Hosts: Nancy Hecht, CFP®, AIF® and Joe Bert, CFP®, AIF®
It is an Ask the Expert weekend on News 96.5 WDBO and this is On the Money, brought to you by Orlando’s oldest and largest independent firm of certified financial planning professionals, that being the Certified Financial Group in Altamonte Springs, and with us this morning we have two of the twelve certified financial planning pros with us. Say good morning to Nancy Hecht, author of the The Hecht Effect and A Man is Not a Plan. Good morning, Nancy.
Nice to see your smiling face.
Nice to see you also, sort of, with the monitor.
Hello over there. And back with us again with his smiling face is the Oracle of Orlando, Joe Bert. Hi Joe.
Hello, good to be there, good to be back. Thank you.
Some of the things we’re going to be talking about today are obviously the Brexit, the Frexit, the maybe Grexit.
Nexit. We’re also going to be talking about how financially prepared you are for a hurricane and a fellow who inherited $15M, who said he actually inherited a nightmare. We’ll talk about all those, plus we’re going to take your phone calls. Nancy, tell everybody — what are you taking phone calls about this morning?
Well, predominantly retirement planning issues. We are independent certified financial planners, but we’d be happy to answer your questions on anything retirement based, whether it has to do with your 401k, 403b, IRA, SEP-IRA, 457, stocks, bonds, mutual funds, annuities, long-term care, succession questions. Any of your pockets of questions we’d be happy to answer. And of course, Joe, the 100 pound, or should I say the 1,000 pound, gorilla in the room is everybody this week is talking about what this is going to do to our 401(k)s, our retirement plans. What can you tell us?
In the long run, nothing. In the short term, we’re going to have some volatility, it’s always expected.
He’s not saying in the long run, he can’t tell you anything.
No, in the long run it’s — you said well what’ll it do. And I said in the long run, nothing.
It won’t do anything in the long run. In the short-term, we’re going to have some volatility. The one thing that holds true is investors don’t like uncertainty, but they despise surprise and yesterday we had a surprise. That’s why we have — we had in the market around the world because the day before the betters, the bookies, and the polls said that they were going to stay in the EU and we woke up yesterday morning to find out that wasn’t the case.
I thought they were going to leave.
Should have bet.
I don’t know why, but I thought they were going to leave, so.
George <Inaudible> bet that they were going to stay.
That’s too bad for George.
But let’s put this in perspective to how this impacts us. Here’s just a few things that I dug up. A mere 10 months ago, there was a headline, Dow plunges 500 points on market correction. And as recently as January of this year the Dow was up 911 points. Now, the Dow is the most popular index. It is only 30 stocks, but let’s look at a couple things. In the beginning of this year, the Dow was at 17.156. It closed yesterday at 17.4. The S&P, which is certainly a broader index, started the year at 2,016 and closed yesterday at 2,036. Now, how much an impact did this have on us?
Well, it took away unfortunately some gains we were counting on this year. This quarter was looking like a nice quarter.
Gains have been pretty much eliminated. That’s the bad news. But, to put it into perspective, we’re kind of back where we started maybe the first of the year.
But, it would have been nicer if it happened a couple weeks ago when everybody’s 401k deposits were getting put in and then people were able to buy their high quality retirement mutual funds that they have on sale.
You’re talking about their IRA deposits.
Not their 401k. Their IRA deposits.
Well, IRA deposits or people who had regular deposits to their 401(k)s once a month, every payday, every two weeks. The end of the month is next week.
But that still continues. So, the opportunity is still here.
Yeah, I mean my contention is, and we were discussing this for a moment or two before we went on, is the biggest impact on retirees is lower income and lower income is a function of interest rates being — artificially, in my opinion — flat for a long period of time. There’s constant waffling on raising interest rates and why they should not be raised. Now, the income produced is a function of the Fed’s fund raise, the LIBOR rate, and then what the various different financial services can provide in income based off of those things.
