Georgiana and me are goofing around at the Palm Springs Art Museum. We were laying on a huge bean bag type cushion and people wanted to take our picture because we look sooooo happy. Well, we are HAPPY!

Late Bloomer Wealth (LBW) Portfolio Quarter 1 Report, looking at the devastation of expensive advisement and portfolio management costs, traveling to Southeast Asia, and Finding LOVE!

Hi everybody,

Not much has happened in my portfolio since the beginning of 2018. But a lot has happened in my private life. I hope you will enjoy this jammed-packed blog post. I know it has been a long time and I thank you for your patience.

I found a new love! I will also discuss my adventures in Vietnam, Laos, and Cambodia, and my emotional reactions, reporting my Late Bloomer Wealth (LBW) portfolio performance, and my obsession with paying close attention to investment costs. I have a bonus!–an 11-year report on my LBW portfolio’s annual returns.

While the LBW portfolio produced a 2018 first-quarter slightly negative return, my life changed big time. Let’s recall that my LBW portfolio returned 9.0% in 2017–I earned $200,000+ in portfolio growth, pension retirement benefit, Social Security, and VA compensation. This significant milestone was terrific by itself. Still, it doesn’t compare with my new love with a lovely, kind and compassionate woman, Georgiana. Am I lucky?

As many of you know, Dan died suddenly and shockingly on October 20, 2015. I went to work with my deadening grief and shock. My friends and I was in shock for months, and the grief never goes away. However, after 2.5 years of hard work, my grief resides in a right place in my heart. I will not forget Dan and my wonderful 40 years with him.

Since that horrific week 2.5 years ago, I joined a bereavement group, worked with a therapist and a life coach, kept involved with my Buddhist teachings, stayed connected with family, friends and kept busy with my volunteer organizations. All paid off. BTW, I am still connected with my in-laws and my bereavement group at CancerPartners. After 2.5 years the members of my bereavement group have become new friends.

After enjoying the senior dating scene for a year, Georgiana and I became exclusive. I would like to insert a positive plug for online dating and texting!

Online Dating and Texting

With the assistance of one of my nieces who experienced online dating, we met on Match.com. Our romance slowly evolved the old fashion way and with our extensive texting. The “matching” took care of the basics: similar politics, spiritual and financial values, and same dietary and exercise and other basics. Not only that, Georgiana is smart, stylish, radiates a generous smile, speaks her mind, and knows investing.

Investing was a big plus for me! Some many people do not have the foggiest idea about finances but just want to be taken care of by somebody who has money. My advice to single people of all ages who are looking for a serious relationship, consider learning personal finance. Financial literacy mixed with success in romance is not just my opinion, click here for a Bloomberg article.

She said on our first coffee date that relationships take time to develop–I was attracted because I was in no hurry either. At the time I was new to the dating and single scene.

She showed a history of financial responsibility by having retirement savings, frugal habits and no debts (previous dates that had debts with no assets, with smoking and a gambling habits were deal breakers). Most importantly, we are the same age; she is a widow also. She has a positive attitude regarding a balance between spending, being generous, and saving. She is fun and likes to travel. Do we have a lot in common? Fortunately for me, my attraction to her was mutual.

As you can see in our picture above, we have a lot of fun where ever we go. Georgiana still works as a therapist with her private practice and with schizophrenics at a hospital. She loves to dance, talks about metaphysical topics, loves new spiritual experiences and music and musical concerts. She is half Italian and half Syrian, so our Mediterranean culture roots are strong. We talk for hours together or on the phone.

I never thought I could feel again let alone feel love. I also have to admit how lucky I am to have found two people to love in my life, my late hubby Dan, and now Georgiana.

Here are some of the activities we have planned for the coming months, and the rest of the year.

1. We are going to Vegas in May to see Bono and U2, and Elton John on the same weekend.
2. On Memorial Day weekend, we are returning to Vegas to see Paul Simon.
3. In July, I gave myself a birthday present with a vacation for both of us to Maui for a week staying at a nice hotel right on the beach. I have not been to Hawaii in decades. I cannot wait to get there and just hang out, dine, read on the beach, take long walks, listen to the waves, feel the warm tropical wind and smell the deep blue Pacific. While I have experienced the famous and spectacular sunrise at Maui’s Haleakala National Park, she has not. So, I look forward to watching the sun come up again.
4. In September or during the holidays, we might go to Boston where Georgiana grew up and graduated from the University of Massachusetts–Boston. I look forward to meeting her east coast family (I have already met her west coast family and friends, and she met some of my friends and my family. Everybody is happy that we are happy). She wants to show me around this historic city. I must go–I have never been to Boston or the northeast.
   

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An Emotional Trip to Vietnam for two reasons:

1. Dan and I had a trip planned to Vietnam and Cambodia in October 2015. We were packed and scheduled to leave LAX the very morning he woke me up at 3:00 AM and rushed him to ER. He died a week later from acute monoblastic leukemia.

2. I wanted to visit the Da Nang (Marble Mountain) area where I served as a 20-year-old Marine, fresh off the northern Wisconsin farm where I grew up. I remember a beautiful country and wanted to see how it recovered from the war.

