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.)
I am not a fan of lifecycle funds, because they operate under the assumption that everyone of a certain age ought to be invested the same way. You are unique and different from millions of other people who were born in the same year, so your investment assets ought to be allocated to meet your needs and not theirs.
The most important factor in determining how your assets should be invested is the rate at which you plan to draw from them. For example, if you have retirement funds in total of $2,000,000 and you plan to spend $100,000 per year for all living expenses, then $1.8 million is not likely to be needed over the next two years and should be invested for the long term -- in equities. This represents 90% of your nest egg. On the other hand, if you only have $500,000 saved, you have a completely different set of problems and certainly can't afford as much risk. See what I mean?
Get in touch with an advisor on this platform and get their advice. It will certainly make a big difference in your life.
Required Minimum Distributions (RMDs) only need to be taken from retirement accounts such as IRAs. If you have saved wisely, you ought to have plenty of savings that is not in an IRA -- ordinary savings from which there is no requirement to withdraw. For example, if you are 65 and retiring and your IRA is $1,500,000 and you have $1,000,000 in regular investments, you are only forced to take an RMD from the IRA, and only after you turn 70-1/2. Between retirement age and age 70-1/2 you should take nothing from your IRA and all your living needs from the savings account, because withdrawals from that account are not taxed. In this example, 4% of your liquid investments is $100,000 per year and your would take it all from ordinary savings from ages 65 to 70. Over that time you can reinvest the income generated by the IRA and watch it grow. Assuming a 5% rate of return on all your investments, in five years the IRA would be $1,914,000 and the personal account would be $715,000. At that time, RMDs would cover living expenses and the personal savings would cover taxes and emergencies. It would work out well. Any excess of RMD funds over what you spend would just be added to the personal account.
Discuss your retirement with an advisor and work out a plan that gives you a secure income without any meaningful risk of depleting your savings. You really ought to talk to an expert about this.
Investing is all about matching your portfolio to your needs. It appears to me that you are exactly the kind of person who develops the right habits and therefore can look forward to a financially secure retirement. However, you also seem to be facing financial needs before you get your degree and enter the workforce for good. $3500 is not going to go far if you need a car or need to rent a place, for example. I would counsel that you not put the money into long term investments because you may need it in the next four years and you do not want to have to sell at the wrong time in the market cycle. There will be plenty of time to build retirement assets.
The most important thing you can do as soon as you have a steady income is to make a budget that fits into your take-home pay and leaves you enough to "pay yourself" every month. Once you are in the workforce and your salary is rising, you can put away money into a 401K or IRA, and build a savings account with whatever is left over. For now, be smart about your expenditures but stay liquid. And stop to smell the roses -- this is a great time in your life and you should avail yourself of opportunities to travel or do interesting things that might cost a little more than you hoped. It's OK. You will never regret it.
This is the most important advice you can ever hear: YOU CANNOT TIME THE MARKET. Every time you are tempted to think you are able to predict when a market dip will occur (and from what level), repeat that to yourself and resolve never to sell. You always have no better than a 50% chance of being right. If you are wrong it can be very costly to get back in (or worse, you will stay on the sidelines for years hoping for that selloff and when it comes you will be too fearful to take advantage.)
I said basically the same thing to an Investopedia question seven months ago. The person who submitted the question was sure there was a correction coming and I told him/her to stay fully invested. Now, that person was right; the market did in fact correct -- from a high of 17% above where it was when he asked the question, to a low of 7% above. Had this person sold, what good would it have done? He would still have missed out. This is the common fallacy of market prediction. Being wrong can be much more costly than being right.
Always stay fully invested. Yes, there will be selloffs. When they happen, re-read that first sentence.
First of all, there is no estate tax on estates under $5.4 million. I understand that Kansas only taxes estates that are subject to Federal estate tax. So you should be in the clear.
The second question is really a rate-of-return question. What is your debt costing you? If it is credit card debt and you are being soaked for 20% per year or thereabouts, pay it off, ASAP. (And never incur credit card debt, ever again.) If it's a mortgage and you pay 3% or so, keep it and invest in a mix of good-quality equities or equity index funds. You should be able to have long term returns that are higher than 3%. As always in equity investing, there are no guarantees and success involves having discipline.