Bloom Asset Management, Inc.
Jack K. Riashi, Jr., CFP® has been with Bloom Asset Management since 2002 and has been an active member of the firm’s Investment Committee since inception, which is responsible for setting investment strategies and selecting approved securities for client portfolios. He provides a wide range of financial expertise including personalized investment management, asset allocation, and comprehensive retirement planning. Jack has been featured as a financial expert for the Detroit News' Money Makeover series and has been a frequent guest on WXYZ-TV Channel 7 Action News providing financial advice and market observations. He has also contributed numerous articles for the firm’s website, MoneyTalk and MoneyWatch newsletters. Jack has also been selected as an HOUR Detroit Five Star Wealth Manager each year since 2011, an honor he works hard to achieve.
Jack has been serving clients in the financial service industry since 1987, holds the designation of Certified Financial Planner (CFP®) and is an active member of the Financial Planning Association. He is a graduate of Wayne State University with a bachelor's degree in finance and has been a featured speaker at many Bloom Asset Management seminars.
As a CERTIFIED FINANCIAL PLANNER™ practitioner, Jack has met rigorous education and ethical requirements and has gained extensive knowledge in the areas of financial planning, risk management, investments, income tax planning, and retirement and estate planning.
In his free time, he enjoys spending time with friends and family and is an avid golfer and cyclist. Jack is also very actively involved in his Church and has contributed his expertise in financial planning and goal setting to the Church’s Finance Committee over the years.
BS, Finance, Wayne State University
Assets Under Management:
It sounds like you and your spouse have done a very good job of saving toward retirement. If you have not already done so, you should consider maintaining at least six months of living expenses in cash. That is important and will prevent you from having to withdraw from longer-term assets.
Without knowing your specific goals and objectives, I would tell you that investing in a variable annuity is a bad idea. Even no-load variable annuities from places like Vanguard, Schwab or Fidelity, which are far less expensive than other annuity products, are still a bad idea. Even though you receive tax-deferred growth on your money, you are held captive to the somewhat limited investment choices in those annuities. But more alarmingly, you are deferring your assets to a possible tax nightmare for yourselves and to your beneficiaries. Assuming the variable annuity grows over time, all of the gains must be distributed first with annuities, which means that either you or your beneficiaries would have to pay ordinary income taxes on the gains. If you end up establishing a monthly income stream from the annuity rather than taking periodic withdrawals, then those distributions are taxed somewhat differently (please refer to a tax professional on this).
Too, your beneficiaries would receive no "step-up" in cost basis as they would if they inherited assets in a taxable brokerage account. If you invested some or all of the $200k in a taxable account, then you would grow your assets at capital gain tax rates, which are less than ordinary income tax rates, or the rate you would pay if you withdrew from a variable annuity. Upon your death, your beneficiaries would inherit the taxable account on a "stepped-up" cost basis, meaning all of the gains would get zeroed out at the date of death value. The beneficiaries could then sell those asses without limited to no capital gain liabilities.
You should seriously consider working with a financial planner that can help you formulate a long-term game plan for your situation. They can help you figure out what types of accounts make sense. I've been a planner for many years, and very rarely have I ever recommended someone purchase a variable annuity. If you desire a stream of income or want to be more conservative, then fixed annuities and/or immediate annuities may work more effectively. But again, a competent, client-focused advisor would be very helpful to you and your family. Be very careful with advisors that work for insurance companies and/or earn their compensation by purely selling financial products. They often invariably recommend variable annuities for their solutions. Make sure you ask lots of questions about their approach, investment strategies, and compensation structure before committing to anyone.
I wish the best of luck to you!
Congrats on your new job! Always great to hear!
You should find out if you are eligible to enroll in your company's retirement plan, assuming they offer one. Some employers allow new employees to enroll right away, while others have a grace period of up to six months or a year before they can officially enroll. The most common employer retirement plan these days are 401(k) plans that allow you to contribute up to $18,500 pre-tax. In other words, your taxable income would be reduced by the amount of your pre-tax contribution. Some employers even match a certain percentage of your income or contributions, making enrolling and contributing to the plan even more valuable.
