Clearstone Wealth Management LLC/IPI Wealth Management Inc.
For more than twenty years, Paul Brown has worked closely with business owners, partners, professionals and family leaders to design and implement effective strategies for their company’s growth, renewal, turnaround and succession. After working as a consultant for Moss Adams, one of the nation’s largest accounting and consulting firms, he became convinced that standardized approaches and cookie-cutter solutions seldom produce lasting, meaningful results. He took a different approach; one that focused on meeting the unique needs, challenges and expectations owners face throughout the life-cycle of their business or professional practice.
Paul has been a hands-on advisor and "interim executive" in the financial industry and has worked with firms and privately owned businesses throughout the United States, including Hawaii and Alaska, and in Eastern Europe.
He started Clearstone Wealth Management, a fee-only investment advisory firm, to help business owners, family enterprises and career professionals prepare for when they face the unique challenges that come when their business, investments and other sources of income and wealth converge to support their long-term and legacy goals.
In addition to having a graduate degree from Bellevue University, Paul is a proud member of the University of Iowa Alumni Association (Go HAWKS!) and a life-long fan of the Chicago CUBS. Yes, he had tears in his eyes when the CUBS won the 2016 World Series.
In his spare time, Paul plays golf, skis and enjoys his family. In warm weather, he can be found riding his motorcycle through one of the area's beautiful mountain ranges.
MA, Leadership, University of Iowa and Bellevue University
Assets Under Management:
Investment advice offered through IPI Wealth Management, Inc., 226 W. Eldorado St. Decatur, IL 65222. PHONE: 217-425-6340. Clearstone Wealth Management LLC is not affiliated with Investment Planners, Inc. or IPI Wealth Management, Inc.
I know that I am expected to give an editorialized answer to your question so as to provide more information than you requested. But, since you asked for something specific, let me provide the same. You can purchase the following ETFs in your brokerage account:
Vanguard High Dividend Yield ETF (VYM): Tracks the FTSE High Dividend Yield Index consisting of high-yielding US stocks and has generally done well over multi-year periods.
iShares US Preferred Stock ETF (PFF): Relatively safe fund holding just under 300 different preferred stock issues. About 85% are issued by US companies and the UK and Netherlands make up most of the remainder.
Vanguard Dividend Appreciation ETF (VIG): Tracks the NASDAQ US Dividend Achievers Select Index which includes stocks that have grown their dividends for 10 years in a row or more. As a result, it leans toward large-cap stocks and limits individual stocks to no more than 4% of the index.
You would still have the penalty, as well as the tax. Sorry. However, if you still want to help your son with college, you could roll your 401(k) into a rollover IRA. Once there, the rules, if followed correctly, allow for you to distribute funds to pay for qualified college expenses (tuition, books, room and board, etc.).
It sounds as though your 401(k) will allow you to take out a loan. If so, then you can borrow up to $50,000 at nominal interest (Prime rate which is about 4.25%). You will need to make quarterly payments and you will have to pay off the loan in 5 years. If this is the case, then by all means, take out the loan, pay off the credit cards and continue to work toward a positive retirement. Afterall, you will be paying interest to yourself (which is an advantage) instead of the banks.
Yes. It sounds as though you are planning on staying in your home for a long time. If so, the interest rate risk of an adjustable rate mortgage is real; particularly in the low-interest environment we are in today. With a 30 year loan, you'll be able to make additional payments if you desire. Even so, I would encourage you to look at the rates for a 15 year mortage, including the payments. With just $100,000 still being owed, the difference in the payments may not be that great. However the total amount you would be expected to pay over the duration of the loan would be significant.
My initial response would normally be to try to dissuade you. But instead, I'm going to assume the best. That is, I'll frame your question as having come from someone who is smart, who had given the matter quite a bit of thought, who is ready to proceed, but who needs some advice. So, out of respect for you and the thought you've given this, let me see if I can help.
Let's start with the $5,000. First, since you are new at this, leave the additional amount you mentioned off the table and see what you can do with your initial stake. If possible, break this down so that you are not using more than 5% (or 10% at the most) on a single move. In this way you will be creating your own diversification plan that could keep you from disaster.
I would probably encourage you to start with "straight up shares," either of a company or of ETFs. In fact, at this stage, I would likely encourage you to start with ETFs since they can provide another layer of diversification. And I would start by going "long" instead of "short" since the natural inclination of the market is to grow. Think of it this way: if you are just starting to learn to sail, it is easier to go with rather than against the wind.
Then come up with a simple technical model. Some will use "trend following" in which asset classes and/or sectors are selected based on their price trend. For example, you could do something as easy as investing in the top 6 asset classes and top 4 sectors based on their relative price movements over the previous 30 days. If you started out by putting $250 in each of these, you would still have one-half of your initial stake kept for safe keeping.
After one month (30 days), re-calibrate your holdings and discard those that might have fallen behind while investing in those that have moved ahead. If you are confident (not cocky), you might take an additional $500 from your dormant $2500 and invest and additional $50 in your ten holdings. By the way: you can set and track your portfolio on Yahoo Finance.
Remember to "play the long game." If your investment goes up 1% the first month, you are on track to achieve a 12% return. That's what your mind will tell you. It will also tell you that if your portfolio goes down 1% you will lose 12% in a year. Which is still much better than what the S&P 500 did in 2008!
What you'll find is that as the market goes down, your best performing assets could be in bonds. This will give you a safe-harbor and could provide an increase.
Start here. At least that's my recommendation.