On January 16, my sister-in-law, Cathy, and my friend and former LAUSD colleague, Janet, boarded our flights for Vietnam, Cambodia, and Laos. It was a long 3-week adventure. My first trip was 50 years ago in January and February 1968 (We planned this trip before I met Georgiana). Georgiana and I missed each other. However, we talked on the phone with a great and free app called WhatsApp.

As planned, we toured the four major Vietnam cities and one of the largest deltas in the world: Hanoi, Hue, Da Nang, Ho Chi Minh City and Mekong Delta. In Cambodia, we visited the world famous Angkor Wat and the horrifying killing fields. In Laos, we visited amazing Buddhist temples. The Buddha, pictured below, was as massive as a two-story building.

The most personal tour site was a sacred place called Marble Mountain in Vietnam. 50 years ago my Marine battalion took up camp not 200 meters from the mountain right on the beach. I was shocked as the entire area, which was a war zone 50 years ago, is now 100% tourist destination. Hundreds of vendors selling marble products of all shapes and sizes and the nearby beach resorts were either already built or being constructed along the South China Sea.

 

 

 

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We arrived home safely on February 7th after three weeks in three countries. The meals, accommodations and the hospitality were as good as people can expect. Our tour guides from every nation and every city were knowledgeable and competent.

Because of the extreme time difference, it took almost two weeks to recover from jet lag. But it was worth it. It was a wonderful experience and was happy to be home again. Georgiana picked me up at the Omni hotel just down the street from my house after hiring a Tesloop driver to take me home from LAX (Tesloop is the same as Uber, only about half the fare and they only drive Teslas).

The trip costs a total of about $7,000 which included travel guide TIPS, flights, accommodations, extra events and all meals ($6,000 for all flights, tour guides, accommodations and most meals. $1,000 for TIPS, meals and some additional excursions such as a musical at the Hanoi Opera House).

BTW, February 7th was a day I will never forget either. It was the 50th anniversary when a mortar round cut short my tour of duty. A knee injury from that North Vietnamese Army mortar qualified me to return home after 37 days of Vietnam service. I was lucky I got out of there alive.

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2018 Q1 LBW Portfolio Update

Have you noticed the bumpy markets? One week they are soaring to record highs and the next they are crashing. At one point in February, the markets were in correction territory when they declined about 10%.

The financial media will be the financial media. Those pundits don’t know what to make of it. They claim that the threat of imposing tariffs or that Facebook and other social media companies participated in the interference of the 2016 presidential election are causing the recent stock market “correction.”

I don’t care about any of the well-thought-out, compelling and I might add, a gazillion reasons the pundits offer. Ignore all it! 100% is intellectual, verbal garbage and useless. I have a conservative and boring portfolio that has grown significantly since 2008 and will withstand another crash.

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Returns for the LBW 30/70 stock bond balanced portfolio since 2007

2007	5.20%
2008	-11.9
2009	13.90%
2010	10.60%
2011	2.50%
2012	10.00%
2013	6.90%
2014	6.00%
2015	-0.005%
2016	5.90%
2017	9.00%

My Late Bloomer Wealth (LBW) portfolio performed like it should for a 70-year-old and retired. I have a 33.7% stock and 66.3% bond allocation. The boring result is that the LBW portfolio is down $12,650.27 from the January 1st, 2018 portfolio (click here for details). That goes to show you that with all of the volatility the LBW portfolio is down only $12,650.27 or about a -.0075%!

Comparing my returns to the benchmarks is so straightforward that I don’t have to wonder if my portfolio is trailing or leading the benchmark returns. My investments already follow the stock and bond market benchmarks:

• S&P 500 index
• MSCI World ex U.S. (MSCI Inc is an investment research firm that provides indices, portfolio risk and performance analytics, and governance tools to institutional investors and hedge funds), and for little ole me!
• Barclays Bond Aggregate Benchmark

For example, the Total Stock Market Exchange-Traded Fund (ETF) is almost identical with the S&P 500 index. My investment includes small and mid-cap stocks for a total of about 3300 companies while the S&P 500 index includes only large-cap companies, the biggest American Corporations. It’s not the perfect benchmark but it is close enough for my purposes.

1. My Total Stock Market ETF reported: minus -0.7 return

2.  The S&P 500 benchmark reported: minus -.076 return.

1. My Total International Stock Market Index returned a minus -.46 return.

2.  MSCI World ex USA International Benchmark: minus -2.19 return. Note: A 1.73% difference. I am not concerned because my fund loss was not a great as the benchmark. Recall, quarterly return comparisons are in the context of short-term, and not to be taken seriously.

1.The Total Bond Market Index produced: a minus -1.47.

2. Barkelys Bond Aggregate benchmark return: a minus -1.46. 

Any questions about tracking your investments with the market returns?

Some of you might be thinking: I don’t look at short-term performances of my portfolio. In fact, I don’t look at it especially when the market is acting up like it has been for the past couple of months. I only think about the long-term, and that’s what you were preaching. So why the Quarterly reports? Fair criticism, and a good question.