Yes. It’s going to be good news for home builders because interest rates are going to stay low, interest — mortgage rates will stay low for a period of time, so home building should continue to do well. And there are other opportunities. I think the probability of an interest rate hike between now and the end of the year has been pretty much eliminated.
Yes, most definitely.
Well, I’ll tell you what. I know we have quite a few ex-pats who listen to you, Joe and Nancy, as you like to weigh in, you ex-pats, you’re more than welcome to call. Along with everybody who has a question about their financial well-being. If you want to talk about your 401k, your IRA, stocks, bonds, mutual funds, long-term health care. As Nancy said, the phone lines are open. Here’s the number. 844-220-0965. 844-220-0965. You can text us at 21232, 21232, or if you want your voice on the program, you can use the open mic feature and you’ll find that on the News 96.5 app. Nancy, you said something interest that stuck just a couple of minutes ago. You said that the young people in England voted to stay.
To stay, right.
And the old people voted to go.
Listen to why this guy voted to go.
The main thing that made me vote for Brexit was Barack Obama’s intervention when he came to England, telling the English to vote to remain.
There’s a lot of sentiment that way, that we should have kept our nose out of their politics. It would be like Cameron coming over here and telling us what to do.
You know, we got what we got. And as Nancy said, the older folks have their opinions, the younger folks have their opinions. The younger folks, the only thing that they knew is the Euro. They liked the idea of traveling between countries and not having to show passports and all that stuff. Whereas the older folks remember what it was like to be an independent England.
Well, and from a work situation, for the EU, you could work in almost any country and a lot of the barriers to going into another country to work did not exist. The interesting thing is — another interview I heard this morning is — a lot of the older generation fought to — during World War Two and everything that went along with that. So, it was a little fighting for Union, and now they want the independence, so I found that an interesting comment.
A lot of British pride.
So, we should do really anything with our retirement plan?
No. That’s the worst thing to do.
Well, I mean if you’re feeling uncomfortable then call your CFP and schedule a review and an update appointment.
You know, what you don’t want to do is do something emotionally, which is the worst thing to do. And remember, investing is long-term. There’s a difference between investing and speculating. You can’t —
Nancy, they’re talking about France and Germany leaving though. And then if they go, they’re closed to the European Union and what — hello.
I believe it will settle out. There’s a —
Look, we’re going to put your money today, as Nancy said, you can’t put —
People went to gold yesterday, they went to currencies yesterday, they went to government bonds yesterday. Government bonds, you know, and your bond is giving you virtually nothing. Put your money in a CD, same thing. People want to buy gold and speculate. Eh, and what do you know about currencies? That money flows south out of stocks temporarily, it’s going to float back in when things settle down.
And my attitude is that quality will prevail.
It prevailed in 2008, it prevailed in 2011, and quality will prevail.
9:15, quarter past 9:00, on News 96.5 WDVO. Dave Wall is in the News Center, he’ll join us in about five minutes. He’s got the latest on the investigation into the nightclub shooting downtown. Nancy.
I can’t wait to hear this.
So this guy inherits $15M. Now, you would think he’d be doing cartwheels down the street, but he’s not happy at all.
Well, we’ve heard stories and we’ve dealt with people in the past that have come into sudden wealth, and the biggest problem that they have is all of a sudden they have friends and relatives that they didn’t know about and people coming out of the woodwork. For this guy, it’s a little bit different. This plays into an issue that we’re dealing with right now. He was in his 20s, only child, dad passed away, and it was a $15M inheritance and he initially started working with the financial advisors that his dad had been with for over 10 years, and they were taking the same attitude of investing and managing the money as they did with the dad. They sort of looked upon him as a spoiled kid and were not taking him seriously, he didn’t really know anything. He had no intention of managing this money himself. He had enough brains to know he needed help, but finding the proper person was the big question. That’s where the problem came in. So, right now there’s a lot of talk about what is a fiduciary, and who — you know, putting the clients’ best interests first. Well, this is how we have run our practice for decades. Planning is first and foremost as far as we’re concerned. We don’t have a storehouse of mutual funds, or annuities, or products that we have to sell our clients. We work with gentlemen like this and people that certainly have much less than $15M to find out what their needs, and concerns, and questions are, and what they want to do in the future for their family and for their community, and put together a plan. Then, investments that fit the person’s need. We can shop the marketplace. But, we work for the client. That is the only boss that we have and this is the kind of person that this gentleman eventually, after about a year and a half of searching, was able to find somebody who was an independent certified financial planner. But, the attitude that he dealt with initially I think is horrible and it puts a bad face on our industry. And we’re here to make a 180 on that kind of attitude.
