Saturday, July 17, 2010

Investing Advice

Today I met with Dan. He's an independant financial adviser with Northwestern Mutual Life and he talks a good game. He also meets my sole criteria for a financial adviser - he drives a Ferrari. Actually, two Ferraris. Well, technically he only drives one at a time, but you get the point. Where was I?

Oh yes - financial advice. Dan said we should really consider an insurance policy with NMW that builds value over time. The money you take is tax free and with good planning, you can retire in style. His plan sounded really impressive and he showed me actuarial tables with some impressive numbers based on real money portfolios over the last 20 years.

I'm sold, but The Wife isn't convinced. Her point (and I begrudgingly see the logic) is that his Ferrari money comes from saps like me who get sold on the pitch, and not from his own holdings. Her point (as I understand it) is that if you invest in an insurance vehicle, not all of the money is working for you and you could do better yourself in something low risk where ALL the money is working for you.

I realize these are tough economic times and many of my readers are unemployed or don't make enough money to invest. I'm not trying to be insensitive. I'm just curious if anyone out there has taken the plunge and if they are happy with the choice (I'm looking at you, Amy).

14 comments:

KenP said...

Humm...

The unending conundrum. Doctors and investing. Last time it came up was on Saturday Night Live. A laugh riot as I recall.

Got vote with the wife here. Sorry!

Two words: Index Funds

Low cost structure and long term growth with reasonable risk. A basket reduces that further. They outperform managed funds.

Easycure said...

As a Dave Ramsey follower, term life is the only way to go. You get much, much better long term in vestments in mutual funds. Insurance that "builds money" is a rip, comparatively. I'd recommend his website.

BLAARGH! said...

KenP said it. Forget mutual funds as most of them underperform long term. Basically, you're paying rent for those guys as well. So to make a profit, you not only have to outperform the market, but outperform their fees. Close to impossible long term. Go for a spdr or vanguard s&p 500 and forget about it until you're ready to take some cash out.

Motley fool is a great place to start if you want to learn a shitload about how all this stuff works.... it will at least give you a base from which to start...

The Sister of DrChako and Mrs. Chako said...

As an avid watcher of Suze Orman (every Saturday night Macy and I sit together, drinking tea, watching Suze and yelling "Deny her Suze! Deny her!!), I can tell you that she is very consistant in her opinion of any kind of term life insurance investment...don't do it. I get the impression from her that it is rather scam-like. I have to be honest, though, I have never done any research into it myself, but from what I have heard, I wouldn't bother researching something I wouldn't invest in anyway.

P.S. My verificatin word: muffyink

The Sister of DrChako and Mrs. Chako said...

verification, that is.

The Poker Meister said...

I agree with BLAARGH!. Fool is a great place to get started. From what you describe, it sounds like a derivative of an annuity - insurance backed annuity. I'm no financial expert, and have a relatively low net worth to really think about it, but if I were searching for an advisor, it would be an independent one. I would want to pay him independently, in the form of a flat fee. I would also request to see his tax forms and investment make up - to see for myself that he practices what he preaches.

Don't just jump on the first hot chick you see. TheWife is right (and I'm not one to admit when my wife or anyone else's for that matter, is right).

The Wife said...

Thank you all for your wisdom (read, "agreeing with me") - I'm guessing at this point I don't need to add more commentary.

The Poker Meister said...

Just go slow with your decision. This is not a purchase like a car or a house, this is your retirement and livelihood (read: future)!

Bayne_S said...

1) Your wife is correct he bought Ferrari from your fees!

2) How wise is he about money if he has 2nd Ferrari??? Does he have 3rd car that he uses on rainy days and when having to park in public parking lots???

DrChako said...

His 3rd car is a Hummer H2 and his 4th is a Jag. Seriously.

-DrC

BamBam said...

FWIW when it comes to my investment strategy, I found "Joe Succesful" and made him turn his laptop towards me. Once we got his personal investment portfolio up so I could see it and confirm the link to his financials, we went ahead and created a mirror portfolio for me.

In my peanut brain, if he's playing with my future, I want to be on an even keel with the future of his three kids!

Again though, take that FWIW.

Oh and also, I agree with The Wife! She picked you didn't she? She's got to be a pretty sharp cookie!

;)

OhCaptain said...

Yep, those life insurance policies are a scam. I can honestly make you a better rate of return on SNG's.

Financial advisors tied to insurance companies are best avoided. They get a spiff for selling you their crap.

Does two Ferrari's make him look like he's good with HIS money? You really only can drive one at a time. Not very efficient.

AmyC said...

Annuities and insurance-based investments aren't my favs (the high fees especially tick me off). But they can fit the needs of some people. The last person I would take advice from about that kind of product, however, is an insurance professional -- or someone who drives a Hummer.

Consider getting some initial advice about your needs from a member of the NAPFA http://napfa.org/ They can help you figure out exactly what you will need -- which should guide you to investments that are more suitable.

AmyC said...

Annuities and insurance-based investments aren't my favs (the high fees especially tick me off). But they can fit the needs of some people. The last person I would take advice from about that kind of product, however, is an insurance professional -- or someone who drives a Hummer.

Consider getting some initial advice about your needs from a member of the NAPFA http://napfa.org/ They can help you figure out exactly what you will need -- which should guide you to investments that are more suitable.