Whole life insurance as an investment vehicle

A financial services guy told a lunch group that it made no difference whether people donated appreciated stock directly to a charity or sold it and donated the proceeds to charity. He claimed that, either way, “you still got the charitable deduction. ”While this is true, he completely ignored the capital gains tax that would be triggered when the person (rather than the charity) sold the appreciated stock. He could not comprehend that a direct donation of the appreciated stock to charity could save the donor from having to pay tax on that capital gain.

He was totally obsessed with the relatively minor charitable deduction on their tax return. I thought this was horrible advice and a disservice to anyone who followed his financial advice.

I am 27 years old and recently inherited about $700,000. My family has a financial advisor through a more prominent firm, but I can not trust the guy. He is charging +2% fee on our total sum. He got a lot of customers, so I feel like he does not have enough time/energy to focus on my wealth.

I have been studying/reading and thinking about doing it by myself through Vanguard's index funds. I'm thinking put majority of my money in couple index funds and let it sit for years without making adjustments. However, I am pretty scared that I'm going to blow all my money.

Some say I should hire a financial advisor, but it seems like FA are all trying to do whatever is in THEIR best interest (although they say that they will be my fiduciary).

Edit: I'm sorry. I don't think I was clear regrading the fee he is charging us. 2% is one time fee as long as I leave it in that designated mutual fund. What I meant by total sum is $ I will put into a mutual fund and after that i guess there are some "hidden" fees. I guess the fee is set by each mutual fund company and he gets a little portion of that 2%.

I had a client who was retiring, and we were in the process of rolling over his 401(k) and pension. In our conversations, I learned that he had purchased a fixed annuity at his local bank a couple of years prior.

Since they wanted to consolidate all of their investments, they were more than comfortable transferring everything to me – but I knew that they had just taken out the fixed annuity a couple of years prior.

My inclination was that there was probably some type of surrender charge attached to it. I inquired about this to the client, and they were under the impression that there was not a surrender charge and that they could take their money; principal and interest, and walk away at any time.

Why did they believe that you ask? Because that’s what the advisor had told them. The advisor had told them they could take out the investment, take their guaranteed interest at any time, and walk away with everything without penalty. Now, once I heard that, as much as I wanted to believe them, I knew something sounded fishy. I had them call the bank and talk to the advisor to clarify how it actually worked. As it turns out, it wasn’t that way at all.

Yes, they could walk away with the principal, but all the interest that they accrued would be forfeited, and in their case, it was approximately $7,000 that they’d be leaving on the table.

Obviously, we weren’t about to give up a big chunk of money just for the sake of consolidating, so we left it as-is to revisit when the surrender period expired- which was four years away! Lesson Learned:Just because the advisor tells you something doesn’t necessarily mean it’s true. If something sounds too good to be true, ask for it in writing.