Ask Todd

Ask Todd R. Tresidder Your Single Most Important Question About Investing, Personal Finance, Retirement Planning, Or Financial Freedom – It’s Free!

Just enter your question in the comments box below – it’s that simple. I will then reply back with an answer.

Why do I offer this service for free? The truth is we’re really helping each other because your questions teach me what my readers are most interested in learning. When you provide questions it helps me focus my writing on what interests you the most. You get relevant content, and I get happy readers – we both win.

Ask Todd

How will your question get answered? Some get replies right on this page while others with wide appeal get a blog post devoted to the answer, so make sure you subscribe to get your answer sent directly to you. The sign-up box is in the sidebar to your right.

Now, what’s your single most important question about investing, personal finance, retirement planning, or financial freedom?

Thank you for your support,

Todd R. Tresidder – Founder, FinancialMentor.Com

233 comments
contato4
contato4

Todd,

Do you still have the wordpress calculators plugin available?

Financialmentor
Financialmentor moderator

@contato4 No. I eliminated it. And I know of no functional alternative as a replacement either. Sorry.

jebeach69
jebeach69

I have $10,000 that I would like to invest short term and have access to with out penalty.  What investment vehicle is best to maximize interest over the short term, say 6 months to a year?

Financialmentor
Financialmentor moderator

@jebeach69 In a world of zero percent short term interest rates, there is no answer to that question worth considering. Any difference in interest rate would be so small and the time period so short that the actual dollar value is not worth paying attention to. You would be far better off focusing any energy spent on that question toward increasing income because it will produce more meaningful results. Hope that helps!

aiminghigh
aiminghigh

Todd Tresidder, 


I am in the process of choosing an appropriate subject for a MSc thesis in finance. 

Main goal: Educate myself as much as possible in reaching financial independence (from scratch). 

Assuming basic knowledge of financial markets, active portfolio management and personal finance, I will manage my own and family portfolio in reaching this objective. As the subject of the thesis have to be quite specific/pointed, my question is: 


What subject would you choose in order to get the most "time investment return" in gaining valuable knowledge towards the main goal? 


Hope question is not to general. Whatever insight would help.

Thank you for the excellent high quality content you deliver. 

I am very confident in referring people to your site for information/services. 


Best regards 




Financialmentor
Financialmentor moderator

@aiminghigh Simple. Wealth is a function of two things. (1) Spend less than you earn. (The bigger the gap, the faster you can achieve financial freedom.) (2) Earn a return on those invested savings in excess of inflation. (The bigger the gap, the faster you can achieve financial freedom.) Simple to understand, but hard to accomplish, and that's what separates the winners from the wannabes. That gives you 3 subjects - how to maximize saving, how to maximize ROI, and how to get it all done. Hope that helps.

offshorebanks
offshorebanks

Hi Todd,


Thank you for providing such useful and honest information about retirement finances. I have read many of your blogs and books and agree with all you have to say on the state of bonds today and avoiding stocks with high P/E ratios. It seems as though we are entering a difficult year to begin retirement this year when interest rates are bound to move up and the DJI is at a all time high with many stocks with high P/E ratios. 


For situations like the above where both index funds and bonds look particularly unfavorable, what are several ways, sectors and other alternatives to diversify within a traditional equity market? 


Thank you, John





RDScherer
RDScherer

Hi Todd,


Any updates on the 52 week email course? It was suspended a few months ago and have not seen it start up.


Thanks

Financialmentor
Financialmentor moderator

@RDScherer Hi Rick - The remainder of the 52 weeks course will be delivered as I build out the underlying courses. 

For example, the wealth building portion is completed because I have that course in draft form. The next section I'll add to the course is the advanced investment strategy. I expect to add that this year as I build out that course. Each of these items is a surprising amount of work to do right. In time, I'll get it all done. It just takes time and persistence. 


Thanks for your patience.

RDScherer
RDScherer

Thanks Todd, that makes it clear.

RDScherer
RDScherer

Todd

You are part of owner of Portfolio Cafe. Can you explain why the website has stopped being maintained? My last email to Tim has gone unanswered.

Any insight is appreciated.

Thank you

Rick

Financialmentor
Financialmentor moderator

@RDScherer I bowed out of Portfolio Cafe and no longer have any financial or business interest in the company.

I did leave my investment account intact with Perfect Portfolio because I don't believe there is any issue with the investment methodology with Perfect Portfolio. It was primarily differences of opinion that come between partners that forced the separation. 

I emailed Tim to get an answer for you and this is what he wrote back...

"The site is being maintained.  I sent an email out (to subscribers) explaining the sequence I would update all of the models.  That was completed.  I have finished a new template for PP and its getting moved to a format that will better present it."

Hope that clarifies...

