Crane Asset Management LLC
Chief Investment Officer
Crane Asset Management LLC is a full-service investment counseling firm providing investment management services to private individuals, retirement plans, endowments, and charitable foundations. All accounts are managed on a discretionary basis. John Frye founded the firm in 2003, with a partner who remains Chief Operating Officer. They work with all of their clients to formulate a long-term investment strategy that will meet their investment objectives while addressing their risk profiles. Understanding their clients in this way enables them to develop unique plans based upon each of their clients’ needs to help them achieve their financial goals.
Before co-founding Crane Asset Management LLC, John served as Executive Vice President and Portfolio Manager at Renberg & Associates in Beverly Hills. He began his career with E. F. Hutton & Company in New York and subsequently worked with Alex. Brown & Sons in Baltimore. He received his Bachelor of Arts in Politics from Princeton University in 1977 and his M.B.A. from Columbia University Graduate School of Business. John holds the Chartered Financial Analyst® designation and is a member of the CFA Society of Los Angeles.
BA, Politics, Princeton University
MBA, Finance, Columbia Graduate School of Business
Assets Under Management:
Crane Asset Management is registered with the State of California. A copy of Crane's Form ADV filing (Parts 2A and 2B) can be accessed here. In addition, Crane's Form ADV (Part 1) can be downloaded from the SEC's website. (Type in Crane's name in the field provided and follow the instructions on the site to download the information required.)
Even though a house can turn out to be a good investment you should never buy one solely as an investment. I would say that you should continue renting as long as you are happy in your current home.
The problem is that in retirement you ought to have your assets be liquid, spendable, and home equity most assuredly is not. You would tie up a lot of money in the down payment and then assume the extra costs of mortgage, property taxes, insurance, maintenance, etc. Don't saddle yourself with that responsibility. "You can't eat home equity." You would reduce your available funds and simultaneously increase your monthly obligations. I think you would hate yourself for having done that.
Besides, as you age, aren't you going to need less space, not more?
It depends on the size of your invested savings. If they are small (say, less than five years' living needs) then the additional cost of an advisor might not give you enough of a benefit for it to matter much. You might consider hiring a planner by the hour to select some funds for you, but might be better off avoiding the ongoing management fee. However, an advisor would be very valuable if you have substantial wealth. First of all, he/she would recognize that a 50-50 allocation might or might not be optimal in your circumstances; also, your advisor could assist in planning your estate, guiding you through times of market volatility and helping to keep you from acting out of fear; and putting parts of your portfolio into asset classes you may not be familiar with but would be very beneficial (for example, preferred stocks.)
And you should never under any circumstances own stock options. They are gambles, not investments.
You should absolutely buy the term insurance, but resolve to put away the difference into an investment portfolio. "Whole life" is really just an insurance policy with an investment portfolio wrapped around it -- the pitch is that you pay a lot per month when you are young and then your portfolio pays the premiums down the road. Usually the returns on that portfolio are low and the management fees are high. I believe your father-in-law is well intentioned in that it's often hard for a young couple to discipline themselves to make monthly deposits to savings. Prove to him (and yourselves) that you can do it.
You can have "cash value accumulation" with anything as long as you force yourselves to (1) contribute steadily; and (2) do not touch until retirement. The best way to do that is to set a 401K contribution as high as you feel comfortable setting it, and put the rest into a Roth. I think it's too early to set up 529s if you don't have kids.
One further thought: At your stage in life you probably don't need $2 million in life insurance. You should have just enough so that if one of you dies suddenly the insurance will fill the financial hole and allow the survivor to continue without disruption to his/her lifestyle. This number is probably fairly small today (think in terms of about 5 years' income) but will grow as your family grows. You can always get modest term policies today and layer on additional policies later. That could save you some money.
Insurance is not an investment; it's a bet you hope you lose.
If you are starting with amounts as small as $3,000, you are better off buying index funds. Split the money between large, mid and small cap indices. I am sure the other responders will give you lots of ideas. Once you have a decent nest egg you can build a portfolio of individual stocks. Don't try to trade, or time the market. Just invest constantly and steadily regardless of market conditions.
I am adding a response because the savings rate is so low in this country that I hope I can do my part to improve it by repeating over and over on Investopedia that you've got to put money away. My suggestion to you is to "pay yourself" $1,000 per month. Deposit the money into a brokerage account at the same time you pay your rent, your utilities, etc. Do this in addition to your 401K deposits, if you are making them. (I hope you are.) If you are 30 and have never invested you are late to the game and need to catch up. You need liquid investments of 20 times your living needs by the time you retire. It's sooner than you think. Good luck.
First of all, I must assume (since you don't mention it) that you have no meaningful savings put away outside of your retirement account. If this is true, it looks as though you are able to cover expenses with pension income plus $18,000 per year (pretax) in withdrawals from the 401(k). $18,000 is 4.4% of the value of your account, so the withdrawal rate is sustainable, more or less.
If you do have a savings account, take the $1,500 per month from it and not your 401(k) (which you should roll over to an IRA at some point). 401(k) withdrawals are taxable and withdrawals from savings are not. Let the assets in the retirement account grow as long as possible, and take them only when you have to -- at age 70-1/2 and after.
But I have to mention that I think 60% bonds is too much. You are subject to "the risk of safety" in that your retirement assets may feel safe, but are unlikely to grow much. Even an extra 2% per year, over the next 20 years, can make a big difference in your lifestyle. I know markets are at highs and that has everyone worried, but I think a 66-year-old who needs less than 5% of his assets in any given year can consider himself a long term investor. I would hold 65-70% equities. Also, consider preferred stocks as an alternative to bonds. I can give you more information on this if you are interested.
Now, don't go changing all at once. We are bound to get a selloff and when it comes you should consider it a buying opportunity.