Introduction

[hermetic]

I am retired, single, and living in a paid-for house on SSI and minimum distributions from a 401K. I make enough to live comfortably but frugally. I have not had to pay income taxes for many years and am poor enough to qualify for a program that eliminates my property taxes. I guess that’s all about to change.

My dad passed away last year leaving 3 heirs; my sister, brother, and me. All other immediate family has been gone for a while. Dad was 92 and in a nursing home so everything he had was in an Edward Jones account, a mix of stocks, bonds, etc. I got ownership back in March, when the country had begun shutting down.

So, I was already in a mild state of shock, wondering if we would all be dead in a short time, and now I’m the owner of a six figure investment account (very low six figure) about which I know absolutely nothing. The EJ office is in a different state. I have spoken with my advisor on the phone a few times and told her not to change anything right now until I have a better idea of what’s going on. I sure don’t want to end up with some huge tax bill.

I have never wanted to be in the stock market because I don’t trust it and she had me agree to not discuss my account with anyone other than her. I have bookmarked several websites that look like they would help me understand what I’ve got but I never seem to have the time for them. I am a very busy person these days. When I discovered this group, I started following figuring I might learn a thing or two.

I am having some concerns about my account, not the least of which is the photo of my advisor. Now I truly have never been one to judge people by their looks but damned if this woman doesn’t have those crazed Republican eyes that we see so often now. Plus a few comments she has made give me pause.

I do realize that there is a lot of confusion and concern about what’s going to happen now. I’ve seen the headlines that we are headed for a worse Depression than has over occurred. My advisor says, “Nah, never gonna happen.”

So, there I am. Waiting and watching. Delighted to meet you all.

[empedocles]

1. My suggestion is that you want save what you have, limit your risk of loss.

Further, I would transfer out of your current high maintenance fee, fairly risky [imo] account, - and easily switch to a low risk mutual fund account, with annual maintenance fees a small fraction of what you are being charged now.

In the current market, I suspect that downside risk is larger, than the upside possibility given the obvious state of the economy now and in the forseeable future.

Treasury bills, are the choice investment for very low risk of capital and lowest annual fees. [You will see minimal or no advertisements for this because profit margins for the seller are low. [to be continued].

[empedocles]

7. Sorry about the interruption, 4 yr old granddaughter had to go to the

pool before leaving with her parents for a few days.

Reading the responses to our OP, they look pretty good.

Vanguard was a good option. Another is American Century. I have both, but like AmCent better. The reason is, if things get really, really bad; even if you consider it a minimal possibility AmCent could be the better option. If things get really bad, bad inflation is possible. Then there are very, few investments that make sense. Nothing, not even T-bills is perfect. However, at some point before inflation hits, some gold funds are a very good idea. They will appreciate and you will have some buying power in a tough world. [As a very rough idea, DJIA between 15000 and points lower are time to consider some dollars into gold. AmCent has a gold fund, and you can transfer into from your existing AmCent account with a phone call.

Most mutual funds will handle most of the work in transferring from your existing account, into the given reputable mutual fund family, when you provide your account number and signature of the transferring entity.

Self education is necessary to protect yourself. Hiring 'an expert' often results in advice that first benefits the expert. That's the way much of the industry works.

Hope this helps.

[hermetic]

14. How nice

that you have grandkids you are able to spend time with. You certainly want to enjoy that while you can.

Thanks for your tips.

[BComplex]

2. I would suggest you ask her to sell enough so that you can pay for a couple of hours worth

of a good attorney. It might save you most of the six figures.

Any financial advisor that tells you not to talk to anyone else is up to NO GOOD. You need an attorney. Some towns have free legal services for people who don't have any money. You don't need to trust the existing advisor just because she says so.

On second thought, go to the attorney before you ask her to sell enough stock so that you can get an attorney. Once you get the bill from the attorney, THEN you can ask her to sell enough to get you the money to pay his/her bill.

OR the attorney will help you with what you should do, and you might end up selling all of it, and getting a good money market or some CD's.

[hermetic]

15. Thanks for your advice

I appreciate your taking the time.

