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Ask Dave

Learning and living

Joan was left in great shape financially after her husband passed away. He handled most of the finances when he was alive, so now Joan is trying to learn more about the wealth they accumulated and how to move forward. Dave and his guest, Chris Hogan, offer advice and support.

QUESTION: Joan from San Antonio, Texas, is worried that she may have too much money invested in certificates of deposit (CDs). She is a recent widow, and her husband handled all the finances, but he left her in great shape. Her total nest egg is more than $1 million, with about $300,000 of that in CDs. A $317,000 annuity, a 403(b) and IRAs worth about $900,000 round out the investments. She also has two homes that are paid for, plus a brand-new, paid-for car. Joan asks Dave and his guest, Chris Hogan, for guidance going forward.

ANSWER: You and your husband did a very good job. You’re worth well over $1 million. Congratulations, you’re a millionaire. You’re set, but you’re wise to be careful. The CDs do give you some stability, but obviously they’re not earning anything. If you’ve had good luck with a variable annuity, that’s fine. But you’ve also had very good luck with your mutual fund investing. Chris, what do you see?

Chris Hogan: Joan, I think you and your husband have done a great job setting you up for your future. The position you’re in financially, with a paid-off home, a paid-off vacation home, and a paid-for car, you are focused. You are allergic to debt, and I want you to keep doing that. With all this money in different areas, you’re diversified. It’s now a matter of you wrapping your arms around it and truly understanding what will work for you going forward. The CDs are not going to offer you any great growth. I kind of allude to them as money kicked up in a hammock. It’s not working for you. You all worked hard for that money, so I’d like to see that money now working hard for you.

I would encourage you to reach out to one of our Endorsed Local Providers (ELPs). We have them in the San Antonio area, and you can have a great conversation, feel comfortable, and not feel like someone’s trying to sell you some stuff.

Dave: The big thing is that you’re trying to understand this. You need someone in your corner who’s teaching you, not selling you. If you get a weird feeling like there’s a little bit of slime in the room or you feel like your arm’s being twisted, get out of that room. You need to learn, and your job — every time you see your investment person — is to leave that room a little bit smarter.

Chris Hogan: What I would tell Joan, too, is that you guys have done well, you’ve worked hard, and you need to be focusing on what’s next for you. What are you going to do, and what are you going to do to enjoy this money? I can hear that angst in your voice — that being unsure of what to do next. An ELP can help that.