"mike742" <gqrxzy8974[at]ftml.net> wrote in message
news:1149269537.537843.271560[at]c74g2000cwc.googlegroups.com...
- quote -

Agreed, and I stand corrected.

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Or might yet to become -- but, then again, I ain't got a
crystal ball.

Chris Cowles wrote:
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A good investment strategy will be backed with data and understandable
reasoning. If you are simply told to put all your money into GE, the
advisor isn't helping you although he might be giving you the best
advice.

--
Ron

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No. Where it advisor is now is just one sample of what
his advice might do (assuming he followed it).

You need to consider what all the possible outcomes might
have been. See Taleb.

Say the advisor bought lottery tickets and won a big one.

Say the advisor played russion rollute for $5M and won.

Say he put all his money in Enron and got out before
the collapse.

You probably won't talk or meet "advisors" which got
the losing end of the above...

"Chris Cowles" <spam_magnet[at]remove-me-bellsouth.net> wrote in message
news:jxXDf.8816$fZ2.4698[at]bignews4.bellsouth.net...
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It's got nothing to do with what you have -vs- what they (advisor) have, nor
how they got it. It's got *everything* to do with

(a) What did the advisor start with (where it came from is irrelevant)
(b) Did they use their "plan" -- is the advisor actually practicing what
s/he's preaching ... and most importantly:
(c) Relative to (a), where is the advisor now?

"John A. Weeks III" <john[at]johnweeks.com> wrote in message
news:john-E20F6A.22010431012006[at]sn-ip.vsrv-sjc.supernews.net...
- quote -

If you inherited $2B and they didn't, would their investment strategies
still be wrong?

John A. Weeks III wrote:
- quote -

John,
I agree with you but in a very limited way. I'm amazed to see people in
financial services whose personal finances are a train wreck. I
sincerely believe that someone who can't manage their own finances has
no business trying to charge other people to tell them how to manage theirs.

But a net worth test isn't really a good one. Someone could have
inherited their money, or had it gifted to them, rather than earned it.
Or received a windfall from a venture completely unrelated to financial
services. Or started private-sector wages late because they served 4
years to pay back a ROTC scholarship. Etc etc. - unlimited scenarios
where a perfectly competent advisor has lower net worth than you (and
vice versa). And as others have said a net-worth test strongly favors
older advisors who naturally have had more time to accumulate wealth.
What's better, $300k on the balance sheet at age 28 or $500k at age 48?

A related question to this is whether the advisor "eats his cooking".
Some people ask this in the most literal sense - having the same
investments as clients. My answer to that (as I think you know I'm an
investment advisor) is "no, I don't have the same investments as my 72
year old retired clients!" Thankfully...for them as well as for me.

-Tad

I'm afraid I agree that "richer than I am" is a foolish way to
choose an advisor. This is particularly true among non-fee-only
advisors, some of whom have become richer than we are by pushing
investments that are highly profitable to themselves. I'd go so
far as to say that this is true of almost all successful stockbrokers.

It's also true that rich depends heavily on age. When you are a grad
student almost every potential advisor is richer than you and when you
are 60 and very successful relatively few are --- and well-trained,
younger advisers who have good ideas and are beginning to do well by
doing well for clients may be just what you need at 60.

David

In article <yobvew0lbdh.fsf[at]panix3.panix.com> ,
BreadWithSpam[at]fractious.net wrote:

- quote -

I think it is the single biggest factor. If an advisor cannot
make their program work for themselves, how can I expect it to
work for me? I only have one shot at life, and I cannot take
chances being a lab rat for a newbie.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

Doug-

This is my strategy as well. I plan on timing the withdraws- take out
2X yearly expenses in up years, and take a year off in a down year.

I see the biggest risk if the market declines in first 3-4 years of
when the plan is implemented. The market is down if the gain in the
account is less than the amount needed for one year's expenses.

"John A. Weeks III" <john[at]johnweeks.com> writes:
- quote -

I'm sorry, but that's patently absurd. The net worth of your
advisor, especially as compared to you, is irrelevant. If the
advisor is doing stupid thing with what money he or she has, that's
different, but the quantity of his or her wealth as compared
to yours (or his or her client's) is useless information.

Look to the quality of the advice, look for conflicts of
interest, look at experience (especially with situations
similar to yours - which may not be what the advisor's
personal situation is).



--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

In article <1138678179.190378.169620[at]f14g2000cwb.googlegroups.com> ,
pacman2081[at]yahoo.com wrote:

- quote -

You simply ask. Whenever someone proposes an investment to me,
no matter how whacky, I simply tell them that I would be happy
to invest in whatever they have so long as they meet two rules:

1) they can show a financial statement that shows they have
more money than I do

2) my current broker approves of the deal

I have only had one cold caller ever take me up on condition
#1. That person became my financial planner, and has been
going on 10 years.

Bottom line -- never take financial advice from someone who
is broker than you are.

