"dumbstruck" wrote
For this to be believable, you would have to provide first source citations.
This would seem to be America of whom you are writing. I do not call them freaks, since it's counterproductive. They made mistakes.
Good thinking, but I would want to put some into foreign currencies stashed away in Swiss banks, foreign stocks, etc., just in case the good old USA goes out of business in the turbulent and unpredictable
21st century.
There comes a point when even risk need not be considered. How many people are there whose only assets are a big house and a whole lot of stock in a company that Grandfather founded? I would suspect there are many. That allocation would be considered risky and foolhardy for a small investor, but for those fortunate people, even if the stock declined to half or less its current value and the house lost value too, there would still be plenty of dividends coming in for a comfortable life style.
And if they or the management drive the company into the ground? I know a people who were in that or similar situations who are now bankrupt. You can't ignore risk. Diversity is the friend of the rich and poor alike.
-- Doug
Lest someone claim that TIPS or T-Bills would eliminate the risk, keep in mind, governments fail, hyperinflation destroys money. I'm not suggesting I expect such a thing to occur, but I never expected to utter the sentence "that's where the World Trade Center used to be." Black Swan events do happen. To add to Doug's point, diversity means across countries as well as asset classes.
JOE
Yes, true. And I would think avoiding risk and doing careful planning would be especially prudent for the rich who want to become still richer, leave more to their heirs than they started with, etc. But I would guess that rich people whose eggs are all in the one basket of a family owned company usually make out OK. Some do drive the company into the ground and end up bankrupt for sure, but many just end up with a lot less wealth, but still enough to keep the mansion in shape and the cars and horses and the beach house in good condition.
The original premise is that our rich friends owned a house and a lot of stock in grandpa's company and nothing else. If the company goes bankrupt, the stock is worthless, but you still have the operating costs on the house (call it 5% a year) and no income to support it.
If the house is worth $10 million, they can sell it as quickly as possible (there is usually a long time on market at that end of things). They can still have a pretty nice life style, but the mansion is gone.
People in the original situation often are reluctant to sell the stock, that's why they are not diversified. So when they want to buy something that cannot be financed out of current dividends (like little Buffy's wedding), they borrow. So our friends may well have quite a lot of debt. If they have borrowed against the stock, they could end up with a negative net worth. This is what happened to some acquaintances I mentioned earlier.
While they are not likely to end up eating dog food, they might. They certainly lose the mansion.
-- Doug
The original intent of this thread was along the lines of whether investing shows were worth watching. Suze was mentioned as an example. My advice was that she has benevolent intentions and is worth watching, but one should keep in mind that she gives broad generalizations and one's unique situation may make her advice unsuitable. Suze's personal investing style is a supporting example of this. Because of her unique situation (wealth beyond critical mass), she has an unusually (but appropriately) low risk tolerance. She does not follow the general investing advice she provides on her show, yet her investing is still suitable for her situation.
See
Strangely, in the same video, a caller states that her husband had a qualified VA that dropped significantly in value shortly before his death and they would have lost $70k had the VA not guaranteed her principal. Suze then endorses that feature of the annuity and then "approves" the investment. The death benefit feature is an additional expense and will only prove beneficial in a minority of situations. Suze regularly preaches against the expense of frivolous features like this. I question anyone that is willing to use a term as absolute as never and then immediately backtrack when called into question with specific examples. At this point I don't where she truly stands.
"kastnna" wrote
I would really have to see examples from her shows or books. Then I'd want to examine whether (1) she qualifies her responses or otherwise makes clear the advice is person-specific (though that should be obvious); and (2) we have the same problem here at MIFP.
What do you think her general investing advice is, anyway? And isn't there a reason we know it as "general" advice? Namely, there are exceptions.
I'd really like to see some evidence you have read her general investing advice.
I see the thumbs down, which indicates to me some general disapproval such as we all have. It's in sound bite format, so it's the network that's forcing her into this mode as much as anything, IMO. I do not hear her saying "never." In fact, she says " when there are death benefits... in that case it [VAs or VAs in IRAs?] makes sense."
Either way, I would not say her (or Scott Burns, or others') have a "welcoming" approach. Orman like others does suggest that rare instances when a VA is something to consider.
You sure you're not just looking to rip her apart as opposed to first researching her actual stances? Sorry, but this is instance two of you're misattributing notions to her.
I have not and do not intend to read her books, but I do watch her show on occasion. I have never heard her "[qualify] her responses or otherwise make[s] clear the advice is person-specific". Perhaps she does on occasion, but not regularly.
Yes we do. That doesn't make it okay. We (collectively) have reprimanded other posters for giving vague responses without digging deeper into the OPs situation. That's a good practice here and should be extended to ANYONE giving financial advice.
I THOUGHT it was buy and hold, minimize fees & expenses, yada yada but perhaps I was wrong.
huge losses, let me share another favorite rule of thumb: If you make a lump-sum investment and it falls 8 percent, sell and reinvest the money in another (hopefully better!) stock or mutual fund."
Apparently, buy high, sell low, and don't ride out market fluctuations are her investment strategies.
Of course there are exceptions. That was the whole point of nearly all my previous posts. I have repeatedly said her advice is good and she means well, but there may be an exception so be careful!
Its not my goal or intention to prove to you that I am a Suze expert. I have never held myself out to be. I even prefaced my original post with "my $0.02" As I said, I have read over her website and occasionally watch, but never read her books. Regardless I don't need to be an expert to warn the OP that her advice may be general, not specific. That was, and still is, the entire motivation behind my original post.
That's what concerns me. In the part of my post you ommited, I stated I was leary of someone that regularly holds one stance and then backtracks when challenged. Suze gives her "12 Biggest Money Mistakes" on yahoo finance. #5 is "Don't buy a variable annuity, especially for your retirement account" (her exact words, not mine). She goes on to explain that high fees are a primary reason she opposed VA's. So which is it? Does she advocate adding the expensive rider that most people will benefit from or is she against the higher fees?
She should have stood her ground and told the caller that she got lucky and benefited from the death benefit feature, but most people are throwing money down the drain. I may not have agreed with her, but at least her advice would have been consistent.
I didn't say she does take a "welcoming" approach. I said I HOPE she adopts one. I am well aware she doesn't currently take that stance.
The intent of my original post that her advice is not individual specific, so beware. If I did not convey that I apologize.
The entire rest of this is the result of my comment on her treasury investing (in which I merely was stating that she is right not to follow her general advice because her situation is unique). The more I have researched her, the more I am regretting my statement that her advice is "generally good". In addition to Elizabeth Richardson's comment on her investing advice, the transcipt from her appearance on Oprah (regarding ARMs) is borderline idiotic (but that's another discussion).
Good day all!
"kastnna" wrote
See
Or they could turn the mansion into a bed and breakfast and get income that way. Some European castles are open to tourists for a fee. But I was assuming, perhaps naively, that there is a kind of upper limit beyond which more wealth is meaningless and also a kind of lower limit on the disappearance of family wealth no matter how bad things become. But you are probably right--there may not be such limits. If one becomes accustomed to the things billions can buy, it would be devastating to have to make do on a few hundred million. .
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.