[progree]

3. I worry if you inherited any IRAs or 401ks.

If you move the money to a regular taxable account (either in the inheritance accounts or to your account), that is considered a distribution, and you will owe taxes on that entire amount (if it's a traditional IRA or traditional 401k). If it's a large amount, you can end up paying taxes on it at a high tax rate because the whole amount becomes taxable income in the year you took distribution.

The correct way is to properly retitle it and ... and ...

If you don't properly retitle it, you may have to take distribution of all of it over 5 years and pay taxes. But that's better than all in one year.

If you do everything properly, you will have to take distribution of all of it over 10 years and pay taxes, but the annual increase to your "income" and therefore your taxes will be much less (will get taxed in a lower tax bracket most likely) than if you took the distribution of it all all in one year. You will probably want to take partial distributions each year, with an eye on what tax bracket it is putting you into each year.

Anyway, don't do anything with an inherited IRA or 401k until you are sure, absolutely sure, that you know what you are doing. (But there are deadlines too on doing what you have to do...). Super-resource the last time I used them, several years ago: https://www.irahelp.com/forums/ira-discussion-forum -- very helpful message board with people who know their stuff delighted to help those who don't.

If someone other than you is handling the parceling out of the inheritance to the heirs, it's that person that must do the proper things as well as you. We had someone post here who was the executor of the estate who didn't know about IRAs and just cashed them out into a taxable money market account and then distributed the cash (in the form of money market fund shares I presume) to the heirs of which she was one. Screwing herself and all of them -- they and she ended up with big tax bills, and lost the tax-deferred compounding benefit of the IRAs, which is the whole point of investing in them (or a Roth IRA, different story, that's tax-free).

If I remember correctly her share was so large that it not only kicked her up into a much higher tax bracket, but she had to pay Medicare premium surcharges for high income people! (In effect her tax bracket was more than just what one would see looking at the tax tables. Almost certainly, more of her Social Security was taxed too, increasing her effective marginal tax rate even more).

[hermetic]

16. Right on the nail head there.

I don't want to do anything to change my tax advantage for this year. Next year will be a different story. I just hope our country survives until then. I realize it SHOULD. We have defeated nazis and idiots and diseases before.

Thank you so much for that IRA link. Definitely going to be spending time there.

Have a great day!

[Canoe52]

4. Don't put it in the stock market, good chance he's going to crash it before this is over.

[Merlot]

5. I don't think she has legal standing to tell you not to talk to anyone else about your account.

I would get on the phone right away to talk to other people about my account if someone told me not to do that.

Look for a mutual fund company like Vanguard, they have plenty of people who you can talk to for free advice.

[hermetic]

17. Yep

Gonna have to do that. Thanks.

[Merlot]

25. I have found financial people are more than happy to answer questions

I talk to as many as possible before making decisions.

Best of luck.

[bottomofthehill]

6. I am sorry for the loss of your dad.

Depending on how the money is held, IRA, Roth, trading account, mutual funds.....there are a host of different strategies. You may want to start with whoever currently administers your 401K plan. They may be able to help you but first you need to know how the money is characterized. There may also be a step up in capital gains so you may be able to sell some with out a major taxi consequence.

[hermetic]

13. Thanks

I know, I have a lot to learn. My 401K is with TIAA/CREF and I have great faith in them.

[csziggy]

8. Edward Jones is a pretty good company

I've been with the local office in my town for nearly twenty years. They have taken care of me through the 2009 recession and although the value dropped some this year, my account had done very well in the past few years.

Edward Jones has offices all over. If you don't like the broker your father used, go and meet the people in your town and see if you are more comfortable with them. My parents had used one in their town and some of my investments were with him, but I did not like the man. Same as you, I did not have a good feeling about him. So I interviewed several brokers where I live. The EJ broker I now use is the son of the man I originally began working with. I am very happy to have a younger man taking care of my account - maybe he won't retire until I don't need a broker anymore!

It is very simple to change from one brokerage office or firm to another - check with any new office you pick, they will be happy to help you.

Also talk to other offices, but even one of the other brokers my parents used told me Edward Jones has pretty low rates - they only charge me for trades and since I only trade to balance my portfolio, they really don't make much off me.

In my experience The advantage of a local broker is that you can go in and talk things over with them. EJ will talk with you and help you assess your goals and your comfort level for risks before they ever begin checking over your portfolio. About once a year they will have a conference with you and discuss re-balancing your portfolio if it needs it. That's about all the effort I put into my investments unless I need to consult with my broker.