If you have access to a 401(k), then I would strongly encourage you to establish a Roth IRA. A Roth IRA allows your money to grow tax-free, as opposed to tax-deferred like a traditional IRA and 401(k) plan. However, some employers are now offering Roth 401(k)s. Contributions to both a Roth IRA and Roth 401(k) are done with after-tax dollars, which means you receive no tax deduction. The offset is, the money grows tax-free. And if you are just getting started, a Roth IRA can prove to be a very powerful retirement account, allowing your capital to compound over many decades without having to pay any income tax on withdrawals down the road. Even if you cannot enroll in your employer plan, you might still want to consider contributing to a Roth IRA. Depending on how much you earn, you may be able to make a tax deduction for a traditional IRA contribution, but it may be more beneficial contributing to a Roth IRA instead.
Too, unlike a traditional IRA and/or 401(k) plan, Roth IRAs do not have any mandatory withdrawal requirements. The IRS rules say people age 70 1/2 have to begin taking mandatory distributions from their IRA accounts. This is not the case with Roth IRAs.
Best of luck on your new job!
The most common types of investments include mutual funds, Exchange Traded Funds, and even individual securities such as stocks and bonds. Since the account is tax-deferred, which means the gains and/or income are not taxable until you withdraw the funds, it may be wise to use more tax inefficient investments for these types of retirement accounts. Unless this is your only investment account, I generally avoid using individual securities for IRAs because you can't take capital losses in IRAs. You can take capital losses in taxable accounts so they would be preferable for individual securities.
Hope this helps you!
Congrats on your new job! That is very exciting. Best of luck to you!
You actually have several options:
1. You can transfer your previous 401(k) to your new employer, but you will have to find out if you are immediately eligible to enroll in their 401(k). Some companies require new employees to wait up to a year before they can enroll in a new plan. If that is the case, then you can still retain your previous 401(k) with your old company, and then once you are able to enroll in your new employer's plan, transfer your previous one.
2. You can perform what is called an IRA rollover of your old 401(k) plan. You would establish an Individual Retirement Account at a brokerage firm. It would be preferable to establish an IRA at a firm like Charles Schwab or a Fidelity Investments because their investment platforms are so extensive and trading costs minimal. The IRA would open the door to a wider array of investment choices, much wider than any 401(k) plan. However, some companies can offer broker windows that allow participants to purchase securities/funds outside the plan's normal 401(k) platform of selected investments.
You should review the investment options of your new company's plan to see if their options are adequate enough. Unfortunately, not all 401(k) plans are the same. Some 401(k) plans are better than others. I have seen some plans with below average investment options, i.e., not having sufficient asset classes, or having too many in the same area, etc. If the new 401(k) does not have sufficient options, then I like the flexibility of having an IRA that I can control or where I can invest in funds or asset classes that may not be part of an existing 401(k) plan.
Lastly, if you decide to roll over your previous 401(k) account, then please be careful where you open your IRA. I would strongly encourage you to consider using a discount brokerage firm that will not sell you products such as annuities that may not fit your goals but will fit the firm or broker's goals.
I hope the above was helpful to you. Good luck on whatever you decide!
It is alarming to read the answers to this question from my peers. It seems that bonds have fallen out of favor even with investment professionals. Excluding bonds from a long-term investment portfolio is not a good idea. And it would certainly be poor timing considering stocks have not suffered through a major decline in more than 9 years! But that is not the point. The reason why investors own bonds is for diversification purposes. They are an ideal complement to stocks. When stocks go down, bonds generally go up. Stocks can drop substantially in a very short period of time. They are extremely volatile assets. Bonds, or certain types of bonds like Treasuries, mortgages, and agencies generally do not suffer major declines. That being said, if interest rates were to climb substantially from current levels, then bonds could experience declines. This is why I generally like using bond mutual funds because their interest can be reinvested to purchase more shares of the fund, thus mitigating some of the decline caused by rising interest rates. Too, bond mutual funds are very diversified, meaning they own literally hundreds of bonds. The manager or management team can make adjustments to their bond fund to take advantage of rising and/or falling interest rates.
The main point is, bonds are great complements to volatile stocks, and often move in the opposite direction during stock market declines. The quality of the bond plays an important role in this relationship though.
I would seek out the advice of a competent investment advisor to get their views on your personal financial situation, your specific risk profile, and other income needs to see what allocation makes sense for you.
Best of luck to you!