Where To Put $600,000 - Stocks Or A Rental - And Why? Financial Advisors' Daily Digest

by: SA For FAs


Neal Frankle takes a holistic approach to a couple's dilemma over whether to buy a rental unit or invest in the stock market.

Eric @ Servo shows you your retirement portfolio year-by-year to give you a feel for how you can retire securely without a dividend “paycheck”.

In this week’s Stock Exchange, Felix rates BMY a sell, Oscar likes DDD, and Jeff and Holmes debate DXCM.

It is said that surgeons like to cut. That is to say, that is the area they know. Another kind of physician may advise another less invasive approach bearing an equally good or superior outcome with less risk and less cost. A psychologist will offer behavioral therapy, a psychiatrist medication and so on. But who is looking at the big picture to provide the greatest benefit with the fewest downsides?

I have on numerous occasions argued in this forum for such an approach to personal financial decision making (here and here, for example). I don't like the idea of going to a financial advisor whose stock in trade is stocks whose only solution is… stocks (or other exchange-traded securities). That is because the real world offers other avenues for increasing or preserving wealth (such as real estate and cash), and I'd like to think that some advisors will take this into consideration, even if their own income is derived from just investment securities.

For that reason, I am particularly pleased to introduce new contributor Neal Frankle to readers of this forum. His debut article takes precisely this holistic approach. Flesh-and-blood investors know they have choices - in this case, whether to buy more stocks or more real estate - and it's affirming to see Neal break down the question by identifying their biases (in this case against, stocks), their overriding goal (in this case, retirement) and how their goals would be served via the scenarios the investors had in mind as well as a superior alternative not previously considered by the investors but suggested by the advisor (and one from which this advisor does not financially benefit to boot).

You can read the investors' question and Neal's analysis here, and follow Neal here.

Please share your thoughts on this in the comments section below. Note to readers: Financial Advisors' Daily Digest will resume publication October 25 after the holiday of Sukkot.

Here are today's links: