Bill Bernstein- 1% of investors

[childay]

I think most doctors could learn investing passive investing 101 in a few minutes, or less than an hour if they wanted to slice and dice. I think most docs need more help with matters such as developing a written financial plan, managing cash flow, determining how much they need to save for various goals (retirement, college, etc), understanding available retirement accounts, investing in a tax efficient manner, making decisions of paying off debt vs. investing, asset decumulation strategies, estate planning, etc. The problem is that fee-based and AUM advisors are not rewarded for doing any of these things. It’s like expecting primary care docs to spend thirty minutes with every patient discussing the importance of eating fresh vegetables, wearing seat belts, and preparing living wills.

Good analogy. And of course most people don't understand or notice the AUM even being taken out.
Don't get me started on the 95yo people without living wills or POA paperwork though.

[jfoxcpacfp]

https://forum.whitecoatinvestor.com/personal-finance-and-budgeting/212288-retirement-planning-in-a-low-interest-rate-environment

Liquidity, risk vs return, volatility, diversification: Your previous post was very well thought out. Although few in number, I believe the responses were excellent.
Do you (personally) need bonds in a crisis?
Do you (personally) need bonds for liquidity, return, volatility, diversification?

I personally think bonds have a very good purpose if properly used. Just not for investment returns, but for liquidity that accomplishes ones personal financial plan.

CM, Larry Ragman and Johanna would make a very interesting panel discussion at WCI2021 or a podcast. Likely a topic without a resolution because there isn't one!

Many of our clients have bonds. I, too, think bonds have a very good purpose if properly used. My beef is that bonds are rarely properly used.

[EntrepreneurMD]

Most doctors get stuck in 101. They need an advisor.

[Kennyt7]

Could not info agree more that learning to invest with a low cost no load diversified portfolio of index funds is quite simple
Many docs think they can do better, a fool's game
Of course you need an estate planning atty and many need a CPA as well
All the info one needs about investing, pre and post retirement, is at your computer
Kitces and Pfau write much about retirement strategies; again not difficult to digest quickly

[Kennyt7]

Every professional has the intelligence to manage your their own portfolio by just reading, Malkel, Bogle, Bernstein, and Swedroe
"IF YOU CAN"- 14 pg online PDF-print it out and spread these words to others-by William Bernstein
If you read and see how 1-2% in yearly fees decimates one's portfolio, it will motivate you to do it yourself
As Dr Dahle has said, a few mistakes one might make over their lifetime is far less costly than the massive fees paid to AUM advisors and others

[EntrepreneurMD]

Many of our clients have bonds. I, too, think bonds have a very good purpose if properly used. My beef is that bonds are rarely properly used.

What is proper for physician level assets? Is there really any scenario where there is a need for more than 5 years of living expenses in bonds? 5 years is plenty to cover SORR, and more is likely to reduce long term returns with no real recessionary protection since most recessions recover within 5 years. Millions in bonds like a 50/50 portfolio doesn't make much sense to me IMO, especially given longer life expectancy.

The only scenario I can think of justifying half or all in bonds is a life expectancy of 5 years or less and a desire (no family)/need (medical bills) to spend it.

Trying to envision what I will do with portfolio heading into retirement age (20 years). Someone who is 67 and healthy today (life expectancy 90 based on family history), debt free, $10M investment portfolio, annual living expenses including taxes are $200K/year (2%, exclude SS/pensions for simplification) - is $1M in bonds reasonable leaving $9M to grow (90/10)? Or would an FA still recommend 60/40 or 50/50?

[Kennyt7]

JFOX-what bonds are appropriate in retirement, may I ask? or other fixed income vehicles like munis, preferred, ginnie Maes, etc

[jfoxcpacfp]

JFOX-what bonds are appropriate in retirement, may I ask? or other fixed income vehicles like munis, preferred, ginnie Maes, etc

Timed to mature at date of need confiding 5-yr goals. We use bonds for specific short term goals only, as articulated in their financial plan.

[jfoxcpacfp]

What is proper for physician level assets? Is there really any scenario where there is a need for more than 5 years of living expenses in bonds? 5 years is plenty to cover SORR, and more is likely to reduce long term returns with no real recessionary protection since most recessions recover within 5 years. Millions in bonds like a 50/50 portfolio doesn't make much sense to me IMO, especially given longer life expectancy.

The only scenario I can think of justifying half or all in bonds is a life expectancy of 5 years or less and a desire (no family)/need (medical bills) to spend it.

Trying to envision what I will do with portfolio heading into retirement age (20 years). Someone who is 67 and healthy today (life expectancy 90 based on family history), debt free, $10M investment portfolio, annual living expenses including taxes are $200K/year (2%, exclude SS/pensions for simplification) - is $1M in bonds reasonable leaving $9M to grow (90/10)? Or would an FA still recommend 60/40 or 50/50?

Not everyone is willing to be logical and cannot extract their emotions from planning. If the plan allows for their money to comfortably last for the rest of their lives while meeting their goals, they can afford those emotions and we just advise them of the comparative scenario of optimal investing.

We don’t use bonds for living expenses. That is the purpose of liquidity.

[Kennyt7]

ANYONE have thoughts on PREFERREDS, the elf PFFD, that Pic Ferri suggests?

[Kennyt7]

Have owned individual MUNIS for 35 yrs and the tax free income is great and bought only long term with higher returns
As well owned Vang Hi Yield Corp for a long time and they buy the best of the junk many times
LT TREASURIES and corporates have done better than sp500 over last 20yrs as well as junk
LT Bonds in the 80's with double digit returns through zero coupon bonds funded my 3 kids education

[Larry Ragman]

Have owned individual MUNIS for 35 yrs and the tax free income is great and bought only long term with higher returns
As well owned Vang Hi Yield Corp for a long time and they buy the best of the junk many times
LT TREASURIES and corporates have done better than sp500 over last 20yrs as well as junk
LT Bonds in the 80's with double digit returns through zero coupon bonds funded my 3 kids education

Yes, we are at the end of a historic bull market in bonds, but what is you plan going forward? Buy more at 1%?

[Kennyt7]

buying more PPFD and dca into vang total stock and vanguard healthcare and bark

[Larry Ragman]

buying more PPFD and dca into vang total stock and vanguard healthcare and bark

Oh, so no bonds? Your risk diversification is international and your factor is healthcare. Ok. Or, are you saying you will hold your current bond allocations to maturity, and the plan described here is where the new money goes?

[Kennyt7]

Still buy corp bond funds, GNMAE bond fund, Agency bonds, etc, etc etc
cannot tolerate another massive paper loss we had in march where on paper lost 640k; got it all back plus