Today, Kate starts out by talking about inheritance. She looks at a study, done by MetLife in 2013, which states that the boomer generation stands to inherit a whopping total of eight point four trillion dollars! There are certainly implications to this, as today, people are living for so much longer. On today's show, she discusses a few things that you need to become aware of, in this regard.
Kate points out that:
- The science of investing was not available to our parent's generation. This had an effect on their stock purchases.
- You no longer need to wait for the commissioned stockbroker to give you a recommendation, today.
- The role of an advisor now, is behavioral.
- You would do well to choose an asset allocation that works for you and stick with your plan to build wealth, rather than trading in and out.
- The average investor underperforms even the SMP500- just because they try to beat the market.
- The portfolio that you inherited could be costing you a lot.
- Actively managed Mutual Funds from big brand National Brokerage Houses come with huge costs.
- You should watch the Capital Gains when inheriting- don't just sell willy nilly.
- When receiving an inheritance, you want to clean it up and tailor it to your needs as soon as possible.
The guest on today's show is Dan Sotiroff. He is an engineer, by profession and he also has a blog called The Personal Finance Engineer. Dan could be described as 'The New Voice on the Market'. He prefers to take a pro-active approach, which is evident in his deep dive into the Peter Lynch era at Fidelity Magellan. Today, Dan demystifies the role of the “Star Manager”. Reading the book Beating The Street, by Peter Lynch, didn't really explain much to Dan about what Lynch had been doing- he found Lynch rather hard to corner. Listen in and find out more about market trading today.
Dan talks to Kate about:
- Being open to change, over your life cycle.
- How your investment allocation changes as you get older.
- Peter Lynch's investing cycles.
- Whether or not the timing (1980's) made a difference to Lynch's success.
- Closed vs open funds being a consideration to Lynch's success.
- The average investor at Magellan only made 7%- due to going in and out- you have to stay in to make it work.
- Dan advises you to be realistic- remember the concept of mean reversion- what has done well in the past is not likely to do well in the future.
- His findings in his statistical analysis of Lynch's portfolio.
- Dan's advice for you (as per Peter Lynch).
Dan's Blog: The PF Engineer.Com
Dan's Email: email@example.com
Dan on Twitter: @danielsotiroff
Kate's website: www.americatalksmoney.com