Cool. Well, there is a difference. In fact, if you’re so inclined to find out what the difference is between a broker and an investment advisor who works as a fiduciary, as Nancy said that we do, simply go to our website. That’s financialgroup.com, financialgroup.com, and click on the video. The Know the Difference will pop up and you’ll get an entertaining video that will clearly demonstrate how we’re different from those folks out there that want to sell you a product versus what we do as fiduciaries, and sell you information and service and guidance.
Speaking of the website, financialgroup.com, www.financialgroup.com, I was on this week’s must read. It’s pretty cool. It’s entitled I Never Thought About Saving For Retirement Until I Saw This Chart and I Freaked Out. And it’s about this 22 year old and what happens when you save $1,000 a year if you start when you’re 22 or if you start when you’re 35 and the difference that you make.
Time is a great asset. Most of us don’t realize that until it’s too late.
And then that’s — my daughter has her first job and one of the things that she did immediately was sign up for their 403b.
You guys do that.
Take care of yourself first.
Listen, we’re going to go to Dave Wall in the News Center. He’s got the latest on the investigation into the Pulse nightclub shooting investigation, and we’re going to come back and take some of your phone calls. The number to call is 844-220-0965. We’ve been off the air for a couple of weeks now, so it’s obvious that we’re a little light on phone calls now, so if you’ve ever wanted to talk to Joe and Nancy, now is the perfect time to call. 844-220-0965, 844-220-0965. You can text us at 21232, 21232. And around here, we like to say we’re planning for tomorrow —
This hour was paid for by the host and does not reflect the opinion of News 96.5.
9:25 on News 96.5, we’ll get back to Dave Wall with a more in-depth look at the news, traffic, and the weather forecast coming up here in about five minutes, so stick around. This is On the Money, brought to you by the Certified Financial Group and in the studio Joe Burt and Nancy Hecht are taking your phone calls. A little lighter on the calls today, obviously, because we’ve been off a couple of weeks now. So, now’s your chance if you’ve ever wanted to talk to the Oracle of Orlando, Joe Burt, or Nancy Hecht, author of A Man is Not a Plan. Here’s the phone number if you have a question about your 401k, or your IRAs, or any kind of retirement plan you have going for you. If you need a question answered call 844-220-0965, 844-220-0965. Or you can text us at 21232. 21232. I’ve got an interesting text here. It’s troopers and unmarked police cars with Go-Karts on the back, probably ATVs, going down Eastbound I-4 between Haynes City exit, Point Sienne exit. A lot of sheriff and SWAT team going down Eastbound. So, we’ve got Dave Wall looking into that, so we’ll see what’s happening. What’s the best way to invest in pound sterling?
The best way, the cleanest way, to do it is just buy it. You can go online and do it. Go to xe.com and you can buy it right online, and you hold it, and if you feel that’s the right way, good luck.
Speaking of that we’ve been gone for a couple of weeks, we had mother’s day and then we were going to do some father’s day stuff, and then we were pre-empted. Nancy, we were supposed to be on.
You were going to give us some father’s day advice.
Yeah, yeah, I got some advice from father’s. The first one is that after getting the first job after school, this person had received their first raise and they were elated and proud of theirselves, couldn’t wait to get home and tell their parents, knowing that they would be proud of me. The father calmly sat this kid down and said that’s great, now live like you never got the raise.
That’s great advice.
Which I thought was really good.