One very important thing to remember is that you only profit or lose if you sell your investments - aside from dividends, that is. If the market drops and you panic and selling, you lock in your losses. If you hold until things recover, good investments will recover their value.

Aside from all of that, begin thinking about estate planning - who will get your stuff when you die. Part of that planning is naming beneficiaries for your investment account.

If you haven't figured it out, I have been where you are now and learned a lot from experience. Condolences on losing your father and good luck handling what he has left you.

[hermetic]

18. Thank you

I have one son and he is my sole beneficiary. That is all legally locked in place, fortunately.

I do like the idea of having someone I can talk to in person. I've never been fond of telephone visits and email is even worse. So I will start having a look around.

[csziggy]

20. Yeah, when I was first looking at brokers I looked at online ones

Vanguard and Fidelity were on my list and they are both very respected. Friends use them and like their service. But I simply don't care to spend the time myself to keep up with what is going on in the stock market and to do the analysis needed to make the best investments. Their fees are slightly lower than Edward Jones bu not by all that much.

My Edwards Jones guy has a good idea of what I am comfortable, but he never makes trades without talking to me. In fact, he has never instigated a sale. He's called me when stuff is happening but he does suggest selling. Most of the sales that have been made I had ordered - Bank of America was one I told him to sell - two weeks later it dropped like a rock. I'd sold because I didn't like their business practices, but it looked as if I had more knowledge than I did, LOL.

I also like that I can call and ask questions of the office managers. They are both very good and can give me a lot of information about the mechanics of my account. If they can't answer a question, they can call into the main office to find out.

[A HERETIC I AM]

9. A few things you may want to consider;

First, my condolences on the passing of your father. I lost my dad in 2000 and my mom about 6 years ago. I miss them both every day.

1) Speaking as a former broker, I would encourage you to find a broker/advisor near you to deal with, instead of dealing with one in another state. While there is nothing inherently wrong with keeping your present Edward Jones advisor, the fact is you are better off if you can see the person handling your assets face to face on occasion. You can easily move the account to an Edward Jones branch closer to your home, or you can change brokerage firms altogether. The idea that she doesn't want you to discuss your account with anyone else says to me that she doesn't want to lose your business. Well, guess what? It isn't up to her! It's YOUR MONEY! It is understandable because it lowers her overall assets under management (AUM) if you move the account, but you are free to move it anywhere you wish and she has bugger all to say about it. And BTW, if you decide to move the assets to another firm, that is seamless once the process starts, and at the very most, EJ might charge $50 as a fee to close the account.

The best way I could suggest to find an advisor near you is to ask any and all of your friends that have investment accounts who they deal with. Find someone that you trust, and ask them who THEY trust to do this sort of thing. At least you will have a bit better of an idea who you are going to be dealing with when you walk in.

2) Take a "Risk Tolerance Questionnaire" or 2. Or 3. Just Google that term and you will get dozens of decent resources. They are simple, usually quick little assessments that can act as a guide and help you determine how much risk you are willing to take, and therefore how your portfolio should or might be structured. You said "I have never wanted to be in the stock market because I don’t trust it" which is fair enough, but it is important to understand that if you want this account to grow, you have few other choices these days. A regular savings account or Money Market account or even US Treasury Bonds are all paying ridiculously low yields right now, and even the best of the safest, so to speak, is barely keeping pace with inflation. Having said that, some people are savers and some are investors. If you just can not stand the idea that your account balance might go down as well as up, then stay away from equity based investments.

3) You mentioned you are taking distributions from a 401(K) I would suggest you consider and look into rolling that over to an IRA, for the sole reason that doing so allows for much more flexibility in investment choices. You are pretty much locked into the funds the 401(K) provider offers, and that's it. There is no such limitation using an IRA, particularly if it is done through a full service broker, and that includes the various online ones, like E*Trade, for example.

However, if you are perfectly happy with the way things are, then fine! Again, it's your money.

4) Like most predictions, those claiming we are headed for another depression are often wrong. There may very well be another serious dip in the stock market on the horizon, and there certainly will be another recession at some point, but those have always happened with some regularity. A depression is an entirely different animal altogether.

