds.

                I'm now in my sixth year as our main financial manager. We do still make major decisions as a team. But my general confidence and our overall track record of performing okay relative to our benchmarks, helps him to just relax and let me do the worrying.

                I guess my advice is to talk it out. Maybe go through some asset allocation tools like Vanguard's (https://personal.vanguard.com/us/FundsInvQuestionnaire), read an asset allocation book like Swedroe's "Right Financial Plan" and figure out your individual risk tolerances. Don't just go in saying you know better than he does. If he's gotten your family this far, respect that. But move forward together, as a team. WCI's book does have a section about when/how to choose a fee-only planner if it would be good for your relationship to have that third-party input.

                Comment


                • #9
                  Thanks for the replies everyone.  Here is a percentage breakdown if what we have so far in savings/investments:

                  1. Brokerage account 1:

                  Equities: 90.46%  Includes 10 different stocks (mostly blue chip) which are roughly 60% of this percentage, and the remainder are a mix of index funds (S&P 500, REIT, Small Cap, Target retirement, Total stock).

                  Cash: 7.94%

                  Fixed Income: 1.59%

                   

                  2. Brokerage account 2:

                  Equities: 10.04%  Includes 3 stocks

                  Mutual Funds: 87.3%  Includes 3 different funds (S&P 500, Total Market, Target retirement that are split equally in this category)

                  ETF: 1.89% Consists of 1 technology fund

                  Cash: 0.77%

                   

                  He had set up brokerage account 1 for himself (hence, more risk), and he set up brokerage account 2 under my name.

                  Our combined brokerage accounts make up roughly 30% of our savings.  We have retirement accounts that we're maxing out (401(a), 403(b)) that are invested in target retirement funds and make up about 40% of our savings.  Another 20% of savings is in 529's (age based funds), 8% in IRA's (really wish we had been more aggressive about funding these earlier), and another 2% in cash.  We are both in our early 40's and plan to retire in about 20 years.

                  So I should correct myself and say that our overall portfolio isn't terrible, but rather the brokerage accounts are more risky than I'd like.  They will make up a larger portion of our savings as time goes on, and they just seem too stock heavy to me.  He's a very hard worker, and he's wanting to save a large amount for retirement (6-7mil range), so I'm trying on my end to increase the odds that we can make this happen with smart investing.  He has mentioned that he wants to sell a bunch of stock in the near future in anticipation of stocks going down...aka market timing...so I'm just afraid that he'll react viscerally to the markets and we'll lose out in the end.

                  I have a copy of WCI's book and have showed it to my husband.  He also knows about the website, but he has not shown any interest in pursuing anything further.  I have been careful about not pushing too hard as I'm aware that there may be ego involved.  I had suggested meeting with an advisor, but again, he didn't really show any interest.  Thoughts based on our current asset allocation?

                   

                   

                  Comment


                  • #10
                    Seems generally ok to me, and I certainly wouldn't call it terrible.  I would invest the cash in brokerage 1 (which I assume is taxable).  20% (if I did the rough math correctly) of your savings in individual stocks is probably too much, but it is likely not worth taking the tax hit if there are significant embedded cap gains.  Other than those tweaks, no major issues in my view.

                    At your age and with many years of earning until retirement, a heavy stock allocation is reasonable.  If you have 20 years of savings ahead of you, you can weather any portfolio downturn due to your high stock allocation.  It seems your risk tolerance is lower than your husband's, which is the primary issue here.  No easy way to address that other than by discussing it.

                    Comment


                    • #11
                      Your allocation isn’t terrible and it seems like you are doing a great job saving which is the most important piece of the puzzle. The allocation to individual stocks seems high, but in the context of the rest of your broadly diversified portfolio it isn’t going to be a deal breaker.  Without having all of the details I can guess that there is a lot of overlap with the investments and primarily invested in US Large Cap.  You are also likely getting some diversified exposure through the target dated funds.  The biggest issue as you identified is that there just isn’t a plan in place so investments are selected individually without a broader consideration of their place in the portfolio.  A plan will also help in knowing what you will do in case of a market downturn.

                      If he’s not ready, you may just want to take a break and try to engage him when he might be more open to discussing it.  Your portfolio isn’t on the verge of collapse or anything and you are already doing a lot right.

                       

                      Comment


                      • #12
                        To echo what others have said, your situation could be a lot worse. As @cgossage posted, your husband has made some good choices in a very strong bull market. Yes, I agree with you that you should move from individual stocks into mutual funds and spread the risk. But I’m not sure about talking your hubbie into doing that. This is as much marital/psychological as financial and I think it has to be his idea, not yours. It’s up to you to come up with a a roadmap to get to that point.

                        Blue chip stocks are not “bad” per se, just not my personal choice for a long-term plan (I’m not talking “correction”, which is what we’ve seen lately, please note). A portfolio of BC stocks is not necessarily a “balanced” portfolio.

                        In addition to the above suggestions, I strongly suggest Nick Murray’s Simple Wealth, Inevitable Wealth, ignoring Nick’s harping about paying a 1% AUM fee, which is presented only to make the overall concepts simpler to follow.

                        It is not as bad as you have feared, take heart. If hubs can “somehow” find his way to WCI and begin the education on his own without your prodding (I speak from experience), you will be > half-way to your goal. Good luck.
                        Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

                        Comment


                        • #13
                          Show him the papers demonstrating that women are better investors than men!

                          if there's a communal computer, perhaps leave WCI website open to a thread about poor investments and see if he reads it.

                          Depending on how long you've held those stocks and funds in the brokerage (taxable) accounts, you probably have a good amount of gains so changing investments may be costly. Might be good to get a fee-only financial advisor to help look through them and see which can be sold etc. Sometimes due to tax costs of selling it makes more sense to leave them be and just build up the rest of the portfolio around them. Then if the individual stocks ever drop in price you may be able to sell and purchase better investments and harvest some tax losses too!

                          Comment


                          • #14
                            Why not set aside a portion of the portfolio for your husband"s individual stock account, maybe 5-10%. Track his returns vs. the S&P 500 and perhaps over time, you will convert him.

                            This situation is hardly "terrible", BTW.

                            Comment


                            • #15
                              One thing that I noticed is you have some fixed income in the taxable account.  Make sure that it is muni bonds.  All in all not bad. Probably some duplication.  Nobody is perfect. I would avoid big capital gains in pursuit of perfection.

                              Comment

                              Working...
                              X