Oh man, I wish I <Inaudible> do that.
Which <Inaudible> with the second piece of fatherly advice; keep life simple and live within your means, enjoy the benefits of it. This is something that we started with my daughter from the first bit of allowance she got. 10% security, 10% to savings, and then you live on the rest.
Here’s another big one that comes from me is: is the item you plan on buying a want or a need? Then from my father-in-law —
Well, wait a minute. You don’t get out of it that easy. A want or a need.
Well what if it’s — you need to have that want? What if you can’t live without that want?
You have to be able to differentiate.
You’ve got to know that the money is going to be gone once you’ve spent it and what’s the regret factor going to be afterwards.
I think it’s a sign of maturity to know the difference between a want and a need.
Young people, kids, don’t understand that — every want is a need. I’ve got to have it. I’ve got to have it.
Yeah, for a short period of time.
And then the last one from my father-in-law is don’t buy other people’s dreams.
Yeah, I like that too.
There were some —
Yeah, some very good things.
I like the first one.
When you get a raise, live like you didn’t get it.
Yeah, that’s what I always tell people is to live below your means.
And the best thing to do when you get the raise, put it in your 401k plan.
Yes, you increase what you’re contributing to your payroll deducted plan.
So, didn’t you say your dad told you something like pay yourself first or something?
Well, yeah, that’s just good common sense because you know <Inaudible> nobody’s going to do it for you. You’ve got to wake up and smell the coffee here because one day those paychecks will stop and if you’re counting on Social Security to live on, it’s not going to be a pleasant retirement and unfortunately, most people don’t stop to think about retirement until they get about 10 years away from it and realize they have to do some serious catching up. So, if you get discipline, as Nancy said, early on in your life and force yourself to set some money aside, you get that raise. If you can’t save at all, at least put some in your retirement plan because when you get to retirement, the only thing you’ll have is what you’ve been able to save on your own. Saving through your retirement plan, whether it’s an IRA, 401k, 403b, 457, is by far and away the most attractive way to save for your future. Because you don’t pay taxes on the money that goes on and the money will compound and grow for you without being taxed until such time as you take it out.
A lot of people say that they can’t afford to save into their payroll things, but you know what? You’re paying the money to the federal government in taxes, or you’re paying it to your own retirement plan.
Alright, we’ve got to get to Dave Wall in the News Center. Oh, and by the way, happy Father’s Day.
Oh yes, it is an Ask the Expert weekend on WDVO and this is On the Money, brought to you by Orlando’s oldest and largest —
Independent firm of certified financial planning professionals, the Certified Financial Group. With us today, Joe Burt the Oracle of Orlando, and author of A Man is Not a Plan and the Hecht Effect, Nancy Hecht in person in the studio. You can talk to Nancy and Joe. Here’s the number, 844-220-0965. Joe, what are people calling and talking about?
Well, Nancy and I are here to clear up the fog that might be in your mind regarding some financial decisions you have to make. As we say in our ads, we go through life trying some of this and trying some of that, and the real problem that we see is — and <Inaudible> many years — is that our educational system Over the many years is that our educational system doesn’t teach us this stuff. We graduate, and we get a job, and we start going through life, having kids, buying houses, buying cars, putting through being married, sending them to school, and then we wake up one day and find out we have a selection of financial accidents. So, we’re here kind of as your financial auto body repair shop and if you have any questions on anything financial that has to do with decisions you might be making about a mutual fund, or an IRA, or an annuity, or a 401k, a 457, a reverse mortgage, life insurance, all that stuff Nancy and I are here to take your calls. The good news is there’s only one person in line and we have room for a lot more. So, simply pick up the phone and dial.
844-220-0965. 844-220-0965, or if you’re more comfortable you could send us a short text and that mobile number is 21232. Hang on, because in just a couple of minutes we’re going to give you some information about this workshop that’s going on this morning. Nancy, you have that do you?
Yes, I do.
