Chamberlain Financial Planning and Wealth Management
Michael Chamberlain has been helping people to make better financial decisions to improve their lives since the 1980’s. Chamberlain Financial Planning was established in 2007 to assist people on a fee-only basis, which means that we do not sell investments or insurance, unlike 95% of other firms.
Michael's education includes both Bachelors and Doctorate degrees from the University of California, Berkeley. Accredited Investment Fiduciary course work was from The Center for Fiduciary Studies at the University of Pittsburgh and CFP® course work was from Boston University.
Michael lives in Santa Cruz with his life partner, Patty, but most of his family is in Sacramento. His daughter Cathi, her husband and three kids, his two brothers and Mom and Dad are all living there. In 2009, Michael opened a branch office in Sacramento so that he could visit with his family more frequently. His son Mitch lives in Austin Texas with his wife and two little girls.
Sailing is one of Michael's life passions. It is a great way to get in touch with nature and he is fortunate enough to have a sailboat at the Santa Cruz harbor.
Doctorate, UC Berkeley
Assets Under Management:
Drum roll please! And the answer is... it depends!
If your 401(k) is from a large corporation, it may have low fees and really good investment options than if you had you been with a small company. The reason is that small business owners are more concerned with keeping the company going then to spend time on making the 401(k) great. Big companies have more resources and some 401(k) plans like at Apple are really good.
I do not know your age, what income you have, nor your expenses or your family situation, so giving investment advice specific to you cannot happen.
You say your Fidelity advisor is pushing you to roll over the 401(k). So, the all-important question is “will the advisor and Fidelity benefit from the rollover?” Are you paying Fidelity to manage your IRA? If the answer is yes, then when you roll the 401(k) into the IRA, the management fee will (in most cases) be higher. This could be a reason to not roll it over!
The next question would be to review the investment options in the 401(k) and compare them to what is in your IRA accounts. Some 401(k) plans have investment options outside of Fidelity. If you were to roll the 401(k) over to an IRA, the Fidelity advisor might suggest more Fidelity funds, which could be a conflict of interest since Fidelity would benefit from more Mutual Fund fees.
After understanding a clients situation, I often suggest that those retirees that have a 401(k) via Fidelity to roll it over to an IRA so that we can have improved investment options and with lower fees than what is in the 401(k).
My advice to you would be to ask more questions and to read the following articles.
9 Considerations Before Rolling Over Your 401(k)
Busting 5 Financial Myths
Most Mutual Funds have no up front costs. Some do and are referred to as “A class Shares”. These have commissions of up to 5.5%. There is no reason to ever buy a mutual fund that has a commission…EVER.
With some custodians there is a transaction cost to buy a mutual fund. This could be $10 to $49 dollars depending on the custodian. Other custodians have no transaction costs to buy a fund but the custodian may get paid a fee to have the mutual fund on their platform.
Granted, I do not know anything about you other than you are 27 years old, so anything that I state here will be a generality, but here goes. It is as simple as 1, 2, 3!
- If you are looking for investments, than buy an investment, not an insurance policy.
- If you are looking for a retirement account, get that, not an insurance policy.
- If you are looking for life insurance, then consider that.
Do not consider a life insurance policy (IUL or any other) as an investment or a retirement account!
The old adage "more is better”, does not really apply to retirement plans. We see folks in their 50's bringing in 5, 6, and more retirement account statements. This is more complex than it needs to be and often results in higher costs than need be. It is good that you are thinking about these things now.
You are on the right track thinking of low cost investment options, such as index funds, but do not count out the TSP offerings. They are very low cost too.
For now, maxing out the TSP is a great start. Wait to see what your next job offers as to a 401(k), 403(b), SEP IRA, etc., and make the choice at that time. Bigger firms tend to have better retirement offerings than small firms so it all depends where you land in the next job.
Depending on your situation, you may be able to fund a ROTH IRA, which would be a good option as well. Verify your eligibility before opening such an account.
You have asked two questions, but anyone responding must make numerous assumptions in the attempt to answer your two questions. Those assumptions may be wrong or right so I won't go down that path.I am sorry that I cannot answer your questions specifically since I do not have more specific information about you or your portfolio.
What I will say about international equities is there are a number of financial services companies such as Vanguard, Fidelity, and Charles Schwab that offer Target Date Funds. These TDFs are professionally managed by each financial services company. The reason I mention target date funds is that EVERY financial services company offering them has international equities in their portfolio no matter their level of risk. If all of the big players think they should be in there, perhaps you should too
Diversification is well-known as a way of mitigating risk. Adding international equities to your portfolio could dampen volatility.
The level of risk in your portfolio should not be dictated by your tolerance for risk (even if you are a low risk profile kind of investor), but rather by your goals as to when you'll need the money and how much money you will need to fund your future cash flow needs.
As for international equities, it has been established that large international companies' ups and downs are similar to large US companies. As a result, you may want to utilize small and mid cap international equities, which are less correlated to US stocks.
Hope that helps.