Wed, 28 April 2021
As you start retirement planning you’ll want to think about using various types of retirement vehicles. This is why we are exploring different asset allocation ingredients in this series. I want you to understand the basics of these investment vehicles so that you can make an educated decision on what to include in your retirement portfolio. Today you’ll learn about closed-end mutual funds, UITs, and structured notes. Listen in and learn why it’s important to keep your investments simple. Don’t need to overcomplicate your investments. What is a closed-end mutual fund?The biggest difference between a closed-end mutual fund and an ETF or open-ended fund is they issue a fixed number of shares. Because of this, closed-end mutual funds act more like individual stocks. They even have an initial public offering just like a stock does. Sometimes they will even roll out a secondary offering. Since there are a limited number of shares, that means there is no more money coming in or out of the fund. Closed-end funds also use leverage as a way to improve returns. What are the advantages of closed-end mutual funds?Open-ended funds and ETFs always trade at net asset value, however, closed-ended funds can trade at a premium or at a discount. They aren’t typically purchased at the net asset value. Closed-ended funds don’t experience cashflow issues since they have a fixed amount they are investing. They don’t have to sell securities just because someone needs the money. People usually buy closed-end funds because of the distribution yields they payout. But it is important to remember that the high yield is usually due to the leverage they use. Discover the disadvantages of closed-end funds by pressing play. What is a unit investment trust (UIT)?A unit investment trust (UIT) is a fixed portfolio. You’ll get a basket of securities in certain percentages that stays consistent over time. At a predetermined date, this trust matures like a bond and you’ll receive the cash value. The benefits of UITs are the costs and the lack of yearly capital gains. Since the trust matures at a certain time you will only need to worry about capital gains taxes at that time. They are also low in cost due to less management. Discover why I haven’t used UITs and why I really don’t like structured funds by listening. Check out the Rock Retirement ClubThe Rock Retirement Club is our online university that will empower you to rock retirement. The online courses will teach you how to build your retirement plan step by step. You’ll learn how much is enough and when you can retire. In addition to being part of the amazing community of like-minded people walking the same journey, you’ll also gain access to retirement calculators, spreadsheets, and other tools to help you rock retirement. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MANPRACTICAL PLANNING SEGMENT
Q&A SEGMENT
TODAY’S SMART SPRINT SEGMENT
Resources Mentioned In This EpisodeCheck out the long term care insurance series by starting here Roger’s YouTube Channel - Roger That BOOK - Rock Retirement by Roger Whitney |
Wed, 21 April 2021
Retirement planning takes many different forms, but to effectively manage your money in retirement it is important to know the types of investment accounts that are available. This is why I am hosting the Asset Allocation Ingredients series. Over the course of this series, we explore what goes into your investment mix. This episode focuses on separately managed accounts. You’ll learn what they are and their advantages and disadvantages. Make sure to stick around for the listener questions segment to hear answers to questions from listeners like you. What is transformation?Transformation means a dramatic change in form or appearance. However, there are many transformations we can make in life that aren’t physical. Common life transformations occur when we leave school and enter the professional world, go from single to married life, and of course, from working to retired. A transformation can be triggered by a few different things. It could be triggered by a life event, or it could be a gradual change over time, or simply by you looking for a change in your life. Are you working towards any transformations in your life? What is a separately managed account?A separately managed account is a portfolio managed by a third party. Essentially, you are assigning the management of funds to a money manager who is implementing the portfolio that you have hired them for. A separately managed account is different from an ETF or mutual fund in that you open an investment account at a firm and the account manager will build the portfolio based on the strategy you choose. It’s like a mutual fund that is completely unwrapped. You own each individual position in that account rather than in a bundle. What are the advantages and disadvantages of separately managed accounts?Some advantages to SMAs are:
There are a few disadvantages:
Are separately managed accounts a part of your portfolio? What do you like about them? What’s coming up next on Retirement Answer ManMake sure to check out the next episode where we will explore UITs and structured notes. After this deep dive into the financial aspect of retirement, next month our focus will shift to the non-financial side of things. You won’t want to miss out on building your non-financial retirement plan. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MANWHAT DOES THAT MEAN?
PRACTICAL PLANNING SEGMENT
Q&A SEGMENT
TODAY’S SMART SPRINT SEGMENT
Resources Mentioned In This EpisodeRoger’s YouTube Channel - Roger That BOOK - Rock Retirement by Roger Whitney Roger’s Retirement Learning Center |
Wed, 14 April 2021
This month we are discussing the ingredients that make up your retirement portfolio--your pie cake. In the previous episode, we took a deeper look at ETFs, and in this episode, we explore mutual funds. You probably have mutual funds somewhere in your portfolio, but you may not know exactly what they are. On this episode of Retirement Answer Man, we will take a look at what a mutual fund is so that you can determine if you should have one in your retirement toolbox. Is the Rock Retirement Club right for you?To truly rock retirement you need to do 3 things.
