201-Friday Q&A: My Parents Just Bought an Annuity...How Do I Help and How To Invest An Extra $20,000
Radical Personal Finance
Joshua J. Sheats, MSFS, CFP, CLU, ChFC, CASL, RHU, REBC, CAP
4.2 • 1.9K Ratings
🗓️ 22 May 2015
⏱️ 69 minutes
🧾️ Download transcript
Summary
Q&A show today and I answer these two questions for you:
- Joshua, My parents just moved to Florida last year and got wooed by an advisor that bought them dinner, gave them a free round of golf, etc. and now they're in an annuity and I can't figure out how badly they are getting screwed (not because there's anything inherently wrong with annuities but because the advisor is sadly not a fee-only advisor so I imagine he's taking a big cut of the action). I'm trying to convince them to find a good fee-only advisor to help them get set up for retirement but I'm not sure how to go about finding a good one. Thanks for the help!
- Joshua, I can't thank you enough for starting Radical Personal Finance; been a fan since you did the interview with Jacob Fisker :) I have learnt so much from you and others in the personal finance community - I'm unable to quantify with an exact figure yet, but I know it's going to compound to a huge amount (possibly millions?) over my lifetime. This morning I just signed up via Patreon to support your show. It's a small amount, but one important thing I've learnt on my PF journey is learning to pay for value rather than simply focusing on cost. I have a question which relates to the investment part of building wealth. How should I invest an idle USD$20,000 that's sitting around in my savings account for maximum returns? I feel I'm sufficiently exposed to the stock market at this stage and diversified enough within and outside the publicly traded securities realm. I don't want to pour money into publicly traded stocks as due to mean reversion, future returns tend to be lower when markets are at highs. Please feel free to suggest the most radical ideas you have - that's why I love the show! Some background on myself: I'm 28 years old living in Singapore. My marginal tax rate is 7% but we are forced to contribute 20% to our own tax-free housing/medical/retirement accounts. Annual take home salary (post taxes and retirement etc contributions) is about USD$50,000. Invested USD$60,000 in semi diversified stocks, ETFs and REITs. USD$20,000 in alternative non-publicly traded investments. Have 6 months emergency fund. Have a 30 year level term insurance for USD $400,000. Time horizon: >20 years. I consider myself an aggressive investor willing to take large risk on small sums of money for the potential return, if the mathematics are in my favor (eg NO lotteries, YES to EM stocks). I know it's hard to provide investment suggestions without knowing the nuances of each individual situation. Right off the bat I know I should be focusing on: increasing my salary/earning potential and starting a side business. Should I be getting more insurance coverage? Should I be maxing out retirement accounts when my marginal tax rate is only 7%? Is there anything else I'm missing? As a goal oriented person (and my goal is to reach FI fast!), I can't stand the fact that my money is idling in my savings account earning a negative real rate of return. Keep doing great work!
Enjoy the show!
Joshua
- Support Radical Personal Finance on Patreon! http://radicalpersonalfinance.com/patron
Transcript
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| 0:00.0 | Friday Q&A show today, four questions. Number one, my parents just bought an annuity, how do I figure out if they're getting screwed or not? Number two, I've got $20,000 to invest. Where should I put it? Number three, here's how I hacked the child labor laws, and |
| 0:17.6 | number four, is tax loss harvesting worth it, or is it a bunch of sales copy? Welcome to the Radical Personal Finance Podcast. My name is Joshua Sheets. This is |
| 0:44.2 | episode 201 of the show. Thank you all so much for being here. I love doing |
| 0:50.0 | these Q&A shows. If you'd like to get a question on a show like this and you'd like your question to have priority, |
| 0:57.3 | make sure that you're a patron of the show. Details for that can be found at radical personal finance |
| 1:01.5 | dot com slash patron at radical personal finance.com slash patron and you'll get priority |
| 1:06.9 | for shows like this. |
| 1:10.3 | But even what I'd still have a few of these that aren't a patron shows |
| 1:16.4 | patron questions. I just thought they were good questions and so we're gonna kick |
| 1:20.4 | this off from with a question here that comes in from Brandon. |
| 1:24.1 | Branna says this, Joshua, just wondering if you've done any podcasts about annuities or an |
| 1:27.6 | episode on what to look for and questions to ask when picking a financial advisor. |
| 1:31.8 | My parents just moved to Florida last year and got wooed by an |
| 1:34.5 | advisor that bought them dinner, gave them a free round of golf, etc, and now they're |
| 1:38.3 | an annuity and I can't figure out how badly they're getting screwed. Not |
| 1:42.0 | because there's anything inherently wrong |
| 1:44.2 | with annuities, but because the advisor is sadly not a fee-only advisor, so I imagine he's taking |
| 1:49.6 | a big cut of the action. Trying to convince him to find a good fee-only advisor to help them get set up for retirement, |
| 1:55.3 | but I'm not sure about how to go about finding a good one. |
| 1:58.0 | Thanks for the help. |
| 1:59.0 | Brandon. |
| 2:00.0 | Brandon, thanks for the most difficult question that I get every single time on this show. |
... |
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