MZ Capital Management
Michael Zhuang is founder and principal of MZ Capital, a fee-only registered investment advisor firm located in the Greater Washington D.C. metropolitan area.
Michael earned dual Master Degrees in Mathematics and Quantitative Finance from Carnegie Mellon University. He was also a PhD candidate for Financial Economics. After completing all training and exams, he decided his true calling is not in academia. The PhD training taught him how to think rigorously and research thoroughly.
From 1999 to 2000, Michael worked as a financial engineer for Societe Generale, the biggest French banking group.
From 2000 to 2003, Michael was hired by PG&E National Energy Group to launch their weather derivatives trading business. Within 2 years, he became one of the top 3 traders in the field. Nevertheless, he saw first hand the crooked ways of the financial industry where everything goes to make a buck. That experience motivated him to launch MZ Capital.
Michael's investment approach is based on the Nobel Prize winning research of Eugene Fama. He is also deeply influenced by three people: Warren Buffet on value-orientation and patience, David Swensen on multi-asset-class investing and decision framework, and John Bogle on minimization of costs for clients and stewardship of clients' money.
Michael is active in the community. He twice sponsored Melodic Impact, a musical fundraiser for kids with cancer. He volunteered as an instructor for Toastmasters International's Youth Leadership Program. He was on the board of Special Love, Inc., a non-profit devoted to kids suffering from cancer. Recently, he also completed Leadership Montgomery.
Michael is married with two children. His favorite past time is stand-up comedy and storytelling. He was nominated as Top Ten Storytellers in Virginia. He has also won multiple Story League contests in DC and Best Storyteller in Philadelphia's Story Slam. He performed clean comedy regularly in corporate, charity and association events.
MS, Finance and Economics, Carnegie Mellon University
MZ Capital Management Story and Value
The safest way to invest in high-yielding dividend stocks is to use the index approach. There is a fund company that specializes in that, its name is Wisdom Tree.
Take for example one of its ETFs called DHS, or Wisdom Tree high dividend fund, it invests in the 30% of companies that pay the highest dividend yields and it uses a fundamental weighting approach. The weight of a particular stock in the fund is determined by its dividend yield, not its market cap.
High dividend stocks are extremely volatile during a prolonged bear market. I did a study in which I held a portfolio of top 30% high dividend yield stocks during the Great Depression, when the market dropped 86%. This portfolio recovered in 3 and half years while the overall market did not recover until 12 years later. See a summary of study here:
In any given years, there are always some funds that perform better than the index. Are they just lucky or the managers truly have skills to beat the market? Study after study have showed that it is mostly due to luck. Since there are so many funds in the world, there bound to be some that will beat that market.
A good analogy would be a stadium full of people tossing coins. After the first coin toss, heads remain standing, tails sit down. About half will remain standing. After the second coin toss, head remain standing, tails sit down. About a quarter will remain standing. So on and so forth. After the tenth coin toss, odds have it that there are five people remain standing. They have consecutively tossed head ten times. Are they expert coin tossers? They are not. If you try another round of ten coin tosses, they could sit down very quickly.
The same logic applies to outperforming funds.
I am a financial advisier, so my answer maybe partial. I think you will almost surely be better off doing a two fund portfolio of 50% total stock market index fund and 50% total bond market index fund than hiring a financial adviser to pick stocks and bonds for you. Harry Markowitz, the Nobel Prize winner who invented modern portfolio theory, did just that. 99.9% of financial advisers can not beat the market. Stock picking is a fool errand. Don't spend money to hire someone to do a fool's errand. On top of that 99% of financial advisers have conflict of interest. That's the way it is in this country, they are registered broker, they are under no obligation to put your interest first.
It is nearly impossible to generate $1,500 from your initial $200K. You may want to explore a single premium immediate annuity (SPIA). I went to this website to get a quote for you: https://www.immediateannuities.com/ and you can get $1,472 a month until you pass away. Even if you live another 30 years, you will get the monthly payment. The downside of it is your kids and grandkids will not get any of the $200K.
Since you are only 44 years, if you cash it out now, you will pay taxes and a 10% penalty. I am sure there are better ways to payoff your car and go on a vacation. Maybe you can get your husband to moonlight for Uber. Just FYI, if you cash out when you are 59.5, you will still pay taxes, but at least there is no penalty.
Also you may want to rollover to an IRA that you have full control over. Rolling over to your current 457(b) could be an option as well if the plan has good investment options. Don't leave it with your old employer for simplicity and safety's sake. I have a client whose old employer went bust, and his 401(k) money was frozen for 2 years as the court sought out the wreckage. You don't need that.