Case Study: Rachel & Allen
In 2016, Rachel and Allen* were in their late-40s and had no children. The couple wanted to retire in their early-60s and contacted WealthArch Investment Services in Pasadena, CA, to accomplish two things:
- To increase the diversification in their investment portfolio.
- Confirm that they would have enough money to retire within their desired timeframe.
Allen and Rachel viewed their overall portfolio as consisting of various “buckets”. One bucket was the equity in their house, which amounted to approximately $700,000. The second bucket was Rachel’s 401(k), which was around $500,000. Their third bucket was a $150,000 brokerage account that Allen managed himself. Finally, the fourth bucket consisted of Rachel’s and Allen’s IRA accounts, totaling approximately $260,000. With all buckets combined, their overall portfolio was approximately $1.6 million.
In their initial conversation, Earl Yaokasin, CFA, explained how WealthArch could become their portfolio anchor and give them even more diversification.
Earl explained that their home equity was most likely quite stable and would continue to gradually increase, and since Rachel’s 401(k) was mostly in mutual funds, it would be relatively conservative in the long-run. But Earl told the couple that Allen’s investing style was a little risky. He explained how WealthArch’s investment strategy is similar to Warren Buffett’s value investing approach, and that it’s conservative by nature while still being able to capture large increases in undervalued companies.
Through WealthArch’s free, detailed advice on Rachel’s 401(k) and making their IRA accounts a “WealthArch Bucket”, Earl explained that the couple would grow their portfolio with downside protection, giving Allen the freedom to manage his investment bucket with more risk.
To address their desire to confirm their retirement timeframe goals, Earl explained that the company’s retirement planning service would be included at no extra cost once WealthArch was managing their IRA accounts. Rachel and Allen then researched WealthArch’s value investing approach, and after reading the company’s reviews on Yelp, they felt confident that WealthArch would be a trusted and successful investment partner.
To confirm that Allen and Rachel would be able to retire with enough savings to live the lifestyle they wanted, Earl had the couple complete a detailed questionnaire about their present income, expenses, and lifestyle, and what they expected them to be in the future. Armed with that information, Earl modeled the couple’s finances and delivered a comprehensive retirement report. The good news was that there was no bad news! The couple should be able to accomplish their goal of retiring with at least $3 million saved, allowing them to pursue and realize their retirement dreams.
Now, approximately seven years from retirement, Allen and Rachel’s portfolio has increased from $1.6 million to approximately $2.5 million, with their WealthArch-managed IRAs now totaling nearly $450,000, a 73% increase. By the time the couple retires, their portfolio should be well in excess of their $3 million goal.