Ohio CollegeAdvantage 529 Plan Referral Promotion Code: Free $25

This is a friendly reminder that you can still get a $25 head start to your child’s college fund if you open a 529 account with the Ohio CollegeAdvantage plan and fund with $25 of your own. Not only is the free money nice, but this is actually a very good plan in which I am making monthly automatic contributions.

Rated a Top 529 Plan by Morningstar
In a recent article The Best and Worst 529 College-Savings Plans by Morningstar, the Ohio CollegeAdvantage plan was rated in the top 5 plans:

Features they liked included having a wide variety of investment options (including active/passive, multiple age-based options, and even ultra-safe CDs), as well as low total expenses. In-state resident can also deduct up to $2,000 of contributions per year, with excess carryover allowed.

My Investment Choice: Inflation-Protected Bonds
529 plans aren’t perfect, and you have to be careful about what you’re invested in. This article I found on BH summarizes my concerns well:

…saving for college isn’t like saving for retirement. The run-up is much shorter, 18 years at most instead of 30 or 40, so most of the miraculous gains of compound interest are lost. Second, the payout is far more immediate and inflexible. People can choose when to retire, delay if they have to, and ride out ups and down in the market over decades. For most students, college happens three months after graduation, ready or not, and the check is due on Day 1.

I explored some conservative 529 investment options here, and based on my conclusions I am currently putting all my contributions into the Vanguard Inflation-Protected Bond option. This works especially well since TIPS are best held in tax-advantaged accounts.

Refer-A-Friend Bonus Instructions

  1. You can enroll online or via mail. The online process was quick and easy, and I didn’t have to mail in anything.
  2. The first step is to input your personal info and choose a login/password. Next, you’ll verify your e-mail and complete the application.
  3. After that, you’ll choose your funding amount and select an investment fund. Your initial deposit must be a least $25, and is funded using the account/routing numbers of your bank account. At the bottom, you will need to enter a referral code to get the bonus. Enter *.
  4. In 1-3 days, your initial deposit will be sucked out, and in 5-7 business days you will get your $25 bonus. The $25 will be deposited directly into the 529 account, and will be invested in the same thing as your initial deposit.

* Number is randomly generated. If you can’t see any numbers above, please use 2483590. With this program, both the newly referred and the referrer get $25. As promised, I have received several referrals from readers, and have thus included their referral codes to be shared here. I probably won’t have time to do it again for this promotion, but keep your eyes out for future similar offers.

Is Your State Prepaid Tuition 529 Plan Really Safe?

I have thought about signing up for a prepaid tuition plan, as I am leaning towards conservative investments for college savings. Lock-in tuition now, and don’t worry about future hikes. However, it appears that even though 18 states have pre-paid tuition plans, only seven of them actually guarantee them – Florida, Maryland, Massachusetts, Mississippi, Texas, Virginia and Washington. (The image below says six, but the article was corrected later to add Virginia.)

Currently, the plan hurting the most publicly is from Alabama, called the Prepaid Affordable College Tuition Plan (PACT). The plan’s asset value dropped from $899 million in September 2007 to $463 million at the end of January, nearly a 50% drop. Why? Because they invested over 70% of their assets in stocks, and also assumed a consistently high rate of return:

According to an actuarial report on the fund filed by the state in January 2008, the fund’s managers then as­sumed a rate of return of about 8 percent until 2013, and 8.5 percent after that. That report also found that the fund’s liabilities exceeded its assets by about $20 mil­lion.

According to fund docu­ments, 42 percent of its assets, as of March 2008, were invested in large market capi­talization domestic stocks, 9 percent in small market capi­talization domestic stocks, 21 percent in international stocks, 26 percent in domestic fixed-income securities and 2 percent in cash.

48,000 families who were invested in the plan got letters earlier this month that the plan may have trouble meeting its future obligations. To make things worse, their brochures actually once stated that it was guaranteed by the state of Alabama, until later on it was found that wasn’t possible due to state law.

I don’t know about you, but isn’t a guaranteed return the entire point of prepaid tuition plans? I commit money now in order to know that I can afford tuition for my child in the future. I give up the chance for higher returns elsewhere. Otherwise, it’s like heads they win, tails you lose. High returns, they keep the difference. Low returns, they say “oops we got no money”.

Also reported to be in trouble are the programs in Tennessee, South Carolina, West Virginia and Washington. Finally, I also found this article which stated that although guaranteed, the Texas plan had a projected shortfall of $206 million.