Well, we’re going to give you that where you can learn a lot from Terry Avely and also get fed at the same time, I hear. Let’s talk to David in Lake Mary.
Good morning, David.
Good morning, good morning.
Good morning Nancy and Joe.
I wanted to tell you — or tell the people listening — that they should think of it like going to the doctor, especially guys don’t like to go to a doctor. But, eventually you’ve got to go to a dentist, or even the people getting screws in their tires. They’ve got to go — unless they can fix them themselves. I’m in that problem right now. I should have come to — I met Joe one time over the radio and he said come on in, he sent me newsletters every month, and you put it off, put it off. But, now I’m getting a little scared. So, my question to you is just because I wanted you to know there’s people listening to you every week — I do anyway — but my question is a broad brush question. I have some mutual funds, I’m 65, which is a little scary, and I need to come in and see you guys. But, the problem is is that I don’t understand about mutual funds. I need some income. I’ve got the Social Security, which isn’t much, but I need to start getting a little money. How do I get money unless I go with an annuity? I understand that, but I think that’s money you — you don’t get it back and then you get a little bit every month, every month. Well that’s all I really need, just so much a month. But, how do I get them off the mutual funds? Just, do they send me a check off the profit or — I’m just confused how I can start getting money.
It’s very simple. You need to determine how much you need, David, and the mutual fund company will send you that amount of money every month for as long as the funds last. Now, how long they last is a function of what kind of funds you have. But, what you have to look at is not at the specific funds, but at the group of funds because that is your nest egg, if you will, and you want to get the funds working in conjunction with each other. Depending on your need for income, depending on your need for growth, you ought to have a combination of mutual funds that provide you both. But, we do this — when Nancy and I do planning, we looked at what your needs are today, what they are in the future. We factor inflation, we factor in taxes, we look at what your other sources of income will be, in your case Social Security, and if you’re fortunate enough to have a pension we factor that in. And then we look at how conservatively that money can be invested to still provide you the income that you need for your lifetime. Then it’s a matter of setting up the mutual funds on a systematic withdrawal program. So, some funds are going to give you immediate income and that you might be reinvesting some of that. Some are designed to give you growth so the principal balance increases and you can draw from that in the future, but it’s a very, very straightforward situation. Nancy and I do that day in and day out for our clients. We send them money on a regular basis whether it’s monthly, quarterly, or even annually. Nancy, what do you want to add to that?
Yes, and David, there’s a number of different mutual funds that pay regular dividends whether it’s a stock mutual fund paying a dividend or a bond mutual fund paying a dividend. So, that ends up being — the regular dividends whether they’re monthly or quarterly end up being the core of many of our clients’ retirement incomes. Joe had mentioned capital gains. When we’re doing regular reviews and updates for our clients, we look at what has gained and what kind of gains can be scraped off to help fund somebody’s lifestyle and pay the income. And then as far as how to get the money, it is, as Joe said, very simple. It’s a matter of attaching your bank account to whatever investment house we use to hold your assets and the money can be transferred at a schedule that is appropriate for you whether it’s monthly, or quarterly, or periodically.
One of the things that we’d like our listeners to know is that when we make recommendations on mutual funds, you can keep the funds where they are. We use two major custodians; TD Ameritrade and Fidelity Investments as our investment firms that we do business with. And what we are simply is we’re not brokers. We’re advisors. We tell our clients what to do, how to place those funds, how they should be allocated, and then we work with TD or Fidelity to give you that distribution that you need on a regular basis. David, I don’t know that we’ve ever met. You said you called on the radio one time and somehow you got on our mailing list. How long have we been sending you our newsletter?
Probably 10 years. 8 years.
Listen, can I say one more thing?
I am coming in because you’re in the old Bill Knapps building, if you know it or not, and I loved that restaurant. It was really —
So did I.
But anyway, real quickly, I just want to ask a question. You know like when you go to a doctor’s office and there’s three doctors and you never met them. There’s 12 doctors at your place. How do I know which one I need? Everybody is probably going to go to Joe, or else <?> you, Nancy.
