Revere Asset Management
President & CIO
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Daniel Stewart is President & CIO of Revere Asset Management and has been providing financial services and portfolio management for over twenty years. Revere Asset is a Fee Based RIA which Always Acts as a Fiduciary in the Best Interest of its Clients. Prior to joining Revere Asset Management, Dan advised on investment portfolios exceeding $200M. He is also well versed in comprehensive planning including corporate, individual, and estate planning.
Dan joined the NorAm Capital team in 2010 to create and manage their Private Wealth Management firm. This eventually led Dan to buy the business and rename it Revere Asset Management. He graduated from The University of Texas at San Antonio with concentrations in Finance and Accounting. Dan has passed the CPA Examination on the first attempt and subsequently earned his CFA® Charter (Chartered Financial Analyst).
Dan, a native of San Antonio, Texas, is married with 3 children. Dan played NCAA tennis on a full scholarship at Vanderbilt University. He played professional tennis on the United States and European circuit and was then the Head Tennis Professional at both the Retama Polo & Tennis Club and Thousand Oaks Indoor/Outdoor Racquet Club, in San Antonio, Texas.
Chartered Financial Analyst (CFA®), BBA in Accounting
Assets Under Management:
Fee Based Only - Fiduciary with No Conflicts of Interest
#Yes Primarily Term
No information presented constitutes a recommendation by Revere Asset Management, to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy. The content neither is, nor should be construed as, an offer, or a solicitation of an offer, to buy, sell, or hold any securities by Revere Asset Management. Revere Asset Management does not offer or provide any opinion regarding the nature, potential, value, suitability or profitability of any particular investment or investment strategy, and you are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance and liquidity needs.
An exchange traded fund, or ETF, is very similar to a mutual fund for many practical purposes but has advantages that mutual funds do not. Like a mutual fund, it can be a passive, broad indexed fund like an S&P 500 Fund, or it can be a sector fund. Both can also be actively managed where they have more flexibility on individual asset selection. Thus both can invest in indices, sectors, bonds, commodities, currencies, real estate, precious metals, or even be actively managed.
The main difference is that ETFs trade during the day like a stock whereas a mutual fund can only be bought or sold at the net asset value, or NAV, at the end of the day. Therefore, ETFs provide more flexibility because you don't have wait until the end of the day to make changes. This may not be very important to a long term investor, but if a major event happens during the day, you are able to make adjustments. I prefer to keep all of my option open. This is crucial for a more tactical investor who wishes to better time his entry & exit points. Most professional money managers rely on ETFs versus mutual funds (unless they are commissioned based).
Many ETFs are lower cost as well, even for the similar mutual fund strategy with the same brand name, but this also varies a great deal and can depend upon which class of mutual fund shares in which you invest. Most funds can have multiple share classes so you must do your homework. Stay away from loaded, commissioned A or B share funds, although they are much less common today.
Another big advantage ETFs have over mutual funds is that they are more tax efficient. This is because you have no control over when a mutual fund pays a distribution of capital gains. It doesn't matter when you bought the fund, it matters when the fund bought and sold the stock/bond within the fund. So you could invest in a mutual fund and actually have a loss at year end based upon the NAV but incur a tax liability if in a taxable account. With an ETF, it is when you buy and sell the ETF and are therefore in control.
At our shop, when we invest using a fund (versus individual securities), we almost always use ETFs exclusively for the reasons mentioned above. The only time I would consider using a mutual fund is if I am investing in the manger of an actively managed fund in a specialized space.
I could dive deep into the minutia and nuances of the differences, but these are the highlights that most investors need to be aware of and research.
Hope this helps and best of luck, Dan Stewart CFA®
If you are simply buying and holding without any type of sell discipline to control drawdown risk, then moving a certain amount to cash might be prudent for you if it is scaring you too much. Some things are not all about money, but quality of life. So you could move all to cash or say, 50% with the remainder in the markets, or you could institute a strict sell discipline for all of your positions.
Be wary though because there are "indexed" annuity salesmen that will feed upon your fears promising you "most of the upside with none of the downside." While it is true you won't get any of the downside, you won't get "most" of the upside either, and will likely get around 3% to 3.5% over time. But you are locking in your money for years.
So with the 50-50 approach, you could ladder some CDs between 4mo to 18mo depending upon each months yield for emotional well-being. Normally the discount brokerage firms get their inventory Monday afternoon or Tuesday morning depending upon the brokerage house. If you wait later in the week, they will have already been picked over and you are better off waiting until early the following week. You will make around 1.6%+ if done properly but you won't lose. There are even FDIC insured CDs that guarantee the principal but the interest crediting is linked to an equity index like the S&P but with a cap. This is very similar to an indexed annuity but with no big surrender penalties, upfront hefty commissions, or salesmen. They are primarily for the fee based side of management but you need to shop & compare them. And you would spread these out over 2 year, 3 year, and 5 year. This way if the market goes up in the first two or even 3 years, but then goes down hard, you will make money on the first 2 and simply get you money back on the 5 year. Conversely, if the market has a major correction early but then recovers, you get your money back on the 2 year, possible make money on the 3 year, and make money on the 5 year. You could mix these various CDs with half of the money so that at the very least, you know that you will get your $400k plus some nominal interest. Then with the other half, you could have a fairly conservative equity portfolio.
