Ted and his wife Jennifer built up a credit card debt for their wedding and honeymoon. They owed about $20,000 spread throughout all of their cards. Some interest rates as high as 22% with total monthly payments of about $700/month. This would have them taking several years to pay off their credit cards. We found a 0% interest card for 18 months and got them approved for $3,000, which will save them almost $1,000 in interest after taking into account the 3% balance transfer fee. We also found a debt consolidation loan for the remaining balance that dropped the remaining interest rate from 15% down to 10% including fees (7% before fees). This allowed them to keep their same payments, but still take years off of their payments, saving them thousands.
Hector recently had an aquaintance convince him to open up a ROTH IRA, which was great advice and allowed him to save a few thousand extra dollars. However, he was getting charged $20 in fees every quarter in addition to the over 1% fees charged by the mutual funds he was able to invest in under the plan. This was creating a huge drag on his investments that if left unchecked would leave him with 100s of thousands of dollars less. We transferred his ROTH IRA to a low cost brokerage account with no quarterly fees and available funds that charge less than 0.1% This will save him 100s of thousands of dollars over his investment lifetime.
Linda had a stock payout from a previous employer worth $10,000 that was getting 0% interest. This money was losing 2-3% of its purchasing power each year due to inflation. She was concerned about losing her money, so we decided on an asset allocation that has historically had the least volatility. This asset allocation offset losses in asset class with gains in other asset classes, resulting in only 5 negative years with the biggest loss being 3.3% over a 43 year time period. Compared to stocks that had a loss of 40.6% during the same period with 10 negative years. For this increased safety, she is sacrificing less than 1% in returns 9.33% CAGR vs 10.15% CAGR. Obviously past returns aren’t indicative of future results, but in 2008, 100% stocks portfolio went down 37.04% while her portfolio would’ve gone down 2.98%.
Daniel has been diligently putting money into his company 401k, but was concerned that his coworkers results were better than his despite putting in less money. He had been getting 0% interest, while his co-workers had been investing in the stock market through mutual funds. Because of keeping the money in cash, he had missed out on an estimated $60,000 in gains. Stocks had a recent run up, so I explained to Daniel about chasing returns and how people see their friends making money when stocks are at a peak and move their money over, just as the stocks start to come back down. This made sense to him, so we decided to look for a more conservative asset allocation. His options to invest within his 401k were pretty limited, but we were able to find the funds that most closely matched his goals. Over time this asset allocation will likely make him 1,000s and later 10,000s per year over what he would’ve gotten.