No, that’s not true. That’s not true. What you want to do is go to our website and all of the planners are right there. So, their background, you can see our smiling faces. And you can pick up the phone and say I want to speak to Nancy, I want to speak to Gary, I want to speak to Roger, I want to speak to Harry, Denise.
Well, I’m looking at your picture right now. But, if I’m going by looks, there’s a younger girl I really like, but I don’t know that she’s — well, I’m staring at her. Is her name Braindell or Lydell or something?
She looks like an old girlfriend. How do I pick the one I need?
It’s because you all have the same qualifications.
And you know that’s a great question. And to continue with your analogies, like going to a doctor’s office, if you go to Jewitt Orthopedic and you walk in the door, there’s several qualified doctors and whoever you might — however every doctor has their own different bedside manner. And Nancy and I are certainly different as we are from Denise, and Judy, and Roger, and Harry, but I think you will find us all knowledgeable. I think it’s a matter of who you’re comfortable with. Some people prefer dealing with a man, some people prefer a woman, some have no preference one way or another. I can tell you one thing and I can guarantee this; you’ll always be treated honestly, you’ll always be treated fairly, and if you’ve been to our website and you know what a fiduciary is, we’ll always work in your best interest. So, that’s a starting point. So, we look forward to meeting you after 10 years of sending you our newsletter.
And I’ve got an idea.
This morning Gary Avely is having a workshop. Anybody can go check out Gary Avely this morning.
There you go, David.
Yeah, and he’s got room for about seven more people.
What’s going on?
It’s called When Can You Retire? Know Your Number, and its from 11:00 to 1:00. Again, hosted by Gary. He’s going to be serving a light lunch and he told me that he has room for about seven more tushies, so David if you want to take one of those spots, you just need to call the office or show up a little bit before 11:00.
1111 Douglas Avenue
Altamonte Springs 32714
You can walk in and for those of you that may not be familiar with our area, go to our website, financialgroup.com, financialgroup.com. There’s a map there and as Nancy said, he’s got room for a few more folks. Drop in at 11:00, <Inaudible> from about 11:00 to 12:30, 1:00, he’ll provide some refreshments. Leave your checkbook at home. We’re not trying to sell you anything. People say why do you do this. We do this for two basic reasons. Number one to give you some information to keep you from falling into the trap <Inaudible> retirement and also to introduce you to our firm and what we do. We’re fee-based financial planners and how we do it this way, whether you need it now or still have time in the future. You give us an opportunity to earn your business. So, go to our website, financialgroup.com, we hope to see you there.
Yeah, I just want to say tell people out there not to hesitate because I have and it’s really starting to get on my nerves like a bad <Background Noise>. You need to go. And I do want to come in, Joe, and I’ll talk to you first and then you pick one of the other people out for me.
You’ve got it.
Thank you, David.
Thank you, have a nice weekend.
He brings up a very good point. I think people who have never come to our office or worked with a financial professional is sometimes intimidated. You see that?
I mean, it’s like going to the doctor for the first time.
If you’ve never been.
Or going to the dentist if you’ve never been.
I have a theory on that.
Because I think that there’s a lot of financial institutions out there, that they think you’re going to try to strong-arm them into selling them something. Maybe they’re not familiar with what a certified financial planning professional is.
You’re not trying to sell something.
No, I mean the biggest thing that we have to sell is our knowledge.
You don’t take <Inaudible>
In fact, we offer complimentary consultations. If you want peace of mind, leave your checkbook at home. We’re here to see if we can help you, and if you want, we can tell you what our services run. We do what we do for a fee and we think that’s the most comfortable way to work with clients.
Don’t get a percentage of anything you sell, so —
We’re not going to sell you anything.
That’s cool. By the way, this workshop this morning, the topics are going to be investment basics, tax planning, planning for special health care needs, budgeting, and calculating appropriate withdrawal rates from retirement accounts. And Jerry says it’s appropriate for both current retirees if you’re worried about running out of money and those that are currently planning for retirement. Once again, you can go to the website and — get a map of where the office is.