The other option is to have your portfolio actively managed by someone who employs a sell discipline thus limiting drawdowns. They move a portion to cash, hedge, or a combination thereof during market duress. You will not make quite as much as the index on the way up but have downside protection. It is called risk-adjusted returns. I believe you control risk first, and make the returns second. Most of my clients are at or near retirement and cannot afford another 2008.
Lastly, the super-cycle of dropping interest rates from 1981 is over and rates are on the rise. This means the bull market for bonds is likely over with the exception of a few short term "flights to quality" during equity market selloffs. But the risk profile of longer term bonds is significantly higher than it was just a year or two ago. So I do not subscribe to having a pie chart based upon your age & station in life and just holding on & hoping for the best because the risk profile of the assets themselves change over time. So it is more about the risks in the assets than your "risk profile" which you intuitively understand based upon your question. And with these artificially low interest rates, there is truly no such thing as "safe money" until interest rates rise and normalize, which will be years. Again, this is due to the cost of living rising faster than the interest received. I personally cannot just sit in cash & let my purchasing power whittle away for a slow, consistent loss (buying power). I will, however, use cash as a defensive position during hard selloffs.
These are the things that you must think about and are strategy questions you must answer for your family. For me though, I believe it is about strategy, not products or which funds.
On a mechanical issue, you should almost certainly roll your 401ks into IRAs for a whole plethora of reasons - lower costs, virtually unlimited investment choices, more control especially on distributions, etc.... This would be true unless you have a complete wide open, full brokerage 401k and the employer pays all or most of the costs. Most employees don't realize that they share on a pro-rata basis most of the 401k plan costs. So if you have a bigger balance than most, you are paying slightly higher costs than most, and you are retired. Therefore I would open up an IRA at a discount brokerage firm and do a Custodian to Custodian Direct Rollover. Open up the account & get your account number, then go to your 401k provider/administrator for the paperwork to initiate the transfer directly to the new custodian. If you don't do this correctly & they send a check to you to do a 60 day rollover, they will automatically withhold 20%. Then you will have to come up with the extra 20% out of pocket for a "100% rollover." The withholding will be netted against your taxes and you will likely get a big refund (of your own money). So just be sure to do a direct IRA rollover which will give you more control, lower fees, and much greater choices.
Gave you a lot to think about. Best of luck, Dan Stewart CFA®
Having flexibility in retirement is an advantage and having all three wouldn't be too difficult. But without knowing your age or income levels I cannot give you sage advice. As a general rule though, the younger you are and the lower your tax bracket, the more advantageous a Roth is. This is because you have more time to compound & grow your assets to make up the out of pocket tax liablity of contributing to a Roth versus a before tax retirement account.
There are also income limits that may preclude you from contributing to a Roth. You definitely want to get the 6% match, and depending upon how good your 401k is - investment choices, whether you have a full brokerage options etc... - would also affect your decision. And you are doing the right thing by rolling your old 401k into an IRA for flexibility, lower fees, and virtually unlimited investment options. Each time you change jobs you should roll the 401k into this recepticle.
Your thinking is good though, and your decision is dependent upon your income, your current 401k set-up & options, age, income level, expected retirement date/age. So again, I need more information to give you solid advice other than the obvious of saving as much as you possibly can for retirement.
Sorry couldn't be more help, Dan Stewart CFA®
The question I have is why are you using mutual funds? With mutual funds you get the Net Asset Value, or NAV, at the end of the day. But you have to put in your order by the close of the day (some funds the cutoff is 2:00 ET) so you have no control over your entry price. You simply put in your order anytime that day or even after the close of the prior day and you will get today's closing NAV price after it is all calculated & added up. In contrast, an Exchange Traded Fund, or ETF, is very similar to a mutual fund but trades like a stock during the day. So you get the best of both worlds, the diversification and/or indexing of a mutual fund but the control of a stock.
Likewise, if a really bad event happened a half an hour after the open and the market started to crater, you couldn't take defensive measures with a mutual fund and would get a sell price at closing NAV whereas with the ETF you could sell as soon as you place the order. I am not saying this would be your strategy, but I like to have all of my options open and flexibility is always a good thing.
For almost every mutual fund you can find a similar ETF, and most ETFs are cheaper. So my vote is to use ETFs. Just Google the differences between a mutual fund & an ETF.
Hope this helps and best of luck, Dan Stewart CFA®
Sounds to me like you might need some professional help. Be sure to get someone who is fee based and acts as your Fiduciary, not someone who works on commissions etc... But to answer your question, if you are talking about a taxable account when you say "investment account," it really doesn't matter versus the home proceeds as they are both after tax money. So whether you take form one pool or the other, has no bearing on taxes unless you are talking about selling something in the investment account to pay the tax. Then is could have a bearing. I would not take an extra IRA distribution to pay the tax.
If you are really unsure and don't know, probably the easiest safest alternative would be just use some of the sale proceeds from the home if you are selling anyway. Again, if we are talking about material amounts you really need to speak with someone knowledgeable in taxes - estate, investment, & income all 3. If you want to reach out to me to pick my brain I can probably quickly answer your questions with just a little more detail. I just hate to give you bad advice as I am a little unclear of what you mean, especially by "investment accounts" and whether you have already "sold" or intending to sell the house anyway or would be doing so to pay the tax.
Hope this help and best of luck, Dan Stewart CFA®