5) Do not, and I repeat with the caps lock on, DO NOT UNDER ANY CIRCUMSTANCES make any changes to your portfolio or holdings until you completely understand the risks involved with a given security, or the potential for loss in making the trade(s). I believe it was Warren Buffet that once said something to the effect that if you can not easily explain an investment idea to a ten year old child, avoid it.


As Host of this group, I would hope the participants here would refrain from giving specific investment advice, up to and including suggesting the purchase of specific securities. No one knows you well enough to suggest you purchase anything in particular, but if anyone does do such a thing, I hope that you would do your own due diligence before making any changes to your holdings.

If you have any specific questions about processes, types of investment securities, account types or anything else, this group is certainly frequented by knowledgeable individuals who are very capable of helping you understand things.


All the best, and may all your trades be net gains.

Paul

[progree]

10. "Well, guess what? It isn't up to her! It's YOUR MONEY! "

Yup, that's the biggest problem I've had with financial advisors under various names -- they kind of think it's their money, not mine. That has really annoyed me over the years.

I quit doing financial advisors and brokers decades ago because of that. Well, I had an account with Smith Barney until 2000 and yup, he seemed to think it was his money, not mine.

Tired of that. I do think that estate planning and taxes requires a professional. But I don't need or want someone to tell me what my equity allocations percentage should be, let alone giving me investment advice which I don't trust to be in my best interest (as opposed to his/her -- the Schwab disclosures are scary about their associates' compensation, though I love that Schwab is very very transparent about this -- unlike the others that I deal with (Vanguard, Fidelity) that one has to do a due-diligence deep dive to find out the same information -- but basically they get compensated a lot more for some investments more than others).

That said, I would emphasize that if someone is inheriting an IRA or 401k, they need to do it "right" like I explained in earlier postings in this thread. I've been lucky -- I had a good tax guy for decades who steered me toward Roth conversions and helped me in innumerable other ways with the complexities of all of this. Anyway, I don't think anyone recommending this stock or that allocation percentage is worth shit, but someone who knows what to keep out of trouble with the IRS is priceless.

[progree]

11. As Host of this group, I would hope the participants here would refrain from giving specific investm

As Host of this group, I would hope the participants here would refrain from giving specific investment advice, up to and including suggesting the purchase of specific securities.

Yes, I would think that might include e.g. American Century gold funds, for example. (Or anyone's gold fund) The last time we had a gold bug post, a few months ago, someone posted a graphic showing how shitty gold's record has been over the long term.

One of my biggest problems is I have too many investment accounts from too many different investment companies. I had an arguably reasonable number but then I inherited some more accounts from different companies (e.g. Fidelity, Schwab) and many more which I got rid of near the 2009 market bottom (I bought other equities in place of those).

Anyway, I rather eat broken glass than open another investment account with yet another company, e.g. American Century or whoever else. People who want to do the gold route have many choices in ETF's or whatever with their current broker/mutual fund company (Vanguard, Fidelity, yada or whatever) without having to set up an account with yet another financial firm.

Think of who might inherit -- do you really want to bestow on them 10 plus financial firms with 50 or so holdings? Is 20 gazillion holdings really helping you or them? SIMPLIFY

[A HERETIC I AM]

12. I agree.....

And I saw that and considered responding directly, but as I have mentioned before, I do want to stay as hands off as possible. That particular reply is what prompted me to write what you quoted.

The OP Admits he is a relative novice, so one would hope no changes to a portfolio would result from this thread! Since the Host "Super Powers" do not include deleting specific replies, only locking entire threads, I decided discretion was the better part of valor, and just tried to word my reply carefully.

Anytime someone suggests buying gold as an "investment", I often ask if they would also consider pork bellies, oil, coal, orange juice, wheat and platinum, because those are commodities too. If one isn't well versed enough to buy a Corn contract, then why would you buy gold?

For anyone else reading this, let me reiterate;

It is improper, not at all helpful and can be utterly counterproductive to suggest to a complete stranger - one who you have no access to their entire financial situation - to purchase ANY specific security. No one has any idea at all whether ANY particular investment is suitable for ANYONE else in this group, unless they are known personally to them and have been able to do a deep dive into their complete financial picture. Not every investment or security is suitable for everyone. The core principle of this group should be to learn more about INVESTING and Personal Finance, NOT the recommendation of specific Mutual Funds, Stocks, Bonds or anything else.

It is one thing to say "I have had great success with XYZ company/Mutual Fund/Fund Family and they warrant your consideration." It is entirely another to say "You should buy XYZ company/Mutual Fund/Fund Family."

There is a reason why I feel this distinction is important and needs to be given the weight it deserves; We are talking about peoples money, here. Often their entire life's savings, or, as is the case with this OP, an inheritance or windfall that could be either a boon or a burden, depending on how it is managed. If a trade is made based on a recommendation from someone unfamiliar with the person and his/her entire situation, and that trade goes south, it could result in a massive disservice to the person who took the advice to heart.
Financial losses can devastate lives. Those of us that have a sincere interest in this subject, and some experience in it, have an obligation to promote and provide honest, straightforward and FACTUAL information, and avoid suggesting particular or specific investments to total strangers.

[csziggy]

21. I've never understood having many different investment accounts

Can you explain why you do? I understand that you inherited some account, but is there a specific reason to have multiple ones?

My parents had a number of different ones - partly because they did not want the people in their little town to know their net worth and the local broker was a gossipy sort. But it cased a lot of problems in the long run - none of their brokers knew that they had other accounts so their advice was based solely on what was in the account they handled. In the end, their aggrgate accounts were not well distributed which has caused problems since they left.

They also didn't tell their estate attorney their true net worth so the planning he did for taxes and distribution of their combined estate was not very good.

The only people who had a clue of their net worth was their accounting firm and of course they could not share with anyone.

Oh - and boy is your last comment correct - it has been a nightmare for our family to sort out the holdings and accounts. Multiple investment accounts with multiple firms with 50 or more holdings in EACH! All of wich has to be divided up in various amounts to nine different heirs. That does not even count the many real estate properties, family corporations, and personal property. My older sister, the executor, has been brilliant at it but after over seven years of dealing with this stuff, she is ready to be done (Dad was incompetent before his death in 2013, Mom passed in 2018). Now we're just waiting for a letter from the IRS so everything can be finalized.

[A HERETIC I AM]

22. When I was a broker, the situation you described were dreaded.

Collecting and/or accounting for financial assets spread across numerous entities is a nightmare, as you can attest. It is especially difficult when there are numerous heirs and some of them claim ownership of this or that. "Mom promised that $5,000 Ming Vase to me!" - or the cabin by the lake, or the trust account with the special fund in it, ...etc. etc. I had a situation where it just happened that I was the one broker the executor (her oldest daughter, in this case) trusted more than the others, and asked me to do the consolidation of funds and all that. I had to set up several new accounts, Inherited IRA's for her and her siblings, etc. It wasn't too horribly bad or difficult, but it was time consuming as hell, and her brothers and sisters were spread all over the country.

The fact is and remains, the more money and accounts you have, the more important it is to have one or two trusted people who are aware where everything is squirreled away.

Not to speak for Progree, but one reason I have found for clients that did that was the old "Don't keep all your eggs in one basket" idea that some folks from our parents generation took VERY seriously, particularly if they were children of the Great Depression.

I think many Americans born in the 20's never got past the knowledge that before the FDIC came along in the early 30's, individual banks could and would fail all the time, leaving their customers penniless. Keeping accounts all over town, so to speak, was safer in their minds, by spreading out that risk.

[csziggy]

24. The "Don't keep all your eggs in one basket" idea is fine for FDIC accounts these days

Since they top out for federal coverage. But for brokerage accounts it doesn't make sense. Mostly my parents wanted to keep their net value private in a very small town, but not telling their estate planners the truth was downright stupid.

At least my parents had the sense when they re-wrote their wills in 2011 and set up a professional trust company to be co-trustee with my sister. All the accounts are now consolidated there. My sister is now over 70 and some of my parents' grandchildren's trust will run for another 40 years (or longer if the grandchildren pass before then and their children inherit), so having a company handle things makes sense.

I have a spending account at a SunTrust (soon to be Truist) and my EJ account. Period. With all the other things my Dad kept going being dissolved or sold, my accountant's life will be much easier going forward.