It’s just off of 434 in Altamonte Springs. Just off of 434.
It’s good, basic information for people who say that they want to learn. This is a good place to learn.
Right, okay. Claire in Brevard County, I’m going to ask you to hang on because we’ve got to get to Dave Wall in the News Center, and then we’re going to come back and take Claire’s call. Then Nancy’s going to answer the question; are you financially prepared for a hurricane?
Stick around. The number is 844-220-0965. 844-220-0965. Or you can text us at 21232. We do have some texts to get to as well. Should one adjust a 4% retirement lower if you’re retiring at 55?
Short answer is yes.
Alright, 9:55 on WDBO. This is On the Money, brought to you by the Certified Financial Group. Coming up right after the news at the top of the hour, it’s Florida Homes and Gardens is back and today from <Inaudible> is the three big things to double check before you spend your hard earned money on appliances. Also, I just talked to Jim Hatterack. He is in the kitchen <?>. He’s with Accurate Window and Door. It’s going to get up to like 100 degrees today. It might be a good time to energize your house by putting in some double pane windows.
There you go.
You’d be proud of me, Joe. My electric bill came in. It was under $120 and I keep my thermostat at 74 degrees.
I couldn’t do that.
It’s like I’m Nanook from the North. Let’s talk to Claire in Brevard County. Good morning, Claire, you’re with Joe and Nancy from the Certified Financial Group.
Good morning, good morning. How are you?
I think many of us understand dollar cost averaging to buy in 100 a month for five years, reinvest the dividends, no touchy. Ooo, look at all that money. Now that we’re taking money out of it, do we dollar cost average out and what do we do with the income that, as soon as we were reinvesting? Do we buy with one hand to reinvest the dividends and sell with the other hand the X dollars for month that we want the fund to send us, and how do we keep track of short-term/long-term gains <Inaudible> along with the sale and then six days later we reinvest the dividends from this quarter. Is that a confusing enough question?
No, it’s not confusing at all. I’m going to take the gain and loss question first. Joe had mentioned that we use TD Ameritrade and Fidelity Institutional to custody most of our accounts. They do a wonderful job keeping track of cost basis and that’s what you’re talking about with the net dollars invested versus current market value and if something has a gain or a loss. So, getting that type of information is not so hard. Then pulling the money out is a function of what are your particular needs. We do not have a withdrawal set plan that is perfect for all our clients. We have to look at Claire and how much she requires, plus cost of living, every single month, every single year to live. Bumped up against any other sources of income you may have; pensions, alimonies, Social Security, whatever the case may be. And then we tailor the withdrawals to meet your particular needs. The front-end withdrawals comes from where?
From your assets. Where is the money currently residing, how is it invested, where are you and what do you need for growth, what do you need for income, what combination of Growth and Income you need? Then, if you’re really conservative, throw all in an income portfolio, which has a low exposure to equities, which are more volatile. Or, do you need and can you afford to have some growth for the future to get that pile to grow for you because somewhere down the road you’ll be withdrawing more because the cost of living will be higher in 5, 10, 15 years. So, the best way to answer that is to do a plan and this is what we do day in and day out for our clients as Nancy clearly said. You look at where you are today with your income and your assets and where you need to be in the future, and how to best allocate it. The tax question is very straightforward, both TD and Fidelity Institutional will provide you the 1099 at the end of the year, tell you what your long-term gains are, short-term gains are, what the interest and dividends are that you receive, and you simply plunk that on your 1040 and you take it from there.
Okay. I received a lump sum distribution from a pension of around $18,000. I would like to know what I should do with it as it is sitting in an IRA and then the text cuts off.
Well, the good news is it’s in an IRA, so you didn’t pay any taxes when the money came out of the pension. So, what do you do with an IRA is to get it invested to meet your long-term goals because by definition an IRA is for your retirement needs. And depending on your current age, depends, that will tell you how aggressive or conservatively that money should be invested.