Conservative 529 Options: CollegeSure Tuition-Indexed CDs vs. Inflation-Protected Bonds (TIPS)

Recently, I have been exploring the “safe” options inside various 529 plans. This would be a good choice for those who want to feel like they are making continuous gradual progress and avoid the swings of the stock market, similar to what is offered in pre-paid tuition plans in certain states like Florida. The problems with those plans are that they are usually limited to residents only, and your kid often has to go to one of the in-state schools to get the guaranteed tuition benefit. One unique pre-paid type of plan is the Independent 529 plan, but it is also restricted to certain schools (mostly private liberal arts colleges).

Next, there are plans with guaranteed-return funds backed by insurance companies, or certificates of deposit from banks. However, these types of investments are still subject to inflation risk. If a period of high inflation occurs, your returns could be squashed. Even with current deflation concerns, given current government policy I think high inflation in the future is still a potential concern.

So what’s left?

CollegeSure Tuition-Indexed CDs

Offered by the College Savings Bank, these are FDIC-insured certificates of deposit which offer an interest rate linked to college tuition levels. The CollegeSure CD earns an annual percentage yield (APY) over the life of the investment that is 3.00% less than the college inflation rate. (For a while, this margin was only 1.5%.) These are only available through either the Montana or Arizona 529 plans, but you can use the proceeds towards a school in any state.

The CDs are available in maturities ranging from 1 to 22 years, so you are basically pre-paying tuition at a fixed premium. Here’s an illustration from their site:

Changes in costs are tracked by the Independent College 500 Index (IC500), which is derived from the average tuition plus housing costs of 500 private colleges. Over the last 10 years, the college inflation rate has been 5.4% annualized, Over the last 20 years, it was 5.7% annualized. Of course, this is just an average and it both excludes public universities and ignores the average aid packages given out, but it seems to be a reasonable index.

Treasury Inflation-Protected Bonds

Treasury Inflation-Protected Securities (TIPS) are bonds that promise you a total return that adjusts with the CPI index for inflation. Very generally, it works like this: if the stated real yield is 2% and inflation ends up at 4%, your return would be 6%. TIPS are issued and backed by full faith of the U.S. government. Right now, they are only available in 529 plans in the form of mutual funds like the Vanguard Inflation Indexed Bond Fund. Some plans offer them as part of their age-based investment mixes, but a few offer them as standalone investment options. The Ohio 529 plan ($25 bonus) looks to offer the cheapest option, with an annual expense ratio of 0.32%.

The actual real yield you get varies, but here is some historical market data for a maturity of 10-years, which is close to the average mutual of the Vanguard fund:

To make a rough estimate, I’d say you average about 2% real before fees. After about 0.3% in fees, you’d end up with 1.7% + inflation.

Inflation is tracked here by the CPI-U (Consumer Price Index for All Urban Consumers), a number tracking the price of a wide basket of goods and services. From January 1999 to January 2009, the annualized inflation rate was about 2.5%. Over the last 20 years, it has been about 3.0%.

It does not focus on college tuition, or even include it explicitly as far as I know. However, there should be some correlation to college tuition.

So which is better?

Would you rather have:

Overall Inflation plus 1.7% or College Inflation minus 3%

If we use the average numbers from the last 10 years, the CollegeSure CD would have earned roughly 2.4% annually and the TIPS fund would have earned roughly 4.2% annually. This would seem to tilt in favor of TIPS, but there are two problems:

  • Unlike with the CollegeSure CD, you can’t match the maturity of the TIPS fund with your goals. It’s more or less fixed at 10 years forever. For example, if you only have 2 years left until college, you might want to start moving money out because you can still lose principal in the short-term due to interest rate fluctations.
  • If the rate of college tuition rises significantly higher than overall inflation by greater than 4.7% a year, then the TIPS fund would fall short.

One could always split money between the two as well, but for not I’m just investing in the TIPS. College inflation may continue to outpace overall inflation (or it may not), but I doubt it will do so by more than 4.7% a year for an extended period. Also, I believe that investment options in 529s will only improve with time. One day, I expect to be able to buy individual TIPS to more closely match maturities with our time horizon.

This is not to say I’ll necessarily be 100% TIPS – I’ll most likely throw a bit of stocks in there – but I think it’ll be a big component of our plan.

Ohio CollegeAdvantage 529 Plan: Free $25 Opening Bonus

The Ohio CollegeAdvantage 529 Savings Plan is again offering a $25 refer-a-friend bonus if you open an account and deposit at least $25 by May 31, 2009. You can be a resident of any state, and there are no application or annual fees.