At the moment my biggest headache is that my husband and I are waiting for three estates to be settled - my parents' (which are seperate), and my husband's mother's. Talk about nightmares!

We both were lucky - there were few conflicts about the personal possessions. I gave in on one table I really wanted and basically bought off my sister for a clock. The one big thing still left is a mirror that no one seems to want but that shouldn't just be dumped on the estate sale market. I may take it just to simplify things, but shipping a mirror that is 8'6" tall and over 4' wide is not cheap or easy.

[hermetic]

19. THANK YOU!

What you told me here is very helpful. I am really grateful. Just so you know, I intend to carefully consider any changes I make. I have been led astray in the past and am hopefully the wiser for it now.

I am very happy that I joined this group as I can see there are very knowledgeable people here and I am learning things already.

All the best to you and, again, thank you.

[A HERETIC I AM]

23. You are very welcome.

Keep us updated on your progress, if you care to!

[bucolic_frolic]

26. No prop taxes? paradise!

What state is that? I get rolled on RE taxes. Need to appeal the assessment due to neighborhood issues and repair needs. But I never get around to it.

[hermetic]

27. Idaho

It's a program for people over 65, or one of a few other qualifiers, and your income for previous year was under $31,280. The program is called Circuit Breaker, don't know why. You can get your tax reduced by up to $1,320. My house is very old and small so taxes would be around $950 now.
Appealing is apparently a good idea but I certainly do understand that "never get around to it."

[bucolic_frolic]

28. Thanks!

Here in PA there is here or there a county or township that has rebates for those age 65 and older; widows and widowers age 50 and older; and people with disability. That 50 and older widows/widowers is a particular nasty part of it. Moralizing. Singles, unmarried or divorced, can't get the rebate, and they didn't have the cost advantage of being married all along.

The rebate is about $3-650, but they say it can be almost a thousand. Lots of hoops to jump through.

[PoindexterOglethorpe]

29. I just finished reading this thread, and I want to say

that I'm especially grateful for the many good and wise things A HERETIC I AM has posted. The only thing I want to add is, don't be in too much or a hurry to change anything. Well, change your broker since you clearly don't trust her, but as for selling stuff and buying stuff, take it slow. Especially for someone with no experience in investments, and as you've said you don't trust the stock market, you are now going to need to learn some stuff about it. Don't be afraid. It's really not that mysterious and there is a lot of information out there.

Oh, and I sincerely hope this windfall is a genuine boon to you.

I will simply say a bit about my personal circumstances, in case anything seems relevant to you. Recently, as in a couple of years ago, I needed to re-do my will and trust work because of certain changes in things that do not need to be addressed here. Luckily, I'd done trust work and wills a couple of times earlier, so I understood the whole process and knew exactly what I wanted in those documents. And here's the thing I want to emphasize: My only son is more or less my only heir (a few bequests to charities and a friend, fifty percent of one life insurance policy goes to my sister) and honestly, he'll be quite well off some day. Once I got all the paperwork in place, I both emailed and snail mailed him copies of everything, including a print out of my investment accounts. I figure the more he knows, the better off he is. The stories told in this thread of people keeping all of their accounts secret and spread around, make me a bit crazy. Clearly the entire world doesn't need to know everything, but those who will inherit really do.

So, my advice to hermetic and anyone else reading this is: Make a will. Do trust work if that's appropriate. And make sure that relevant people know what they need to know. My son has full disclosure from me. My sister only knows about her share of the life insurance. Both of those are appropriate. Your circumstances will be different.

And again, I hope this inheritance is a boon and improves your life.

[A HERETIC I AM]

31. WOW! Thanks! And very well said!

I’ve been on the road a lot recently (typing this from a hotel room in Kansas City, KS) and haven’t looked at this group often enough, apparently! I look at it when the “My Subscriptions” Bar lights up, and when someone has responded to a post of mine, but I didn’t see this until just now.

First, thank you very much for the compliment. I really appreciate the kind words.

As for the rest of what you wrote, I couldn’t agree more. Well said and excellent advice.

This is why I enjoy this group so much. Even though we don’t get a lot of traffic here, those that participate are very well informed as well as helpful and kind to newcomers.

Thanks for your participation and again, thank you for the friendly sentiment.


Cheers!

Paul