New expert investor who's not sure what he's doing

[ERD50]

OK, if you are not giving up 1% of the whole enchilada...

The way my chintzy self looks at this is that if a guy gets to manage just 3 or 4 portfolios like mine (which is not outrageous), then he gets to live like I do (3 to 4% of my stash).

But how is that a full-time job? Does he day-trade or what? I am not going to give that much money to someone for doing so little, unless he promises to beat the market and I have it in writing. And I would still want some collateral in case he skips town.

It's not a full time job for the FA. The full time job was getting those 3 or 4 clients. And they might go away at any time, so he has to keep looking. He probably has 100 that are 1/100 the size of those 3 or 4.

I suspect that being a salesperson can be a very hard, or at least time consuming, job.

Of course, none of that activity on their part does anything for you!

-ERD50

 

[ER Eddie]

Day trading can work. Becoming an NFL quarterback can also work at increasing net worth. A similar percentage of people wanting either dream tend to succeed at their endeavor.

[....]
Overall, about or less than 1% of them have consistently beat the markets over the long haul.

Ever wonder how much better off you'd be if you used some of the time you spend here to manage your own portfolio rather than shelling out that 1%. Just sayin...

it's just 1% of a piece of my portfolio - the rest is passive

Same here. I've got 70% in Vanguard index funds and 30% in Fidelity, managed by a financial advisor. I recently looked at the performance since 2012. The index funds returned 7.6%. The managed Fidelity account returned 7.0%. I calculated that it has cost me about $1250/yr to keep that money under management (vs. just index fund).

 

[Big_Hitter]

OK. We all pay some expense ratios on mutual funds and ETFs anyway. I do have more on individual stocks than most people here, but have to pay something for that diversification.

If the 1% is on top of everything else, I would lose all of my travel budget, and I do not like it.

DW wants to travel. Maybe I'll fire them after I FIRE and start traveling.

the other thing to add is that this is a broker-directed account. I only told them certain stocks I can't invest in due to my j*b. makes things a lot easier at w*rk

 

[Big_Hitter]

OK. We all pay some expense ratios on mutual funds and ETFs anyway. I do have more on individual stocks than most people here, but have to pay something for that diversification.

If the 1% is on top of everything else, I would lose all of my travel budget, and I do not like it.

I think a reasonable passive expense load on big-fund domestic equities is about 6 bips so yes, everyone pays something

 

[NW-Bound]

It's not a full time job for the FA. The full time job was getting those 3 or 4 clients. And they might go away at any time, so he has to keep looking. He probably has 100 that are 1/100 the size of those 3 or 4.

I suspect that being a salesperson can be a very hard, or at least time consuming, job.

Of course, none of that activity on their part does anything for you!

-ERD50

You are absolutely right.

Talk about spending time to take care of one's financial affair, my 27-year-old son just got started in investing. He only has about $100K right now, and some of it is in 401k even, which has limited investment choices.

He started out by doing some individual stocks. I warned him about being diversified, and that I have a lot more than he does, in order have more positions with individual stocks. My stash is larger so the time spent is more worthwhile. And I am retired, and looking at stocks is my pastime when I am not doing something else more fun like traveling. And look is what I do, more often than to trade.

Well, he got some successes and some failures last year with 4 or 5 positions. So, I asked him how he compared with the S&P. He trailed it. He is looking into getting some ETFs now to get some diversification.

One has to do it in order to learn it. Else, it looks so easy.

 

[Big_Hitter]

I calculated that it has cost me about $1250/yr to keep that money under management (vs. just index fund).

it's just money....

 

[Big_Hitter]

One has to do it in order to learn it. Else, it looks so easy.

you mean I can't just watch squawk box every morning when I work out?

 

[NW-Bound]

I do not have access to CNBC anymore, but liked to watch the cute gals in the morning.

Some people claim to make good money following the bald and beefy guys in the afternoon show (are they still on?), but they are not cute to me, so I did not watch them as much.

 

[ownyourfuture]

Goldman Sachs has a panel of experts offering their opinion on which countries should do well each year. Their predictions for 2016 were off. I did not follow them before that, and have not remembered to see what they say for 2017.

That doesn't surprise me.

 

[ER Eddie]

it's just money....

Yeah, and I've got to weigh $1250/yr against the intangibles. For instance, I am no financial whiz kid, so the idea of managing 100% of my money makes me a bit apprehensive. I get some peace of mind from knowing she is handling 30% of it. There is some increased diversification, since we have different approaches. And I can call on her for advice and input, too. So, it might be worth the trade off.

 

[NW-Bound]

I never have had an FA. I prefer to conquer greed and fear on my own.

I guess if an FA provides good hand-holding to talk people out of panicking and selling low when the sky was falling, he/she is worth the 1%, particularly if he/she is managing a lot of smaller accounts. I know I would not want their job. I would be swearing and cursing at my clients who wanted to bail out at the bottom, or people who complained that I did not get them enough dot-coms like the ones their brother-in-laws were bragging about.

 

[Big_Hitter]

I never have had an FA. I prefer to conquer greed and fear on my own.

I guess if an FA provides good hand-holding to talk people out of panicking and selling low when the sky was falling, he/she is worth the 1%, particularly if he/she is managing a lot of smaller accounts. I know I would not want their job. I would be swearing and cursing at my clients who wanted to bail out at the bottom, or people who complained that I did not get them enough dot-coms like the ones their brother-in-laws were bragging about.

this is my first FA - golf club buddy - can't swing a cat at my golf club without hitting a FA, attorney or doctor

this guy seems trustworthy - he's older than I and still has kids to get thru school so I know he'll work hard

I had to sit for essentially CFA part 1 so I know about portfolio theory, fixed income investments, how they are priced, the risks, how to read financial statements, etc but we had a pile of cash/funds in different places I wanted to consolidate and we got a good deal on the refi with these guys so we moved the money (was that a run on?)

 

[Big_Hitter]

good point about having a 3-4% withdrawal rate and forking over a huge chunk of it each year to a FA - my initial withdrawal rate will probably exceed that until we start drawing pension/ss - DW already draws a pension but not SS.

 

[Trooper]

One of my favorite lines -- it may be a member on this forum's signature -- is "Stop looking for the needles; instead buy the haystack"

 

[Boho]

...I won't buy if there's just one sell recommendation...

I'm totally going with this as a general principle. I'm afraid of the stock market and I was putting extra effort into minimizing risk, at least for the short term, so I was looking for international treasury bond ETFs. I found a list. I cross checked with a list of the best bond ETFs according to U.S. News & World Reports. Six of the treasury funds from the first list were listed in the second list and three got a gold ribbon. I looked up the Morningstar star rating of the top two. One got two stars out of five and the other was unrated. So, I'm not buying any of the international treasury bond ETFs.

 

[redduck]

...I guess if I had to pick another question it would be what country's index fund do you think would make a good investment for the coming years, not including the U.S....

I'll take a shot at answering your question: ELBONIA might be just the country that would make a good investment for the coming years.

 

[Boho]

Avatars are so small here that you can't read the full book cover that I designed, so here.