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Personal Financial Advisor Essay

1308 words - 6 pages

Personal Financial AdvisorQuestionsHow old is your mother? Does she have or plan to have a life insurance?Will you be reconsidering the beneficiary of your life insurance?What types of insurance do you and your children have?Are you planning to have more children?Are you going to continue staying in this house? If not, how much do you expect to spend on your new house? Will you sell your current house or use it for other purposes?What is the rate of return that you expect for your investment?Which risk level is sustainable to you?When Brook is in college, do you plan to buy a car for him?Is it convenient for your family to have only one car?Is there anything other than inflation that will ...view middle of the document...

Especially, you have to put $19,280 in the 401k plan this year. Therefore, if you don't cut back the car expense, you will have a negative cash flow of $6200. The amount of money you save, of course, depends on which car you choose to keep and which one you sell. If you keep the Lexus, you save $7000 a year. Your saving would become $11,494 a year if you decide to keep the BMW. In addition to that, there're only 24 payments left for the BMW. So selling the Lexus is more beneficial. However, keeping either of these cars would be fine. But of course, saving more will give us better chance to meet your retirement goal.The current mortgage rates are 7.75% for 30 years and 7.50% for 15 years, which are a lot lower than the rate of 9.5% that you are paying right now. You should definitely refinance your mortgage immediately to lower interest expense. If you don't refinance the mortgage, and still want to pay off your debt by the time you retire, you will have to pay roughly $18,545 a year. If you refinance, even though you have to pay a 2% closing cost, you will only pay $14,652 and save approximately $2000 a year. Also as I said before, because you are starting to save your money through the 401k plan, you will have a negative cash flow of $1,500 unless you refinance your mortgage.The current wrap fee of 3% that you pay for your broker is really high. The usual wrap fee is only about 1.5%. Moreover, I have some concern about the efficiency of your broker. In fact, there's no reason for him to refuse giving you the return information for at least one of the last five years. There might be something wrong going on with this brokerage service. I recommend you to have a talk with your broker to ask for a lower wrap fee and an improvement in his work quality. If there is no way to fix this problem, you might want to change your broker. There are many brokers who charge a lower wrap fee while providing a better service. This will help you save money in your accounts; thus, have a higher return on your investment.As I said before, to achieve your goal, you will need to have at least $1,972,702 at your retirement. The money you will have from your 401K plan at the...

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