You can find all 3 of these things in the Rock Retirement Club. If this sounds like it could help you plan the next chapter of your life check out RockRetirementClub.com. Have you collected investments and accounts?As you approach retirement, you may notice that you have a lot of financial clutter. You have probably worked a few different jobs and over time, you may have collected retirement investment accounts in various places. You may also have several types of investments in different accounts. When you are approaching retirement this can be a problem. These investments can be a financial mess. The complexity can be confusing and overwhelming. When building a retirement investment portfolio take the time to make it simple. Determine what kind of portfolio you want to build to support your retirement. What are open-ended mutual funds?Mutual funds are similar to ETFs which we discussed in the previous episode. However, in a mutual fund investors pool their money together into an existing portfolio. Mutual funds are priced only once per day based on the net asset value and they are traded only once per day based on that price. What are the advantages and disadvantages of open-ended mutual funds?Just like any other investment, mutual funds are neither good nor bad. They are simply a tool to add to your investment toolkit. One advantage of mutual funds is that there is no tracking error since it is priced on the net asset value. They are easy to invest and there is a huge menu of investment options. Open-ended mutual funds are extremely liquid so you can get in and out of them easily. Listen in to hear what the disadvantages of mutual funds are. You’ll also hear me answer several listener questions with Nichole. Press play now. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MANPRACTICAL PLANNING SEGMENT
Q&A WITH NICHOLE
TODAY’S SMART SPRINT SEGMENT
Resources Mentioned In This EpisodeEpisode 370 - The recent episode with Fritz Gilbert Episode 372 - Start here if you want to learn more about building your pie cake Episode 363 - The beginning of the Let’s Get Physical health series BOOK - Atomic Habits by James Clear Roger’s YouTube Channel - Roger That BOOK - Rock Retirement by Roger Whitney Roger’s Retirement Learning Center |
Wed, 7 April 2021
If you have listened to this show for a while you know that I like to create a retirement withdrawal strategy based on the pie cake. However, we haven’t discussed what goes into the mix. Over the next several episodes, we’ll dive into the details of asset allocation. You’ll learn a bit about ETFs, mutual funds, separately managed accounts, and UITs. On this episode, in addition to answering listener questions with Andy Panko from Retirement Planning Demystified, you’ll learn about ETFs and their pros and cons. Building your pie cakeIn retirement, your portfolios need to reflect when you plan on spending those funds. I separate these portfolios into what I call the pie cake. The basis of the pie cake, is of course, the plate. Your plate will contain your contingency fund and emergency fund. The first layer of your pie cake contains the money that you will use to fund your life over the next 4-5 years. The next layer will contain funds that have a different asset allocation. It may contain funds that are more of a mix of stocks and bonds. In your last layer, you have your long-term assets which will consist mainly of stocks. What are the ingredients of the pie?Now that you have the cake set up you’ll need to consider what you’re going to put into each pie. Each layer of the pie cake is different and must be made separately. You’ll want to consider what ingredients you want to add. How many ingredients do you want to have in your mix? I like to have as few ingredients as possible. Try adding complexity to your ingredients by diversification rather than simply adding more ingredients. What would you prefer in your pie--simple ingredients or complex ones with names you can’t pronounce? What is an exchange-traded fund?An exchange-traded fund (ETF) is an instant portfolio. It is different from traditional mutual funds in that an ETF trades like a stock--you can buy call options or put options. They can be highly managed or not depending on what you buy, so pay careful attention to the fees attached. One unique mechanism ETFs have is that the managers buy stocks that represent the portfolio you are trying to match. They track very closely to the net asset value. Learn more about ETFs by listening to this episode of Retirement Answer Man--make sure to stick around for the listener questions with Andy Panko. What are some advantages and disadvantages to ETFs?ETFs aren’t all good or all bad. They have their pros and cons. One advantage to an ETF is that you have an instant portfolio. Another advantage is the clarity. You know what is inside the fund at all times. They are also transferable between different brokerage houses and are quite tax efficient. On the flip side, if you buy an ETF that is focused on an index you may get less diversification than you think. So make sure to dig under the hood a bit to understand what it is that you are buying. ETFs can also be more expensive if it is more actively managed. Press play to hear the difference between an organic and manufactured ETF. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MANPRACTICAL PLANNING SEGMENT
Q&A SEGMENT WITH ANDY PANKO
TODAY’S SMART SPRINT SEGMENT
Resources Mentioned In This EpisodeTaxes in Retirement Facebook group Retirement Planning Demystified on YouTube BOOK - Thinking in Bets by Annie Duke Roger’s YouTube Channel - Roger That BOOK - Rock Retirement by Roger Whitney Roger’s Retirement Learning Center |