I am so late in getting my Q3 Year to Date Report. Interestingly, despite being forced to stay home you might think that I would have “extra” time to get this report out at the end of the third quarter, September 30, 2020? No, it doesn’t work like that. This is 2020. The pandemic with all of its implications, social/racial unrest, and the election takes a lot of energy. But there is an additional reason:
We Are Moving to Long Beach!
Since my Q2 report, last July, Georgiana and I decided to move to Long Beach. We have been feverishly searching for a residence or condo. My Rancho Mirage home is spacious and homey but there are two continuing problems.
- Major problem. It’s a five-year story but I will cut it short. The Home Owners Association is dealing with a new owner of the golf course and it has not been favorable. We are currently in a settlement that will require an additional 110 new homes on the golf course with a new boutique hotel where the golf course lodge is now. If an investor/developer bought it now, it would take another five years to finish the current plan, building new homes (and selling them), a boutique hotel, and revamping the golf course. In the meantime, the HOA fees have almost doubled because we have to keep the golf course maintained. I want out.
- My swimming pool. I hardly ever use it. The costs of maintenance and energy are about $2500 a year. When Dan and I moved here in 2008, we thought that the swimming pool could be used for more months than just the three desert summer months! We used the pool heater once when the family came for the holidays at a cost of $200.00 in gas! (only for three days). Furthermore, my pool is going to need resurfacing of the interior costing between $10,000-$20,000. This cost is hideous and pointless because I already have access to the community pool that is heated year-round with a jacuzzi! Never purchase a home with a private swimming pool, especially in a condo community!
But I am looking forward to moving out of the desert and back to the Los Angeles area. Both of us will not miss the summer heat but we do miss the culture of Los Angeles, the center of it all! We both lived and worked in the Los Angeles area for decades, so it’s like going back home with friends, former work colleagues, and relatives.
Real Estate Agents and their
Commissions!
My home is 99% ready to sell. I talked to two real estate agents, one charges the standard rate of 6.0% and the other 4.5%. I would have $7,500 more in my pocket with the 2nd agent. But better yet, if I sold it myself I would have $30,000 more in my pocket! For Sale By Owner (FSBO) websites to help sell real estate are all over the web. Way back in 2008, Dan and I sold two properties without an agent before so it is nothing unfamiliar. I know how to stage a house and disclose all that is needed for the new buyer so that I am fully transparent. But the question is for me, do I want to do this again? I leaning towards hiring the 4.5% agent.
Los Angeles, Here We Come: Beaches, museums, Hollywood Bowl, Restaurants, Opera, Ballet, Theaters (When our lives go back to normal)
I Sold My Beloved First New Car I Ever Bought in My Life, 100% Electric Nissan Leaf!
I even had a slight problem selling my Nissan Leaf. It is a 100% electric car and 8.5 years old with 47047 miles. It is a beautiful car and great for local distances only. I asked for Blue Book price of $4500.00 and nobody responded. So I lowered the price to $2995 and I sold it for $2300.00. I had to come down even more during negotiations with the buyer!
The problem is that only a few people are comfortable with electric cars because of the range. Electric cars are dependable and simple with no oil changes, no tune-ups, or smog checks. I estimated that I saved over $4000.00 to $5000.00 in gas alone during the last 8.5 years since I owned it. I am happy that I sold it as Georgiana and I do not need three cars and it went to new owners who appreciate electric cars. By the success of Tesla, other major car companies are following up by building electric cars too. It is the future!
Now back to the reality of this terrible year! Like the sunset in the picture above, 2020 will go down in history as one of our darkest eras in the last 100 years. Not since the Great Depression or WWII have we been so worried about the future. What in the world happened that we deserved this? But that is the wrong question. The appropriate question is will we come together as a country to effectively treat this epidemic, our racial and political problems?
Dan Died Five Years Ago This Week
At the moment, my new bride, Georgiana, and I feel fine. On October 20 was the fifth anniversary of my first spouse’s death, Dan. w e voted and dropped off our ballets at our local city hall. While I will always remember Dan, I also have a new life and a wonderful spouse. Despite these difficult times, I am so lucky to be loved, alive, and healthy at the moment.
White Privilege Example Pure and Simple
One nation is finally discussing one controversial topic in-depth–our white privilege. While we watch in horror people waiting in long lines for 11 hours to vote, we simply dropped off our mail-in ballets at our local city hall. No line, no voters, nobody except Georgiana and I and the two election officials watching the ballots. Rancho Mirage is exclusively white. I have lived here for 12 years and I have never stood in line, even in Los Angeles on Mt. Washington at the local school or the park.
But as we all know and agree, we can’t wait for this year to be over. What terrible times we live in. Now I know what Americans were going through during the “War Years” of WWII but at least people could socialize and go to work. This is terrible and with protests against police brutality here and around the world, RBG dying, the continuing spread of COVID with no end in sight, and with the latest surprise which the White House itself is now a COVID “hot spot”. Lastly, let’s not forget the big event on the first Tuesday next month in two weeks! At least the election will be decided and behind us by the time you get my end of the year annual portfolio and economic report.
