Korving & Company LLC
Arie Korving spent 20 years in industry before deciding that investing was his true passion. As an Honors graduate from Michigan Tech with a degree in Chemistry, he took his analytical skills to unravel the intricacies of the stock market. Not long after entering the investment industry with Kidder, Peabody he experienced “Black Monday,” the stock market crash of 1987, which still ranks as largest one-day market crash in history, the Dow losing 22.6% of its value on October 19th 1987. It taught him a very valuable lesson: be very skeptical of Wall Street’s promises and always carefully examine what can go wrong. During his time as an advisor and portfolio manager he has experienced a number of other market cycles and has developed an investment philosophy that attempts to control risk while obtaining a fair rate of return. Prior to establishing his own investment firm, he was a Vice President and Senior Portfolio Manager for a major Wall Street Investment firm.
He believes in keeping it simple and educating his clients. He believes in transparency, with simple, easy to understand fees and no hidden compensation. As an independent RIA (Registered Investment Advisor), he is able to perform services for his clients that go beyond financial issues. He has gone car shopping for them and helped them decide on an appropriate retirement home. He is the trusted advisor for numerous widows who have lost husbands that managed the family investments. His experience in helping widows who lost their husbands prompted him to write his popular book BEFORE I GO, PREPARING YOUR AFFAIRS FOR YOUR HEIRS designed to make the passing of a loved one less traumatic for those left behind. He believes in consistency, telling his clients what he is going to do and then delivering on his promises.
He has been joined in the business by his son, Stephen Korving, a graduate of Virginia Tech with a degree in finance. Before joining his father, Stephen spent years with Cambridge Associates, one of the country’s premier investment management consulting firms advising foundations and wealthy families on asset allocation and manager selection.
Arie lives with his wife, Mary in Chesapeake, Virginia and is the proud father of his daughter, Marianne, his aforementioned son, Stephen, and his four grandchildren. He is an avid reader and amateur historian.
BS, Chemistry, Michigan Technological University
There are a few questions I would ask.
First, does your financial advisor charge the fee on the value of your account or on the market value of the invested assets? Unless the advisor specifically excludes cash balances, you are being charged on the total value of the account, including the cash.
Some investment managers consider cash an asset class and will devote a certain percentage of a portfolio to that class. Others do not. You should ask your advisor. Whether cash “motivates” your manager depends on the answers to the previous questions. It your planner keeps large amounts of cash on the sidelines because he doesn’t have any good ideas and does not view it as an asset class that’s part of his strategy, you should look for a new advisor.
Annuities are never “temporary” investments. From your question is appears that you have a fixed annuity with a guaranteed rate of 4% for 4 years. There are a few other moving parts with annuities.
1. After the 4 years are up, the rate may change. It probably will.
2. What are the redemption fees and how long will they last? Many annuities charge a redemption fee if more than 10% of the principal is withdrawn within a specified number of years.
3. Annuities can provide a guaranteed income stream for your lifetime. If you need guaranteed income beyond pension and social security, it may be worthwhile to see what this annuity offers.
4. Once you begin taking that guaranteed income (it’s called annuitizing) you can no longer request a withdrawal of your investment. The money now belongs to the insurance company which, in turn promises you a check for as long as you live.
5. Unless there is an inflation adjustment, the check from the insurance company will not change and its buying power will be eroded by inflation.
6. A guaranteed annuity income for life may allow you to invest aggressively with more confidence with the rest of your money.
These are just some of the issues you should be aware of. Consult an independent advisor for more detail.
You can buy and sell the same stock any number of times; it’s called trading. I would caution you that simulations and real life are not the same. In real life there are transaction costs which erode profits. In real life there are bid and ask spreads, and they are usually much bigger than fractions of a penny. And in real life stocks don’t conveniently go up and down, giving you riskless opportunities to make a profit. I suspect that the only one who will profit from your interest is the company selling you the trading strategy.
Before I can answer your question, I need to know how you got the stock. If you bought it for $21,390 and sell it for less, you have no tax to pay. In fact, you have a loss which can be deducted from other income.
If you got the stock as a gift you would have to determine what the original cost was to see if there is a gain on which you would have to pay tax.
If you received the stock because a relative died the cost basis is the value of the stock on the date of death. Again, if it was worth more on that date than it is today, you have a loss and owe no tax.
Thank you for your question and congratulations on being so forward looking. At age 27 you have about three decades of saving and investing before retirement. Your future is in your hands in more ways than you may know. For example, by the time you retire the Social Security Trust Fund may well be exhausted and your benefits may be a lot lower than current retirees.
You should put as much as you can into your TSP and participate in your company’s retirement plans, which probably includes either a regular 401(k) or a Roth 401(k) plan. At your age I would consider contributing to a Roth plan. A Roth plan does not give you an immediate tax benefit, but when you retire you can get your money out tax free, and meanwhile your money grows tax free.
You should try to save about 15% of your income for retirement. You should first create an emergency fund that can be used for unexpected expenses. You may be surprised to learn that four in ten people in this country can’t afford a $400 emergency without borrowing. An emergency fund equal to 6 months of your net income should be adequate.
After funding your TSP and 401(k) plans you should open an investment account with a discount broker. Fund it with extra savings beyond what put in your tax-free accounts. Keep in mind that tax free accounts like IRAs, TSPs and 401(k) plans are not readily accessible without taxes or penalties. Over the next few decades you will need money for things such as a home purchase, weddings, children, vacations, etc. That's why taxable accounts come in handy, as well as providing liquidity when you first retire.
Based on your question I am assuming that you are not an experienced investor; few people your age are. In fact, most people of any age are poor investors. I suggest you shop around for a good fee-only financial advisor who is willing to spend time teaching you the basics of investment management. He will charge you a fee, but it will be well worth it because learning by making mistakes is a lot more expensive.
Good luck and give me a call if you need more advice.-