First Impressions
My own account with them has been open for a few months, and so far I am quite impressed with the Ohio plan. The website itself is functional and fast, there are a variety of investment choices (cash, index funds, active funds), they are upfront with the fees, and the expenses are very competitive – either the lowest or near the lowest in the nation. The only bad thing I can think of is that every time I make a purchase I get a snail-mail confirmation with no paperless option, which seems wasteful. A more detailed review is upcoming.

I have gotten the $25 bonuses plus several referrals, with no complaints from the people I referred. I have also started an auto-debit from my checking account for $50 a month. Right now, half of my 529 is in the Vanguard inflation-protected bond fund. This is an investment option that is unavailable in most state plans. I feel that since college is only at most 18 years away with a big lump-sum payment, I would prefer less volatility while marching towards that goal. This is in contrast to saving for retirement, where I currently have 35 years until I turn 65, and hopefully another 20 years after that as well.

Referral Bonus Instructions
Both the referred and referree get $25, and I’d love for you to help fund my kid’s college dreams. :D Here’s how:

  1. You can enroll online or via mail. The online process was quick and easy, and I didn’t have to mail in anything.
  2. The first step is to input your personal info and choose a login/password. Next, you’ll verify your e-mail and complete the application.
  3. After that, you’ll choose your funding amount and select an investment fund. Your initial deposit must be a least $25, and is funded using the account/routing numbers of your bank account. At the bottom, you will need to enter a referral code to get the bonus. Enter *.
  4. In 1-3 days, your initial deposit will be sucked out, and in 5-7 business days you will get your $25 bonus. The $25 will be deposited directly into the 529 account, and will be invested in the same thing as your initial deposit.

I opened the account back in November and got my $25 bonus successfully and as promised:

* Javascript is required. If you can’t see any numbers, please use 2439350.

Puppy!

We added a new member to our family today, of the four-legged and fuzzy variety. Her name is Pumpkin, and she was placed in our home by a dog rescue group.

Getting a rescue is kind of stressful. You put your name on lists. You get a call that dogs need a home. You have to sit down, talk it over, and decide whether to say yes. Do you have the time? The money? Then, you still don’t know if you’ll get the dog. People volunteer ahead of you. People drop out. You get a phone call asking if you are still available? You ponder again. You say yes, but you still can’t be sure until you actually pick them up. (To be fair, I’m sure it’s much more stressful for the animals.)

To top it all off, you don’t know much about the history of the dog and any health and/or behavioral problems. She’s intact, so we will try to take advantage of the discounted spay and neuter services that many humane societies offer. As for Pumpkin, we don’t know much about her history, but from what we were told she was one of 20 dogs someone used to run a puppy mill in their house. We assume that she’s been stuck in a cage much of her life, as she is over 2 years old and is not potty-trained nor leash-trained. She’s a bit skittish, but I can already see her coming around. I don’t have any eloquent words, so read these instead.

This will of course affect our finances, but we’ll take it as it comes and I already know I’ll be getting a huge increase in the quality of my life. Dogs seem to take love and multiply it! Hey, at least our holiday gifts to each other are taken care of already. ;) Let’s hope the house-training goes by quickly…


(Guess why her name is Pumpkin…)

Marriage and Money: Can Love Overcome Financial Incompatibility?

I know a lot of different friends who are happily married. Republicans and Democrats. Catholics and Hindus. Dog-lovers and Cat-lovers. Rich families and not-so-rich. Even Ohio State and Michigan alumni! However, I recently met a recently-engaged guy from Washington who was sharing his wedding worries. Here’s the short version:

  • He is from a middle-class family in a rural area. She is from an upper class family in the posh area of town.
  • He currently earns $30,000 a year. In a couple of years, he will probably make double that. She currently makes around $30,000 per year, with limited upside potential.
  • She has stated that she needs a $20,000 engagement ring, as that is what all her friends are getting. He’s been saving for a while…
  • She will not let her kids go anywhere else but the same private school that she attended. Current annual tuition: $15,000.
  • How rich is her family? She recently “found” 1,000 Euros laying around in her room (lives at parents’ house), and is now taking a trip to Europe to spend it.
  • His dream wedding is a backyard bar-b-que. Her dream wedding is going to cost $100,000. Her parents will pay for most of it.

When I first heard this story, I thought I was hearing a pitch for a new movie with Jennifer Aniston and Vince Vaughn. But this is their reality, and they do seem in love. Still, I don’t understand it from either side. How can he think they can afford such a lifestyle? How can she think they can afford such a lifestyle? Something’s got to give, and I hope they can work it out.

