AssetBuilder Inc. Registered Investment Advisor - Simple Investing. Smart Future.

Scott,

 My wife and I invested $550,000 through Edward Jones in December of 2005.  To date we have received an average of about 8% return.  The first year was better but, we lost most of our gains in January when the market took a dip.  I have not lost back to my original investment but, I am a little worried.  Right now we are at about $695,000 and fluctuating. 

 I am 51 and my wife is 46.  Our house if paid off and we have 1 car payment.  We have 1 child left in college and her college fund will pretty much take care of her needs in that respect.  I make approximately $100k annually and plan to continue working until 65 at least.  I say plan because the investment came as a result of some serious injuries that occasionally remind me that they are there.  However, while I am able, I will continue to work.  We are worried about the implications of the rise in oil prices and the effect on the market and our portfolio.  We have a friend that is a day trader and our investment planner is one that we have known for several years.  I don't want to ask either as they will probably be at both ends of the spectrum. 

We have started wondering if we could manage this better ourselves and eliminate the fees and middleman.  However, neither of us is market savy and would appreciate a good strategy and an dis-interested third party overview.

GW

GW,

This is a slow and very deliberate decision you need to make. Before you make it you should have some good measures of the actual performance of your portfolio---"about 8 percent return" isn't adequate.

If you have enjoyed an 8 percent annual return over that period, you're doing nicely for an all equity portfolio. The return on the Vanguard Total Market Index fund was an annualized 4.28 percent from January 1, 2005 through March 31.

That said, you need to examine this in terms that have long term meaning. What is the asset allocation of your portfolio? What degree of risk are you willing to take, e.g. how much of a loss can you tolerate? One way to get acqainted with all that is to have your portfolio evaluated by AssetBuilder. It's a free service, no obligation, and it will help you start to answer those questions. We'd like it, of course, if you became an AssetBuilder client but there are many alternatives.

One is to build your own Couch Potato portfolio. If that's too complicated, another path is to invest in one or more of the low cost balanced funds that have excellent long-term records such as Vanguard Wellington, Dodge and Cox Balanced, or Fidelity Puritan.

In terms of financial assets and your age, I'd say you were in good shape and should limit your risk. Another good thing to do is to start tracking your expected Social Security payments. It should replace about 24 percent of your income, given your salary, if you can work to full retirement age. Your wife would probably take a reduce benefit at age 62 that would replace another 9 percent of your final salary--- so you'll replace about 35 percent just with Social Security. The remainder, which doesn't have to be anywhere near 100 percent, will have to come from investment income.

Scott