If you want your wealth to grow, do the things that wealthy
people do. If you want to be broke, do the things that
broke people do. And when you consider how wealthy people
live, make sure you have the facts, and are not looking at
the 1% of odd-balls like Paris Hilton. The book "The
Millionaire Next Door" is a great introduction to this topic.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

How do you find a financial planner with more money than you do and one
with a proven track record ?

Bucky <uw_badgers[at]email.com> wrote:

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I think this is actually the investment I was thinking of.

Michael Sullivan wrote:
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That's not a bad idea. But the goofy issue with I-Bonds is that you
have to pay federal tax. If inflation is 4%, then your composite
interest is about 6%. But then you pay about 25% of that in tax, so
you're left with 4.5%, which is only 0.5% real return, which is only
$10,000. In times of very high inflation, your after tax return will
not keep up with inflation.

BreadWithSpam[at]fractious.net wrote:
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orpheusNY <orpheusNYNOSPAM[at]yahoo.com> writes:
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Good point. They can invest in TIPS though, which are currently
yielding 2%.

BreadWithSpam[at]fractious.net writes:

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Or have bought I-Bonds back in 2000-2001 when you could
lock in CPI + 3.5% and CPI + 3%.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

orpheusNY <orpheusNYNOSPAM[at]yahoo.com> writes:

- quote -

They currently pay only 1% above inflation, too.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

"jIM" <noreplysoccer[at]hotmail.com> wrote:

- quote -

Don't forget expenses that are not paid monthly. You need to add in annual
insurance payments and taxes. You also need to add allowances for purchase of
cars and major house repairs (if you own).

- quote -

It's worth pointing out that this is a market timing strategy. If you withdraw
your year's expenses every year, rain or shine, then you don't need a seven year
cushion. If you skip some years, because the market is down, then you are
hoping it will be up in later years. Market timing -- on a longer time scale
than most timers, but still market timing.

To be fair, this is more-or-less the strategy I am planning. I just haven't
figured out how to make the withdrawal decision. Do I withdraw additional years
when the market is up (whatever "up" means)? How do I decide the market is
"down"?

-- Doug

mscottveach[at]gmail.com wrote:
- quote -

This question is near and dear to my heart. I was faced with it in
2000, with slightly different parameters. That date should cause
laughter to all the "invest heavily in equities for the long haul"
folks. The answer is Excel spreadsheets. Windows comes with a free
"Microsoft Works Spreadsheet, file.xlr" if you want to play around
cheap. The PMT function can be used to calculate mortgages, although I
always use the formula. If you can figure out one year of expenses
with a calculator and the back of an envelope you are good to go. A
flick of the wrist in a spreadsheet (pull down) will give you the next
99 years.
I can't predict the future. I can't tell you what returns will be
or the inflation rate. I can answer the question "If this happens,
do I succeed?". Of course, even I make mistakes.

I always under calculate the spendable income compared to financial
advisors. I like to shoot for "self sustaining" investment mode
and fail into "spending down" mode when reality slaps me in the
face.

Assume two million dollars starting principle, inflation rate of 3%,
"bank" rate of 4%, overall tax rate of 30% (CA takes 9.2% by itself
here). You can start living on $32,338. This will be inflation
indexed in future years. Your balance goes to $0 in 60 years. This is
very sensitive to tax rate. If your tax rate is 15%, your money lasts
for 73 years. That 73rd year, your living expenses will be $279,000
dollars. It's not the first year of retirement it's tough to save
for, it's the last year that's a real bear. As an afterthought I
calculated "self sustaining" rate and it is now one of my favorite
data. For the 30% tax rate example, a self sustaining return needs to
be 6.6%. For the 15% tax rate example, self sustaining return only
needs to be 5.43%.
If you plot income and principal over time you tend to see patterns.
Income goes up exponentially because it is predicated on a fixed
inflation rate. Easy. Principal can do one of three basic things. It
can rise exponentially forever if your return if over the self
sustaining rate. It can go up for a while, peak, and then come down.
It can go down from
the beginning. Spending down is very scary to me. Ask your financial
advisor if you can move in with his children if you outlive your money
by 3 years. "Hope I die before I get old" (you are a geezer if you
chorused back "Too much, the magic bus".) Spreadsheets can be made
as complicated as you want. You can allow the parameters to change
every year. You can put in Social Security at age 67. You can put in
$100,000 of medical expenses for five years at age 70. It's just a
"what if" model (not the actual future).

Good Luck to you.

"TB" <borekfm[at]pacbell.net> wrote
- quote -

Though the maintenance costs and taxes on a $500k house in
some parts of the country could really eat into the income
from the remaining $1.5 million. You touch on that a little,
Tad, but I thought it could use a bit of elaboration.

In one instance with which I am familiar, the upkeep on such
a house helped drive someone I know into a far less
expensive nursing home sooner, rather than later. The cost
of maintaining a house is something to consider as one looks
for a "nice" place to live.

- quote -

You can only put 30k a year into I-bonds, no? How is that going to serve
someone with 2 million to invest?