Mary Cowen
Mary Cowen

Hi Todd - love your podcasts.  Will you be adding more?


Thanks for the work you're doing!

Financialmentor
Financialmentor moderator

@Mary Cowen Thanks for asking Mary. Yes, I have two recorded already but just not published. I also have many more planned. They are a lot of work to put together and I've had time limitations due to other web development projects that I chose to prioritize. Hope to resume publishing in the foreseeable future. I appreciate your patience and support.

KBorrower
KBorrower

I have too much credit card debt and have been working hard the last couple of years to pay it off.  I am interested in knowing if the Lending Club is a legitimate company (it appears it is from my research and the article on your site) and if there is some unstated risk I should be aware of.  I am one of those who borrowers who won't default, however, I want to be careful that there aren't any hidden risk of the interest rate skyrocketing, etc.


What are the risks to the borrower??

Financialmentor
Financialmentor moderator

@KBorrower My answer is not what you're wanting to hear. I am not a fan of "bailing out" a credit card debt problem because it tends to result in the person re-creating the problem later again. The permanent solution to credit card debt problems is to endure the pain of austerity required to pay it off because that pain will be driven so deeply into your bones over a significant period of time that you'll NEVER repeat the mistake again. It is the most certain path to a permanent solution, which I'm assuming is your goal. I would suggest dropping any pursuit of "magical solutions" and simply dig deep to get the job done. It is the short-term pain that gives the best long-term results. Hope that helps.

EagleDriver
EagleDriver

Hi Todd,

After reading your book "How Much Money Do I Need to Retiree," I would like to know what is your recommendation to someone that hits a mandatory retirement and finds himself retiring when the market valuation is extremely high? If the answer was in the book I either missed it or didn't comprehend it. Also, can you please tell me the best way to determine market valuation. For example, if I were to retire today, how would I best determine this?

Thanks for any advice you can offer, and thanks for the great educational products you're sharing.

Regards,

DJ

Financialmentor
Financialmentor moderator

@EagleDriver You second question is easy - Doug Short runs a site, used to be called Dshort.com but now is something like AdvisorPerspectives.com, just put dshort.com in your browser and it will be redirected. Every month around the second week he publishes a post that includes both the q-ratio (for assets) and CAPE for income valuation along with some relevant commentary and analysis. Great resource and totally free.


Regarding your first question, that is (unfortunately) impossible to answer without digging into your situation in much greater detail. You are essentially seeking investment strategy advice to weather the inevitable sub-par returns that follow both excess valuation and record low interest rates. Because we have no relationship and I don't know all the relevant details, I can't possibly give that question the complete and fully developed answer in a blog comment that is required to be accurate and useful.


With that said, this is likely one of the most difficult periods to begin retirement in all of recorded history because nearly all assets are not just overvalued by historical measures, but are at logical extremes. This is a direct result of government policy causing asset price inflation.

Once your understand the cause (government policy), one potential cure is to look outside the sphere of U.S. government policy influence for markets that might represent more reasonable valuation (and future expectancy as a result).


There are other potential answers as well depending on your needs and situation. Some people are looking to SPIA's as a solution, and others are choosing non-traditional assets like income producing real estate depending on valuations in the area where they live.


The self-serving answer is I will be teaching a course on Expectancy Investing which shows you how to manage risk and find positive expectancy in these difficult markets. I will announce it in the newsletter likely second quarter of 2015.


Hope those various ideas point a direction that is helpful!

RDScherer
RDScherer

Todd,


I am a few weeks into the Perfect Portfolio and it is as advertised. Thank you!

Any updates on the 52 week course you suspended? I also recall something new was to be announced with Portfolio Cafe changing the name to ExpectancyFinancial.Com.


Thanks


Rick

Financialmentor
Financialmentor moderator

@RDScherer While "weeks" is too short to judge any investment methodology by, it is a thing of beauty to watch in real time, isn't it. Fun stuff!! Glad you are liking it.


Regarding all the other stuff you mentioned... SHHHH!!!... you don't want the world to know all the fun stuff I'm cooking up behind the scenes :-))


RDScherer
RDScherer

Todd,

I took your advice gave myself a Chrismas gift. Portfolio Cafe. I am excited to get started. Any tips on using the various investing options would be much appreciated.

Thanks!

Financialmentor
Financialmentor moderator

@RDScherer Congratulations. I hope you get great value from the subscription. Tim should be contacting you shortly as a new subscriber and offering to personally walk you through the various models and help you get oriented. For what it is worth, I personally use Perfect Portfolio as a core holding. Hope that helps.

takeshimm
takeshimm

If one were to buy an ETF focusing on large cap high dividend stocks in the world with the intention of never selling and simply enjoying the dividend is this such a bad strategy? (You mentioned the many limitations of a buy and hold strategy)

takeshimm
takeshimm

How do I take your course I cannot find the link anywhere

Financialmentor
Financialmentor moderator

@takeshimm Much to explain to do full justice to your question. With that said, one simple and direct point to consider is the question of fees. If you intention is to be a passive, long-term, buy and hold investor, then why acquire the position through an ETF and incur the fees? While the fees may seem small, they are likely a huge percentage of the actual dividend income. If your plan is as stated then it might make sense to purchase the underlying securities and avoid the wasteful fees. Hope that helps.

