Rowan Financial LLC
Dave Rowan, MBA, CFP® is the founder of Rowan Financial, LLC. His mission is to enable his clients to achieve a future that is even brighter than their past and present.
Dave primarily attracts clients who are contemplating or experiencing a career transition. This includes moving from one employer to another while remaining in the same field, pursuing an entirely new profession, starting up a small business or embarking upon an encore career. Dave provides his clients with the short-term guidance necessary to successfully navigate these often stressful transitions with more confidence and financial security than they had ever imagined was possible.
Dave transforms the lives of professionals and entrepreneurs across the country with his expertise through his free online newsletter and blog. Each issue contains high value content that enables readers to make the most of their career transitions, not only from a professional development standpoint, but also in terms of their financial and personal goals.
Dave is a Certified Financial Planner® and is also a member of the Financial Planning Association® (FPA®). His background also includes a BS degree in Chemical Engineering from Penn State and an MBA from Lehigh University.
Dave is a sought after expert in the financial news media. He has been featured in various online publications including US News & World Report, NASDAQ.com, The LA Times, Yahoo! Finance, Investopedia, and The Christian Science Monitor.
Dave grew up in the Lehigh Valley of Pennsylvania and has lived in the area for most of his life. He currently resides in Bethlehem with his wife Stacy and their two daughters. He loves walking and hiking in nature, football, lacrosse, yoga, reading, writing, shopping at local farmers’ markets, eating healthy food, an occasional battle on Clash of Clans, and bringing positive energy to his work and his relationships with family and friends.
BS, Chemical Engineering, The Pennsylvania State University
MBA, Management of Technology, Lehigh University
Dave Rowan | Rowan Financial
Congratulations on being so well prepared for retirement!
To me, you have positioned yourself well to have wonderful options available at this life stage. I am glad to hear that your wife loves her job, which I'm assuming means that she would plan to continue working for the foreseeable future. A first consideration for you is similar - do you love your job? If you do and find it deeply fulfilling, then there is no reason to stop. However, since you're asking this question, I'm guessing you don't love it.
If that's the case, then I'd recommend figuring out what you plan to do at this life stage because 45 is awfully early to retire. Some ideas:
- Take a career pause to spend time with your 10 year old for the next 8 years, then figure out what you want to do.
- Scale back and find something part time (even if it's not an ideal job) to have more time with your son.
- Read the following book to discover your Unique Ability -
Your Unique Ability is defined as a short list of tasks that you do better than almost anyone else and love so much that you'd do them for free all day long. Find work that allows you to focus upon your Unique Ability, even if it represents a pay cut versus what you're doing currently.
On the financial side of things, you can do a quick and dirty check on your retirement readiness by calculating your Retirement Account Multiple or RAM. Check out the following article to learn how:
If you get a RAM of greater than 7, (which I'm guessing you will) you can seriously consider pursuing alternate work that you find more fulfilling. If you are looking for a more detailed Retirement Plan for more certainty on your future finances, consider reaching out to an advisor:
Good luck with this important decision!
With Kind Regards,
You've done a good job providing information to answer the question; however, would probably need a little more info to offer you the best perspective. Specifically would need to know 1.) What is your time horizon with the money? 2.) Are you willing to risk some short-term losses to maximize your chances of better long-term gains? 3.) What does your overall financial situation look like and what tax bracket are you in now versus where do we project you'll be in retirement?
Regardless of the answers to these questions, I'd recommend that you:
1.) Make sure your Emergency Fund is fully funded. Park 6 months of living expenses there if you are the only wage earner in your household. If there is another significant wage earner in the household, you can consider having an Emergency Fund with 3-4 months of expenses.
2.) Fund an HSA. This is a great means to manage your tax bill.
3.) Open and fund a Roth IRA if you're eligible - tax free growth after tax contributions is a great thing.
Regarding the choice as to whether or not to max out your 401(k) plan versus to invest this money in an after tax account - this is a gray area. Let's walk through some IF/THENS.
1.) IF you've been diligently saving for retirement and already have a large balance in your 401(k), THEN it may make sense for you to invest this money in an after-tax account. Sometimes when people have all of their retirement savings parked in pre-tax accounts, they end up in a higher tax bracket than when they were working and would have been better served with some retirement savings in after-tax dollars.