Is it possible in the real world for love to overcome completely different financial tastes? As I get older, I feel more and more that compatibility in this area is simply too important not to have.

(On a related note, I just have to say that adult allowances have been working great for us as a way to reduce judgments on discretionary spending.)

Costco Complete Emergency Preparation Kit?

Don’t ask me why, but I have been on a secret survivalist bent recently. I guess too many worst-case scenarios going around in my head. Lo and behold, I run across this Complete Emergency Preparation Kit at Costco.

Includes:
# 6 Days Food (60 Servings) for 2 Adults
# Food is 100% Vegetarian with a 20 Year Shelf Life
# Fruit & Vegetable Dietary Supplements
# Water Filtration System (100 plus Gallon Capacity)
# Crank Flashlight/Radio/Cell Phone Charger
# Survival Multi-Tool
# Cooking Supplies/Stove/Fuel
# First Aid Supplies
# Sanitizer/Matches
# Emergency Blankets
# Compass/Whistle/Thermometer
# 2-N95 Safety Masks
# 4 Ready-to-Eat Meals (No cooking required)
# Duct Tape
# Plastic Sheeting (100 square feet; 3mm thick)
# 2 Nylon Ropes (20 feet each)
# Tube Tent
# Hygiene Kit
# 4 Hand Warmers
# 8 Water Pouches
# 2 pairs Leather Work Gloves

I know I might be able to gather most of this by myself, but I also know that I’ve been living on my own for a decade and haven’t actually done so. $100 for something that should last at least 10 years is just $10 a year. However, I am also afraid that this kit has a bunch of cheap crap thrown in it, of which I won’t realize until way too late. Right now, I just have a store of canned food and a case of water that I rotate.

Anyone else considering this? Anyone actually bought one and have a review?

Is Money The Secret To A Happy Marriage?

The New York Times had an article this weekend called The Key to Wedded Bliss? Money Matters*. It was kind of hit and miss for me, but I did like one particular quote:

“A lot of the debates people have about money are code for how we want to live our lives.”

Money itself isn’t important. Money is simply a tool to achieve what you want. As long as you and your partner want the same things, then in general I think the rest falls into place. You just have to realize that money spent in one place takes away from another desire. However, if you don’t agree on what you want, you could be billionaires and unhappy.

My wife and I remind each other all the time about our primary goals:

  • Work less.
  • Be able to spend time with children.
  • Travel and experience the world.

With this in mind, neither of us bug each other very much about most material things. I don’t ask for a BMW. She doesn’t ask for stuff from Pottery Barn or Restoration Hardware. If our wallets start to wander, then we keep each other in check.

(The rest of the article talks about little things like having a weekly financial meeting, rotating the financial responsibilities, hiring a mediator, and other minor things that I feel aren’t nearly as important. We don’t do any of those things.)

This article caught my eye because my wife and I are currently very close to booking a week-long trip to Spain, pending vacation time approval. It was weird because many of our coworkers’ reactions were “Jeez, big spender, where did you get the money for that?”. I wanted to say something along the lines of “Remember the 18 times last month you called me cheap? Yeah, that’s where the money came from!“.

More appropriate might be “How much did your [new car] cost again? Mine depreciates less than $1,000 per year. Subtract the difference, and that’s an extra $1,000+ for me every year, which is an international trip.” They make fun of our old car. ;)

What’s the point of all this? Having aligned goals is awesome. Oh, and I love my wife. :)

Helping Mom Transfer Old 401(k) To Vanguard IRA

My mom is trying to organize and simplify her financial accounts, which I applaud. A major part of this is to finally move her orphaned 401(k)s and IRAs into one location. I recommended Vanguard, since that’s where all my IRAs are. She was okay with sticking with low-cost and passive index funds, which is Vanguard’s specialty. They are also known to be investor-oriented and have high client loyalty.

If you intend to buy individual stocks or ETFs, I wouldn’t go with Vanguard Brokerage Services because they are relatively expensive. Open an account elsewhere – check out Zecco, TradeKing, or Sharebuilder.

Make A Phone Call To Old Administrator
There are a variety of ways these rollovers can happen. They may want to know the name of the company you’re going with, and also have some various paperwork to fill out. With some companies, you can request everything be done online. Even so, I think the easiest way is to simply call them and ask them the easiest way to do it (my mom didn’t like having to deal with the old company “Why are you leaving us? You can simply rollover to an IRA here…”).

