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:
Congratulations on pulling off an early retirement!
I, as well as many other fee-only financial planners love it when person has a pension.
Not sure what you mean when you say the HELOC is for 10 more years of interest only. I assume just that and at the end of ten years one of two things will occur. You will have to pay the loan off or start a payment plan to pay it off in a set length of time.
You asked what seems a straight forward question, but you do not provide adequate information to give you an informed response.
You did not specify other data points that would be needed to give you specific advice, such as:
1) You said “our” but did you mean a spouse, a family or pet dog?
2) If it is a spouse, does the pension continue on when you die and at what %?
3) Does the spouse work, have a pension or other income?
4) What is the amount of the HELOC?
5) Is the home owned by just you or with the other part of “our”?
6) Will you be getting Social Security in the future and if so how much?
7) What is the repayment period once you have to start paying back principle?
8) Poes the pension have a COLA?
9) How are the ROTH funds invested and the expected rate of return?
10) How is the Deferred funds invested and expected rate of return?
11) Are the two types of investments tax efficient with growth in the ROTH and fixed income in the deferred accounts?
12) What is your health status and life expectancy and that of your spouse?
13) You are not on Medicare yet. How are health care costs being address? You may have big increases in the future prior to Medicare.
Perhaps to get a worthwhile answer, you should work with a fee only advisor that knows your specifics, rather than looking for general advice that may or may not be accurate for your situation.
The answer to your question is yes! You can buy and sell a stock many times in one day.
The real question that you should be asking is:
Should I buy and sell the same stock many times in one day?
The answer to that question is NO. The reason is that there are people a whole lot smarter than you, with more education than you, with more experience than you, with more capital than you, with better and faster computers than you. Some make money, but many do not.
If you think that a simulator will guarantee you a profit, you may be disapointed to learn that the company marketing the simulator is the only one making any money.
Trust fund...rumor or the truth. It is normal to want to know if there such an account but finding out may not be easy.
The most straight forward way is to go to the person that told you there was such a trust and find out more. Usually trusts or accounts for kids are set up by relatives such as grandparents or aunts or uncles. It is very unlikely that a stranger would be so generous.
It may be a trust that was created when a person died. If so, in most states beneficiaries are required to be told of such an account. Maybe the creator of the trust has not died. In most cases trust can be changed and even if your son had been named as a beneficiary at one time, it could have been changed.
Maybe it is not a trust at all but what was described as a trust and in fact is a Uniform Gift to Minor account that will become your sons at the time he turns 18. It could be an educational account such as a 529. It is really hard to know if there is an account and what type it may be. In any case if your son is 18 now he is an adult and no institution would cooperate with you in your attempt to locate an account.
If you think there was an investment account and it was lost you can check with the SEC via the Escheatment process. From the SEC “All states require financial institutions, including brokerage firms, to report when personal property has been abandoned or unclaimed after a period of time specified by state law — often five years. Before a brokerage account can be considered abandoned or unclaimed, the firm must make a diligent effort to try to locate the account owner. If the firm is unable to do so, and the account has remained inactive for the period of time specified by state law, the firm must report the account to the state where the account is held. The state then claims the account through a process called "escheatment," whereby the state becomes the owner of the account.”
There is also the National Association of Unclaimed Property Administrators. Every U.S. state, District of Columbia, Puerto Rico, the U.S. Virgin Islands, and Quebec, British Columbia and Alberta in Canada, have unclaimed property programs that actively and continuously find owners of lost and forgotten assets. Check out their website to learn more. https://www.unclaimed.org/what/
In any case good luck to you and your son.
Where to hold which asset classes is a common question that all investors should seriously consider. The answer could depend on your age, the type of accounts that you have, the magnitude of your portfolio, your goals and needs.
Your situation is ideal since you have a tax-free account (ROTH) a taxable account and a deferred account (IRA) and you do not plan to need the funds for years.
In this situation, I would want fixed income in the deferred account so that dividends are not added to your taxable income while you are working and can compound. This would include the short-term bonds.
You should want the most aggressive growth in the ROTH account, since that growth will be tax free t a point in time. The last thing I would want in the ROTH would be cash and short-term bonds.
I would also want growth assets in the taxable account, since when they are sold, the tax is at capital gains rate rather than ordinary income. Also, on your passing there is a step up in basis and your heirs could sell the holding and have no tax to pay.
I am a little concerned when you say that you want to add short term bonds at this point in time. You should have owned them for some time. You do not want long bonds at this point with the rising interest rate environment.
It could be worthwhile to have your portfolio reviewed to be sure that you are not missing out on other portfolio improvements. The goals of a portfolio design should be:
- To have the correct level of risk based on your goals
- Using investments that will give you the highest returns for that level of risk
- To be low cost
- To be tax efficient
- To have a portfolio design and management methodology that is easy for you to understand
This is a very good question that many people ask at various points in their life time, There is a short answer and a long answer.
The short answer is NO, do not sell and move all to cash.
The long answer is still NO because:
1. You and the wife will live for another 20 years, which will have periods of ups and downs, inflation, recession, bull markets and bear markets, higher interest rates and lower interest rates. Cash cannot give you returns over time that will provide the Required Minimum Distributions that you are mandated to take, plus grow for the future and increase your purchasing power over time.
2. The key to maintaining investments over the long haul is to have an asset allocation that holds both stock (can be ETF or Mutual funds) as well as fixed income (Bonds and cash) in the right proportion for your situation. I do not know what that may be. For instance: Do you own a home, is it paid for, what amount of SS income do you have, do you have a pension, are you supporting anyone else and many more?
3. What is the current percentage of stocks in your 401k? Without knowing anything about you, it is not possible for me or anyone else to tell you what is right for you, but if we were to look at the 42 different financial companies that offer target date funds the average of those 42 would suggest that 30% stocks and 70% fixed income maybe a reasonable allocation. If your current allocation is 60% or 70% it would be appropriate for you to decrease the percentage of stock but not going all to cash.
Your current RMD is about $29,000 to $30,000 but that that will go hiogher in the future. For instance an 80 year old with $800,000 would have an RMD of about $42,000 and at age 90 $72,000 RMD.
I would recommned that you talk to a CFP professional about determining the right allocation for your situation and if you should keep the funds in the 401k or move them to an IRA.