SMART MONEY: Disappointing returns may signal it's time for a change
DEAR BRUCE: I have about $3 million invested through a financial planner, and I need your advice.
This past year I earned zero income from my investments. He said that he was playing it safe with my money. He also said he didn’t lose any of my money. I wrote him back and said in a sense he did lose money for me because the market has soared this past year. He said in return that investing in the stock market was like putting money in a slot machine in Las Vegas. I had 30 percent in the market with him.
My question is, should I change to another financial planner? I have to live off my investments. I think some of these so-called financial planners are just good salesmen. — C.M., via email
DEAR C.M.: Cut very quickly to the chase: Any investment adviser who says putting money in the stock market is like putting money in a slot machine in Las Vegas should be shown the door immediately. You have $3 million and no return? Even a private conservative investor should have come up with at least $100,000, and I would never have been satisfied with a $100,000 return on $3 million.
I would like to know what kind of fees he has made for himself.
Even at 4 percent, which is a no-brainer, your $3 million should have brought in $120,000, and you could figure the percentage if you didn’t invest it all with him. This guy is a loser and should be dumped instantly!
DEAR BRUCE: How much of your income should you spend on monthly house expenses? I heard that it should be 50 percent. Can you tell me if that sounds right? — G.D., via email
DEAR G.D.: I don’t know where you heard 50 percent. That is way out of balance. Somewhere around 30 percent would be as high as I would go, and I would like to shave that down a couple of points. Spending half of your income on just house expenses is far more than most budgets would ever be able to handle.