Can we talk about 401Ks?

[tvguy]

We also use a financial advisor that charges 1% per year. Yes, it adds up to a lot of money each year. But, they also make us ALOT of money. They have about half of our money - husband handles the rest. He doesn’t want any more on his plate to manage, so it works for us.

The thing that always kind of baffles me, is people who balk at paying a 1% fee to manage your wealth, but who move on average every 8 years and pay a 6% commission every time on what selling is probably their biggest asset. Hopefully though, their retirement nest egg is biggger.

 

[dcfromva]

The thing that always kind of baffles me, is people who balk at paying a 1% fee to manage your wealth, but who move on average every 8 years and pay a 6% commission every time on what selling is probably their biggest asset. Hopefully though, their retirement nest egg is biggger.

That is an interesting perspective. But, assuming the portfolio and the house were of equal value I believe the 1% X 8 years would be more for the financial planner than the real estate agent (not even accounting for the loss of compounding for the bit that had been removed from the portfolio).

 

[tvguy]

That is an interesting perspective. But, assuming the portfolio and the house were of equal value I believe the 1% X 8 years would be more for the financial planner than the real estate agent (not even accounting for the loss of compounding for the bit that had been removed from the portfolio).

Yes. But factoring in moving costs, and for people like me living in California where buying a different house can vastly increase your property taxes, I think selling the house costs you more.

 

[QueenIsabella]

The thing that always kind of baffles me, is people who balk at paying a 1% fee to manage your wealth, but who move on average every 8 years and pay a 6% commission every time on what selling is probably their biggest asset. Hopefully though, their retirement nest egg is biggger.

It really depends. In our case, we had corporate relocations that paid for our moves, including house closing costs and having someone come in and pack up our stuff. They also gave us a lump sum to cover stuff like a house-hunting trip and the costs of miscellaneous crap--deposits for various things, any cancellation costs, and so forth. But, perks vary, and you have to be in a position where moving is a good thing.

 

[tvguy]

It really depends. In our case, we had corporate relocations that paid for our moves, including house closing costs and having someone come in and pack up our stuff. They also gave us a lump sum to cover stuff like a house-hunting trip and the costs of miscellaneous crap--deposits for various things, any cancellation costs, and so forth. But, perks vary, and you have to be in a position where moving is a good thing.

A past neighbor's wife worked for HP. I was trying to get him to split the cost of a common fence, but he said his wife was about to be transferred and HP would buy their house if it didn't sell in 30 days. It is also why he wasn't replacing the roof or the HVAC. Nice perk for sure, but when the transfer came through and the house didn't sell in 30 days he learned there were strings to that offer. The house had to pass an inspection. HP said before they would buy the house but not until they replaced the roof, the HVAC and the fence. So they ended up on the hook for those costs all at once before they could move.
Those kind of perks I think are rare. My last two employers capped moving expenses at $1,500. Barely enough to cover a U-Haul and gas to move your stuff, let along sell and buy a new house.

 

[DLgal]

The thing that always kind of baffles me, is people who balk at paying a 1% fee to manage your wealth, but who move on average every 8 years and pay a 6% commission every time on what selling is probably their biggest asset. Hopefully though, their retirement nest egg is biggger.

This is an irrelevant comparison. Your house is not a liquid asset that you can tap into in retirement. The value on paper is meaningless until you sell it and have the money in your bank account. With the exception of a reverse mortgage, it doesn't matter how much your house is worth to YOU in retirement (although your heirs probably care).

That said, I think it's pretty foolish to pay someone 1% of your invested asset value every year to "manage" your money. It's not that complicated to DIY and you can find index funds that charge well under 1%. No one has a crystal ball, and even these "professionals" screw up sometimes. There are no guarantees.

 

[QueenIsabella]

A past neighbor's wife worked for HP. I was trying to get him to split the cost of a common fence, but he said his wife was about to be transferred and HP would buy their house if it didn't sell in 30 days. It is also why he wasn't replacing the roof or the HVAC. Nice perk for sure, but when the transfer came through and the house didn't sell in 30 days he learned there were strings to that offer. The house had to pass an inspection. HP said before they would buy the house but not until they replaced the roof, the HVAC and the fence. So they ended up on the hook for those costs all at once before they could move.
Those kind of perks I think are rare. My last two employers capped moving expenses at $1,500. Barely enough to cover a U-Haul and gas to move your stuff, let along sell and buy a new house.