2.) IF you're just getting started in your 401(k), THEN consider maxing this out and using some of the money you inherited to cover living expenses. You're probably better off in this instance taking full advantage of as much pre-tax investing as you can.
Finally, regarding time frame. As you know, investments can and do lose money. If your time frame is less than 5 years and you do not want to risk any principal, then you're probably better off in CD's or savings accounts. However, if your time frame is greater than 5-7 years, then consider investing in a low cost, well diversified portfolio of stock, bond, and hard asset ETFs.
Good luck with this decision!
With Kind Regards,
Everyone's new to investing in stocks at some point - good for you to ask this very basic but important question right up front!
The short answer is, yes you can. However, there is also the question of should you buy stocks in individual companies, which I'll cover later.
In terms of buying a stock yourself, the easiest way to do so is to open up a brokerage account with a discount provider such as Charles Schwab or Scottrade. Once your account is open and funded, you can login and buy and sell shares of stocks as often as you'd like. Most discount brokerage providers charge about $8 or $9 per trade.
Make sure you look up the correct stock symbol and do your trading during the hours when the market is open rather than after hours when bid/ask spreads tend to widen and you could end up paying a premium for shares. For thinly traded shares (small companies that average few shares traded per day), consider putting a Limit Order in place to make sure you don't pay a premium. Here's a link that talks about what Limit Orders are:
However, rather than buying stocks in individual companies, you may want to consider investing in low cost ETF's (Exchange Traded Funds) that track major market indices such as the S&P 500. By buying shares in the ETF, you are effectively buying stock in dozens, if not hundreds of different companies and spreading out your risk rather than putting all of your eggs in one basket.
I personally no longer buy shares of individual stock for this very reason and recommend the same to all of my clients. If for some reason you still feel the need to buy stocks in individual companies, consider limiting this to no more than 5-10% of your total portfolio.
Good luck with getting started!
With Kind Regards,
Yes, many advisors will offer a valuable "second opinion" as you've described it above. I personally call this Financial Advocate services and charge on an hourly basis.
Financial planners vary widely in terms of their rates. Most fall within $150-$300 per hour.
Just as an aside, you may want to consider shopping around for a new advisor while you're on this mission. Insurance companies are notorious for the number and volume of fees they pass along to their clients. Hopefully, your advisor doesn't fall into this camp, but doesn't hurt to ask how much they charged you in fees, commissions, and front or back end loads.
You are making a wise choice to seek out a second opinion on your finances. Good luck working through the process!
With Kind Regards,
Glad you are asking this question. Minimizing commissions and fees can have a HUGE impact over the course of your entire investing career. Here are 3 ways:
- Invest in Exchange Traded Funds (ETFs) rather than Mutual Funds. The expense ratios are almost always lower for an ETF versus a comparable mutual fund. It is now very easy to build a low cost, well diversified portfolio using ETFs with an expense ratio of 0.25% or less per year.
- Avoid products with front-end loads, back-end loads, or 12b-1 fees. These are typically found within Mutual Funds, but not ETF's. Read the fund's prospectus to know whether these fees are associated with any product you are investing in.
- Seek out ETF's with no trading fees. Many asset custodians charge between $7.95-$9.95 per trade, however, a growing number of fund families are waiving trading fees on their ETF's. As an example, Charles Schwab offers a full range of ETF's that have no trading fees.
- If you do decide to invest in a fund with a trading fee, try to invest over $1,000 per fund. To keep the math simple, let's say you are investing in a fund that charges $10 per trade. If you invest $1,000 in that fund, you will pay 1% ($10 out of the $1,000) for your initial investment and another 1% when you sell the fund for a total of 2%. However, if you are only investing $100 in the fund, you're paying the equivalent of 10% for the initial investment ($10 out of the $100) and another 10% when you sell for a total of 20%. You'll need to earn an awful lot of return to overcome those trading costs!
- If you decide to work with a financial advisor to help you with your investments, look for one who charges 1% or less of Assets Under Management for their services.
Thanks for the great question and good luck keeping those fees to a minimum so you can keep more of your money growing in your accounts on your behalf!
With Kind Regards,