History of Stock Markets, Presidental Elections, and Dems or GOP Administrations
Survey after survey about the historical effects between democratic and republican administrations was neutral. The only effect on a candidate winning and losing is the economy. If the economy is negative the incumbent is usually defeated, and if the economy is good, the opposite. This is the case because the stock market reflects many variables (GDP, interest rates, consumer confidence and spending, manufacturing data, employment rate, geopolitical tensions, trade wars, and on and on) and not just who gets elected. The stock market went up or down no matter which party was in office.
Here is an article about the stock market and politics: https://awealthofcommonsense.com/2020/10/dont-mix-your-politics-with-your-portfolio/
My portfolio is up only because the stock and bond markets are up too. Recall that my portfolio follows the market. I have been lucky with my 67% bond allocation as interest rates dropped, my bond value is up, and so is my portfolio. Take a look at my graphs and tables. My Vanguard Total Bond Market Index is up 7.18%. That’s huge, especially just after 2019 spectacular 8.71% return! I have about a third of my entire portfolio in this one bond fund.
International stocks have struggled for several years. But that’s fine with me. I will always have an international stock market allocation in my portfolio. Please tell me why not?
Asset Allocation
The Cost in Dollars by Investment
Costs, Costs, and COSTS!
Never underestimate how excessive costs eat into your portfolio returns. If just 1.0% more was charged on my 7 figure portfolio, I would pay about $17,000.00 instead of $1,063.00! Many investors pay more than 1.0%! Those prices are terrible. If you work with a financial adviser always ask for your total costs, and your YTD return.
For comparison purposes. Take this information to your adviser:
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My portfolio returned 3.6% after three quarters in 2020
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For investment expenses, I pay a minuscule 6.4 basis points (.0064%) or about $1063.00 per year (projected out for all of 2020).
If you have an advisor, chances are he or she is charging you up to 1.0% Assets Under Management (AUM). By a simple algebraic equation, you can calculate my portfolio’s worth. If you have $500,000 and your adviser is charging you 1.0% AUM, you are paying your adviser $5000 per year PLUS the cost of the investments. Compared to my portfolio which is larger, I am only paying $1063.00 per year. Please learn to invest, it is well worth or time and effort. Here is a blog post I wrote on the benefits of being a Do It Yourselfer (DIY) or being financially literate. Just break down your overall finances into parts and hire the appropriate professionals to take care of the areas that you want. My post will help you break it down and show you what I do to hire the appropriate people to do specific tasks with no A.U.M.!: https://old.latebloomerwealth.com/seven-benefits-of-financial-literacy-with-one-bonus/
As educators we want our pension plans to divest from corporations to harm the environment, manufacture weapons, lack health care for employees or have abusive employee relationships. The good news is that the Millennial Generation is also on board with investing in Socially Responsible Companies.
https://www.morningstar.com/features/esg-investing-history
I don’t invest in specific Socially Responsible Funds. Although if you are an LAUSD educator, you have one available with TIAA in the 403(b) plan (800-842-2252)
Don’t forget to vote!
Steve
Retired LAUSD Teacher and author
Late Bloomer Wealth
Steve’s Bio
Stephen A. Schullo, Ph.D. (UCLA ’96) taught in the Los Angeles Unified School District (LAUSD) for 24 years and UCLA Extension teaching educational technology to student teachers. Steve wrote investment articles for the United Teacher-Los Angeles (UTLA) union newspaper for 13 years. He has been featured and quoted in many mainstream media articles about 403(b) plans, including the Los Angeles Times, NY Times, and U.S. News and World Report. He co-founded an investor self-help group 403bAware for teacher colleagues and wrote 7,500 posts in three investment forums since 1997. He testified at California State legislative hearings and honored with the “Unsung Hero” award by his teacher’s union for his retirement planning advocacy.
For the last 14 years, he serves as a volunteer on LAUSD’s Investment Advisory Committee as a “Member-at-Large” and former co-chair. The committee contains collective bargaining reps from the unions and monitors the district’s tax-deferred retirement plans, 457b/403b, of 55,000 former and current LAUSD employees, worth $2.8 billion in total assets.
He started this blog in 2012 to help all PreK-12 public school educators nationwide, especially his Los Angeles Unified School District colleagues. He belongs to a small national group of 403(b) advocates (mostly teachers) who want to bring closer attention to the 403(b). During the last 25 years, 40 newspaper articles have been published and each one says the same thing, TSAs (Tax Sheltered Annuities) are terrible 403(b) plans and the salesperson gets the benefit from lucrative commissions and high-costs. Nobody in educational leadership reads these articles NOR talk about the proper place for annuity products publically. We come together at 403bwise.com and 403bwise Facebook page https://www.facebook.com/groups/349968819000560/ Come on over if you want to join us so we can help our colleagues avoid these self-conflicted and high-cost Tax-sheltered Annuities (TSAs).
Steve is the author of two books, Late Bloomer Millionaires and 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, but very precious “Plan Design” award.
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.