You have to ask for a “direct rollover”, because otherwise you may be subject to a 20% automatic withholding, taxes, and also penalties. If the transfer can’t be done electronically, the old company will liquidate your account and send you a paper check made out to your new company. Be sure to send the check to your new company within 60 days.

Open An Account At Vanguard
Just go to Vanguard.com, click on “Open an account” at the top-right, and follow the guide. We went with “Invest for retirement” > “Roll over a 401(k) or other employer-sponsored plan” and then “Vanguard® mutual funds”.

Choosing Initial Investments
If you don’t know what to buy yet, just choose a conservative money market fund to get started. One popular option is the Prime Money Market Fund (VMMXX). You can switch into other mutual funds later easily as there are no transaction fees.

If you have over $100,000 in assets at Vanguard, you reach their Voyager level which includes a discounted financial plan. The pitch: “Pay just $250 for a plan developed by a Certified Financial Planner™ from Vanguard—a $1,000 value.” I haven’t actually paid for this myself, so I don’t know how customized it is.

Avoiding Fees
Don’t want mom getting hit with crazy fees! Vanguard charges a $20 annual fee for each Vanguard mutual fund in which your balance is under $10,000. Again, if you are at the Voyager level ($100,000+ in total assets at Vanguard) these are all waived. After that, the easiest way to avoid this fee is to sign up for electronic delivery of documents. Most people are willing to save a potential $20-$100 a year by printing out their own statements.

So now she has a funded Vanguard IRA. Next task is to provide her some investment options which fit within her overall portfolio.

Marriage & Money Quiz by Money Magazine: Did We Pass?

Wedding Ceremony Image

weddingMoney magazine has an article this month about how many married folks don’t know the details about their spouse’s finances. In one study, half of the pairs questioned came up with completely different answers when asked to estimate their family’s income and net worth. Are you and your partner similar? A quiz was included that is designed for each partner to take separately. Here are the quiz questions, as well as the answers that my wife and I gave.

How much money did your spouse make last year, including salary, bonuses, commissions, and freelance pay?

Me: I did the taxes, so I got this one correct.

Her: She was about 20% below my actual gross income last year. She reads this blog, so she know the after-tax and after-spending results, but I guess she underestimated how much in taxes we get hit with. Also, I have variable side-income which is not easy to track.

What’s the last big purchase (more than $100) your spouse made, and how much did it cost?

This is a tricky question. Is this a purchase meant solely for ourselves? Although it’s not like we never spend money, we both had a hard time remembering the last time we bought a $100+ item for ourselves, like a purse or a gadget.

Me: I remembered that she bought a plane ticket for work-related opportunity for $300 yesterday.

Her: She noted that I gave a $100 gift for a friend’s wedding (from the both of us) last week.

How much does your spouse owe, counting credit card balances, car loans and another other debt, aside from your mortgage?

Me: Nothing (correct).

Her: Nothing (effectively correct, if you ignore making money with 0% balance transfers).

What is the current value of your spouse’s 401(k) or other principal retirement account?

Me: About $15,000. This is actually incorrect – it is more like $25,000. I forgot that she had been working at this job for two years already. Oops! This is kind of sad, considering I actually check and record the balance every month in a spreadsheet for our net worth updates.

Her: $15,000. My Solo 401k is actually around $23,000. She admits that this was a wild guess.

If your spouse passes away, how much will you collect in life insurance (counting both workplace and individual policies)?

Me & Her:: We both currently have ~$300,000 each in mostly-subsidized life insurance through work. We have been discussing life insurance in general recently and were looking into getting individual term life insurance policies, although we’ve been “looking” for months now. :(

Overall self-grade as a couple: B. We weren’t completely clueless, but there is a lot of room for improvement. I think there is a good chance that a lot of people who read this blog have significant others who are not quite as interested in finances as they are. So why not give them this quiz and see how they do? It definitely helped us get closer to being on the same page.

Economics of Shared Living: Estimated Savings From Having Roommates

If you’re looking to reduce expenses, why not start with your most expensive category – usually housing. While it can be a lifestyle change, one of the most effective ways to save money is to share a household with others, as it also can reduce your costs in other areas like utilities. In this article The “N” Factor and Retirement Planning, columnist Scott Burns focuses on the financial impact of having kids but also shares a interesting way to estimate how the size of a household affects how much it spends overall:

Here’s the algorithm: The cost of living for a household is the square root of the number of people in the household. So if you are single, your cost of living is the square root of 1 or… 1.