Financialmentor
Financialmentor moderator

@takeshimm I'm working on all the courses and all the infrastructure to support the whole shebang. I'm hoping to be able to offer Step 6 - Expectancy Investing in the first quarter of 2015. Thanks for your interest and sorry for the temporary confusion. The sales pages aren't complete and that is why you can't find links. We'll get there...

RDScherer
RDScherer

Todd,

I have $300,000 in cash and would like to invest but uncertain on the best approach. I am 61, still working, and I plan to work to 65 or 66 if I am so fortunate. My strategy is to use this money to help generate retirement income to supplement my pension, social security, and dividends from other investments. Thoughts?

Thank you

Financialmentor
Financialmentor moderator

@RDScherer I can't tell you specifically what to invest in because that would be personalized investment advice. That can only be done by a licensed investment advisor. I can say that I invest 100% of my money according to the principles I teach in the Expectancy Investing course (Step 6 of 7 Steps to 7 Figures coming out in early 2015). These same principles are used by PortfolioCafe.Com (soon to be renamed ExpectancyFinancial.Com) in the models published there which you could use. Full disclosure - I'm a 35% owner of ExpectancyFinancial and have money invested according to the same models. Hope that helps.

RDScherer
RDScherer

Can you comment on Ray Dalio's All Weather Strategy? I have doing some research and was interested to hear your thoughts.

Thank you

Financialmentor
Financialmentor moderator

@RDScherer Great question. I would have to write an entire post to explain my thoughts, both pro and con, to this strategy. It can't be properly explained in a blog comment. However, I will be asking my readers soon for their most important questions on investment strategy so make sure you chime in with this one. Thanks!

JWeatherford
JWeatherford

You mention in one of your podcasts that there is a point when an emergency fund is no longer a needed part of a financial plan. Will you elaborate on that?

Financialmentor
Financialmentor moderator

@JWeatherford Once you get past living month to month and are in wealth building mode you simply have savings or liquid assets. There is no useful purpose to artificially carving out a chunk of those assets in a separate account that is labeled "emergency". It makes no useful sense and only adds pointless complication by creating an additional account. Additionally, these accounts frequently get mismanaged from an expectancy investing standpoint because they are earmarked as "emergency" thus remaining in cash (typically). In my life, all of my liquid assets are "emergency funds", and they are long-term investments as well. I have no separation since any and all funds can be readily liquidated to spendable cash if need be. Hope that clarifies.

Tasha Nesbitt
Tasha Nesbitt

I just inherited my family home that has a mortgage that is 40% of the appraised value of the house. I want to do my due diligence in order to make sound financial decision but am not sure if my math is right or if I'm even asking the right questions. I don't have time to join a real estate investing group or read an entire book on the subject. What do you recommend I do?

Financialmentor
Financialmentor moderator

@Tasha Nesbitt I can't make a recommendation because there is not even fractionally enough information in the above paragraph to make a responsible assessment. In addition, you really didn't even ask a specific question.


What I would say, however, is I would prioritize the time to gather the information and develop the background knowledge to make an intelligent decision.


I'm only guessing, assuming there is reasonable equity in the home as stated you would probably have to work a darn long time to gather that equity after tax as it sits there today.


It is probably worth making a priority.

RDScherer
RDScherer

Todd,


I sat in on the Webex last night and wondered if more information regarding the rules based system would be shared. Your presentation never really went through any examples. Very interesting session.



Financialmentor
Financialmentor moderator

@RDScherer Because of the technical problems, we're working on a video replacement. I will keep you content suggestion in mind as I design the videos. I'm hoping to email my subscribers and everyone who registered in the next couple of days to update them. Thanks for your interest!

KEVIN14206
KEVIN14206

Hi Todd, With $600.00 what type of stock investment can I make ? I have had some training on stock options but I'm not sure what I should start with ? I was thinking to do covered calls, to start off with a low risk until I get a few trades under my belt. What do you think?

Financialmentor
Financialmentor moderator

@KEVIN14206 Simple. What is the mathematical expectancy of the strategy you are implementing? Dollar amount is not a factor except at the highest levels (100s of millions or more) and lower levels (under $5,000). Expectancy determines compound returns and thus determines your investment process. See my forthcoming investing course in the 7 Steps To 7 Figures curriculum expected to launch October 2014 for more information. Hope that helps!