I am reporting it every quarter to build the confidence of readers to stay the course. So many people lack the confidence to ride through the volatility of their portfolio. So people can vicariously experience the ups and downs of how the LBW balanced portfolio works especially during volatile markets. Let’s face it, the first Quarter, 2018, the markets have been volatile.

 

Click here for additional information about the first quarter 2018 stock and bond market performance.

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Costs

Costs

Costs!

Costs add up over time, BIG TIME.

The next table reveals the costs of each of my investments. I calculated the amount paid in 2017 from a 7 figure portfolio at about $1100 from a charge of .07% or 7 basis points (for example, multiple .0016 x the amount investing in Vanguard Prime Money Market fund to get a dollar amount, and add up the result of that multiplication of each fund for a total cost.

While I pay meager costs for my money that is not the case for many investors who don’t know what they are paying. Georgiana didn’t know either until she asked her Charles Shwab broker. Georgiana was surprised that a $28 fee was levied for every $10,000 invested. While the fee seems relatively low, she doesn’t know if other fees apply. But, once again, my point is that Georgiana did not realize that she was paying any fees.

It is not uncommon for some investors to pay up to 3-5% costs in the form of assets under management (AUM) or an annual retainer. For one adviser that I found online, she charged a $5000 retainer for a $100,000 portfolio. That’s 5% cost!

Check the websites of various fee-only financial advisers and you might be surprised too. To their credit, a few advisers will publish their fee schedule and most charge about 1.0% assets up to a $1,000,000 under management plus the costs of each fund.

Below is the last table. I created it to show you the comparison of what my fee schedule, in green, compared to the most common fee charged to people who hired a fee-only adviser–1.0% AUM (I added .35% to included investments costs to make it a projected 1.35% cost, in red.

For a $100,000 portfolio, a 1.35% fee will cost the investor $1,350 every year, while I pay just $70. Always think about how much you are paying for advice and management.

I reported above that my LBW 33.7% / 67.3% stock-bond split portfolio returned a minus -.0075% YTD and I paid .07% in costs. You can use this information to take to your adviser and ask him or her two questions, and begin an important discussion about meeting your goals:

1. What is my return year to date? Mine is -.0075$

2. What am I paying you Mr. or Ms. Financial Adviser for management fees, retainer costs and what are the costs of each investment? My cost is .07%. Just a side note: you will be paying more than .07% in costs if you have a financial adviser, so the question is for you. Are you reaching your goals or could you do better yourself?

As a client, you have a right to know if your portfolio is on track. Start a conversation with your financial adviser, and save yourself some money on investment and advisory costs. 

Steve’s Bio:

*Stephen A. Schullo, Ph.D. (UCLA ’96) taught elementary students in the Los Angeles Unified School District (LAUSD) for 24 years and UCLA Extension teaching educational technology to student teachers. Because of his negative experience with annuity agents, unions, and his school district benefits personnel over the most horrific tax-deferred plan in history, the 403(b), Steve wrote investment articles for the United Teacher-Los Angeles (UTLA) newspaper for 13 years. 

So he became a 403(b) activist and talked to anybody who listened about reforming this terrible plan. He simply wanted to inform his colleagues that districts and the insurance industry are looking out for their best interests, and not the teachers. The media began listening for the first time in the entire history of the 403(b) plan commonly known as the TSA in 1998. From 1961 to 1998, nobody in or out of education ever talked about this terrible 403(b) specifically with k-12 school districts. I kid you not!

Consequently, he was thrice featured retirement plan advocate for reformed 403(b) plans for public k-12 colleagues that were in the Los Angeles Times and U.S. News and World Report. He co-founded an investor self-help group (403bAware with a colleague, Sandy Keaton) for teacher colleagues. He also wrote 7,000 helpful posts in three online investment forums since 1997. Frequently quoted by the media, testified at California State legislative hearings and honored with the “Unsung Hero” award by United Teachers Los Angeles (UTLA) for his retirement planning advocacy.

For the last eleven years, he continues to serve on LAUSD’s Retirement Investment Advisory Committee (RIAC) as a “Member-at-Large” and former co-chair. The committee monitors the district’s 457b/403b of 55,000 former and current LAUSD employees, worth $2.5 billion in total assets. Lastly, Steve and his late husband, Dan, were featured participants for the award-winning documentary, PBS Frontline: The Retirement Gamble, aired April 23, 2013.

Steve is the author of two books, “Fighting Powerful Interests: Educators Challenge Tax-sheltered Annuities and WIN!“, a story of how a handful of LAUSD educators struggled for years to improve the 403(b) to no avail. But we never quit! We were instrumental in LAUSD’s implementation of the new 457(b) plan and earned a very rare “Plan Design” award. 

Steve is the co-author with his late husband Dan Robertson of a book on learning the investment process from the ground up, “Late Bloomer Millionaires.” It’s a heartfelt story about two ordinary chaps and how they discovered investing and money management without a professional financial adviser. They list all of their successes and massive mistakes and they still retired earlier than most Americans.

For a copy of both books, email Steve at steve.schullo@latebloomerwealth.com and he will happily email you both books, FREE with no obligation except to read them and get informed, in a pdf file format.