But if you are recently married, your cost of living is the square root of 2, or 1.414. Yes, two can’t live for the price of one. But they can live for only 42 percent more than the price of one. Economists call this “economies of shared living.”

Expanding on this, if you have 3 people then the √3 is 1.73 (73% increase over a single person). But if we are talking about adults and not kids, then it is probably more helpful to simply focus on the effect of each person’s share.

Example
If you’re single and live by yourself, your total cost of living may be $2,000 per month. This includes things like food, transportation, and utilities.

  • Get one roommate, and your cost of living is now 1.414/2 = 71% of living alone, or $1,420 per month.
  • Get two roommates, and your cost of living is now 1.73/3 = 58% of living alone, or $1,160 per month.
  • Get three roommates, and your cost of living is now 2/4 = 50% of living alone, or $1,000 per month.

Quick Check
Using Rentometer, I found the median rent levels for a one, two, and three bedroom rental in my area. (Yes, they are really high overall for the US.) This should provide a quick check for this rule, even though we are just looking at housing. It turns out to be pretty close:

One bedrooms: $1050/month – $1050 per person
Two bedrooms: $1600/month – $800 per person, or 76% of living alone
Three bedrooms: $2175/month – $725, or 69% of living alone

According to the √N Rule, the biggest relative benefit comes when you stop living alone, at a savings of nearly 30%. While it is easy to dismiss communal living, I think it is important to realize that is an option, even if you choose not to go that way. In many cultures even having multiple families living under one roof is common.

Burns also extended this concept a bit in showing us how a retiree can survive on $15,000 a year. Of course, the same idea can also apply to non-retirees. “Cooperation is a wonderful but generally overlooked substitute for money.”

Can Your Spouse/Partner Manage The Family Finances Without You?

Piper

My wife got to ride in a single-engine Piper airplane for the first time a couple of days ago, which was exciting for her and scary for me. She even got to fly a little bit. I was surprised she agreed to go since usually I am banned from such “extreme” activities.

This, along with a recent Vanguard article about estate planning, got me thinking. Many of you reading this are the Chief Financial Officers of your households, but would your spouse or partner be able to run things well without you?

It’s funny, right now I don’t feel an urge to buy life insurance (my wife is paid well and does not depend on me for financial support), nor do I feel like I need a will (we are married, so most things would just shift to her naturally), but I do feel like I need to compose some sort of “Financial Will” because currently I take care of most of the finances. In fact, my wife hasn’t paid a single bill since we’ve gotten married! That leaves a lot of instructions to compile…

Where is all the money?
Although she knows where all our major accounts are, I have a lot of smaller accounts. I need to create a list of all financial institutions where I have accounts, what the approximate balances are, as well as a secure system to show her the account numbers as well as usernames/passwords. She already knows where all the bank statements and important legal documents are.

I should also write down all the bills, although this is another reason why I still like receiving paper statements. If a credit card or utility company wants money, she’ll get a letter.

Where do I learn about money?
As for the whole spending less than you earn thing, I think she can handle that just fine. She’s much less familiar with investing, so I would leave her this list of books to start her education. I might change this list later, but I think it offers a decent mix of basic advice and some more slightly advanced concepts.

What if I would prefer professional help?
Let’s say she feels overwhelmed and would prefer to hire a professional. I would encourage her to hire a fee-only advisor who does not work on commissions, and preferably one with a simple passive investment philosophy. I would tell her specifically to avoid names like Merrill Lynch, Ameriprise, and Edward Jones. (There are fine employees at these companies, but the conflicts of interest that exist greatly decrease the chances at finding one at random.)

Although I’ve never met with any of these firms, based on my limited knowledge of their philosophies and reputations, I would give them a shot:

However, these advisors can be very expensive for smaller portfolios, so I would definitely prefer for her learn on her own first. Maybe I would suggest a simple Vanguard Target Retirement fund as an auto-pilot option in the meantime.

How do I keep any passive income flowing in?
Some people may have rental properties, or royalty income, or some other sort of settlement income to preserve. For me, if I die then my day job and freelance income will stop, but this website has the potential to keep earning advertising money for many additional months if not years. I would need a brief manual on how to keep this site up and running (pay the hosting bill!) and who to call if something breaks. Also I would need a list of important contacts to maintain relationships with.

Of course, I would also tell her to read the contents of this site and other sites I link to for more support and advice! ;)

I would also write down a trusted accountant and lawyer, although we already have those within the family. Hmm… anything else?