We did have to get our New Hampshire house inspected, and had to fix a few weird things. Not the roof or HVAC, though. They had an appraiser go through it, and decide on a price--if it didn't sell in 60 days, they bought it.

And we had way better moving expenses--at least 10X what you got. It depends on the company, the distance moved , cost of living in the two areas, etc. We didn't make out like bandits or anything, I think we pretty much broke even.

 

[georgina]

I am a control freak. I want complete control over my investments. I do not mind paying a fee for specialized investment advice from time to time, but NO ONE will ever have control over my money. I absolutely reject paying 1% of my investments to someone to manage them. I have always enjoyed learning about investing and reading up on various options. We do have a lot of index funds, and some balanced funds in our Roth IRA's. (I do my own taxes too, plus we have moved residences once in 35 years) Everyone has their own tolerance and interests. Investing (and money and taxes) are some of my interests.

 

[tvguy]

And we had way better moving expenses--at least 10X what you got. It depends on the company, the distance moved , cost of living in the two areas, etc. We didn't make out like bandits or anything, I think we pretty much broke even.

To be clear I have never moved for a job or a company. I did have an offer in Los Angeles in 1979 but turned it down, just wasn't worth the cost of the move even though the salary was double what I was making.

 

[DLgal]

To be clear I have never moved for a job or a company. I did have an offer in Los Angeles in 1979 but turned it down, just wasn't worth the cost of the move even though the salary was double what I was making.

We moved 4 times before I turned 16, for my dad's jobs. Every single time, it was 100% paid for by his company, and they even helped with the sale of the house (paid a portion of the realtor fees) and down-payment assistance on a new house as part of the relocation package. Moving doesn't always have to be expensive. If we were still living in the first house my parents bought, it would have only appreciated 3%, total, over the last 40 years. They bought it in 1982 for $60 000 and it's only worth $205,000 today.

That is a TERRIBLE return. Had they stayed there, they would have ended up sinking more money into that house than it will ever be worth.

In contrast, the last house they bought before retirement appreciated 95% in just 10 years. They sold it and made out like bandits on that one. Moving ended up being quite lucrative for my parents.

You never know with housing. It can go either way.

 

[tvguy]

We moved 4 times before I turned 16, for my dad's jobs. Every single time, it was 100% paid for by his company, and they even helped with the sale of the house (paid a portion of the realtor fees) and down-payment assistance on a new house as part of the relocation package. Moving doesn't always have to be expensive. If we were still living in the first house my parents bought, it would have only appreciated 3%, total, over the last 40 years. They bought it in 1982 for $60 000 and it's only worth $205,000 today.

That is a TERRIBLE return. Had they stayed there, they would have ended up sinking more money into that house than it will ever be worth.

In contrast, the last house they bought before retirement appreciated 95% in just 10 years. They sold it and made out like bandits on that one. Moving ended up being quite lucrative for my parents.

You never know with housing. It can go either way.

I've only lived in 4 hours in my 65 years, so as you can see I'm not big on moving.
My parents paid $2,500 for their first house in 1950 and sold it 10 years later for $50,000. Enough to buy a new house for cash, 2 new cars for cash, and put money away for my college.
Jobs that pay all your moving costs are rare, and are getting rarer.

 

[DCLMP]

I am a control freak. I want complete control over my investments. I do not mind paying a fee for specialized investment advice from time to time, but NO ONE will ever have control over my money. I absolutely reject paying 1% of my investments to someone to manage them. I have always enjoyed learning about investing and reading up on various options. We do have a lot of index funds, and some balanced funds in our Roth IRA's. (I do my own taxes too, plus we have moved residences once in 35 years) Everyone has their own tolerance and interests. Investing (and money and taxes) are some of my interests.

I’m a control freak plus I’m very private. I couldn’t do it either.