Christina is worried. She’s retired with a paid-off condo in Florida. But rising fees, insurance rates, and a major HOA assessment are killing her cash flow. Is it time to become a renter?
Les is surprised by Paula and Joe’s allocation recommendations for international equities. Based on market capitalization, it makes no sense. What’s he missing?
Luke and his wife are breaking some personal finance rules in the name of financial independence. Are they right to take this approach or is there a better way?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
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Christina asks (at 06:04 minutes): I’m 60 years old and retired due to health issues. I own a paid-off two-bedroom condo in Florida but the fees are getting expensive. Should I sell it?
My only income source is $1461 a month from Social Security and my monthly expenses are $2,000.
Since retiring, I’ve been hit with a $10,000 assessment and my condo fees have increased 20 percent to $600.
I have $330,000 in retirement accounts, half in Roth and half in Traditional IRAs. My home is worth $200,000. If I sell, I’d become a renter and use the proceeds to invest instead.
Another option is to sell, invest half of the proceeds, and use the other half to purchase a smaller one-bedroom condo with lower fees.
Should I stay put, sell and rent, or sell and downsize?
Les asks (at 27:36 minutes): I was surprised to hear you say on Episode 517 that it’d be crazy for someone to have more than 30 percent of their portfolio in international equities.
When you look at market capitalization, the international market makes up 38 percent. Before the most recent bull market in the United States, it was up to 50 percent.
The Vanguard Total World Stock Market index has a higher capitalization and proportion of their stocks in internationals than the 20 to 30 percent that you and Joe suggested.
I currently have 40 percent of my portfolio in international index funds. Am I missing something?
Can you also discuss your thoughts on the small-cap value premium? If you think it’ll continue, what percentage should one consider allocating to this momentum factor?
Luke asks (at 43:39 minutes): My wife and I want to become financially independent in five years and we’re breaking some personal finance rules to get there. I wonder what you think?
We’re in our late thirties with a high income in a 35 percent federal tax bracket and live in a state with a 5 percent tax rate. We save $150,000 to $200,000 per year towards investments.
We’re attempting to pay off five doors of rental real estate in the same timeframe. We’re not sure we’ll retire completely, but I expect we’ll scale things back a bit.
My wife maxes out tax-deferred accounts in her business. I max out Roth 401k amounts with my employer, and we contribute everything else to after-tax accounts.
Considering our high tax rates, I understand it’d be more optimal for my Roth contributions to go into a tax-deferred account instead. Still, I like the flexibility of a three-bucket strategy.
If and when we slow down, we could pursue Roth conversions then. What are your thoughts?
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