Dave Jr
Dave Jr

Hello Todd, 

What is you're opinion on variable life insurance? I am a small business owner and my financial adviser recommended the variable policy as an investment vehicle for the kids college fund.  The cost of insurance is less than $400 a year but the investment fees are insane.  I invested close to 10k so far but have a $1200 negative balance after seeing a 10% return.  I am 2 years into the policy and have contributed $400 a month.  Out of the $400, about $90 goes to investment fees and a small fee to cover the COI.  I questioned the adviser as this never came up when he sold the product.  He said the fees are flat and will never rise and that they are class A stocks and that's the reason for the expense.

Financialmentor
Financialmentor moderator

@Dave Jr Read my book about Variable Annuities available on Amazon. You can find it in the sidebar or on home page of this site. While not a perfect match to your situation, the general message is consistent and should prove helpful in dissecting the situation you are in. It just 3$ if you pay cash and it is free to prime and unlimited members at Amazon. It should prove helpful.

Dave Jr
Dave Jr

Thank you for you're timely reply. I will take you're advice.

Thanks again, Dave.

Fay2014
Fay2014

Hi Todd, I am a 34 year old, working a w-2 job with a defined benefit plan retirement in place. As long as I stay in the system and work for the same line of industry, I do not need to worry about retirement. I have a pretty solid job security and a full coverage of health benefits that would continue in retirement.

I own a house with a 30 year mortgage, that has 28 years remaining on it with a balance of $250k, and the interest rate is 3.75%.  I have no debt. I am able to save 1k-2k a month regularly. I am in the 28% tax bracket.

My question is, I have about 75k cash saved that is parked in a savings account, and I would like to hear your opinion about how to invest this money.  This includes all emergency cash and everything, though honestly, I am not sure if I really need six months of income saved and just put aside.  I can keep maybe 15k for reserve and the rest can all be invested.

Should I switch to a 15 year mortgage and use some of this money to lower the principal balance? Should I get a financial advisor to invest in a portfolio of stocks, bonds, etc? I am pretty knowledgeable about finances, but don't have the time or motivation to actively invest.

Or, should I consider purchasing a second property, perhaps a vacation home I can also rent out? Or, consider a Roth IRA, traditional IRA to supplement retirement income in case I need it? a side business I can manage or invest in?

Thank you in advance for your input, I look forward to it.

Financialmentor
Financialmentor moderator

@Fay2014 This is exactly what coaching is for. Stated another way, the answers you seek cannot be provided in a sound bite reply on a blog. You are seeking a comprehensive plan.


If you don't want to pay for personal financial coaching then I have a group coaching process slated to launch Fall/Winter 2014 that is Step 5 of my "7 Steps To 7" Figures curriculum and specifically teaches exactly how to invest your money. Watch for an announcement in the newsletter. Subscribers will get first access.

I also have some free resources on this site addressing some of the other questions you asked including this comprehensive article about paying off your mortgage early  or investing the difference http://financialmentor.com/financial-advice/pay-off-mortgage-early-or-invest/7478

In a nutshell you are looking for a pretty comprehensive plan and detailed answers. If you don't want to pay for coaching then you will have to work through assembling the missing resources and education. Your needs cannot be answered adequately in a brief blog comment. It would disrespect the importance of the questions you are addressing.

I hope these resources help...

dkarp
dkarp

Hi Todd, I am 61 yrs old and retired with half of my annual income coming from secondary market annuities and the other half coming from tax-free municial bonds. By the end of the year I will lose $15,000 of annual income due to called municipal bonds. Where do you suggest one re-invests that bond principal in order to keep my current income where it was before my bonds were called. I averaged 5% tax-free on those bonds. Is it advisable to sit with cash until interest rates start to rise (when and if they do)? Thanks

Financialmentor
Financialmentor moderator

@dkarp Unfortunately, this is a very difficult question for many.


The government has waged war on savers with artificially low interest rates and retirees seeking a fixed income from their assets are taking the brunt of this policy.


There are no easy answers.


You can see my analysis of the credit markets back in March/April 2013 in this post http://financialmentor.com/investment-advice/investment-strategy-alternative/bond-bubble/9064


Nothing has changed.


While I can't specifically answer your question because it would be personalized financial advice (which I can't legally give), I believe this article will give you a solid understanding of the risk/rewards of fixed income investing for long maturities right now.


Hope that helps.

Roger JR
Roger JR

Hey Todd, I want to do an early withdrawal of $65,000.00  from my retirement.   I am in the 28% tax bracket.  What would be my penalty and taxable amount?

Financialmentor
Financialmentor moderator

@Roger JR Hey Roger, please check my retirement calculators on this site underneath the calculators tab on the main menu. They will help you calculate this for yourself. Hope that helps...