What the Money Guy Said

It looks like Mrs Mama and I are in pretty good shape in terms of saving for retirement. Right now, we have about $135k between us, in 401ks and various flavors of IRA. And we each sock 15% into our 401ks, although we haven’t funded IRAs in the last 2 years.

That said, the Money Guy made some suggestions for tweaking our investments, and I’m thinking about how much of his advice I should and will follow.

  • We are overexposed in international stock mutual funds
  • We also have too much invested in large cap company oriented mutual funds
  • We don’t have enough in small cap mutual funds
  • We don’t have enough in real estate mutual funds
  • We don’t have enough in stable/income/bond funds to protect ourselves in the event of a severe downmarket
  • We own too many individual stocks

Out of this so far, I’ve made a couple of changes. I sold:

  • 20 shares of KSS (Kohls) for $1,554.22, on an initial investment of $1000.
  • 45 shares of EAT (Brinkers) for $1,507.77, also on an initial investment of $1000.
  • 24.387 shares of OAKLX for $828.42, on a rollover IRA investment left over from an old 401k, basis $670.33. (No, that’s not an individual stock, but I think I should get rid of any asset I have that is less than 1% of my portfolio. This is going to be a phased-in process.)

I also have limit orders open to sell my 66 shares of PFE (Pfizer) at a loss of about 25%.

Meeting with the Money Guy

Mrs Mama and I both save 15% in our work 401ks, which means that our retirement savings is in pretty good shape — probably better than any of the rest of our finances. We also have rollover and Roth IRAs, but neither of us has contributed a new dime to those since 2005.

That said, we have a total of about $135k in all of our retirement accounts, combined. (Except for Mrs Mama’s ancient and tiny TIAA-CREF account, which we ignore.) Roughly$70k is in our direct control, with the other $65k in limited-option 401ks.

When I reviewed our retirement assets last month, I figured out that we have 26 distinct holdings, including 10 individual stocks.  Those assets range, individually, from being as much as 17% of our portfolio, to as little as .08%. Yes, that’s 8 hundredths of a percent, or $107.

Well that makes no sense. Obviously I can’t keep track of 26 different investments, and I’m not. It’s also silly to hold on to lots of little assets that are worth only 1-2% of my portfolio, or less.

So I asked a random financial planner guy who I met recently if he would review our savings and make suggestions. He’s coming over tomorrow with his proposed changes.

(Yeah, that could be the worst way to find a financial advisor, but his business model is to try to get me to transfer my accounts to him. Which I warned him was unlikely and offered to just pay for his review service. He declined.)