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Old 10-05-2014, 11:03 AM   #41
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My question is - can a normal FIRE'er accomplish somewhat similar diversification using Vanguard mutual funds in the different classes or worth the 1.4% (approx) fee (ouch).
Keep digging for more information, so that you can approach this challenge armed with facts. At the bottom is a table I keep handy in a spreadsheet where I monitor various aspects of our investments.

Here is an article which explains the issue in more depth.

The Erosive Effect of Expenses on a Portfolio’s Value

Many sites, including Vanguard, have enough resources to completely answer your question.
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Old 10-05-2014, 11:23 AM   #42
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Good Morning FIRE's. Always look forward to discussions and very much value people's feedback.

Planning on retiring 31 Dec 14. Somewhat scarey. High paying job, won't get back. Enjoy people, but not the stress, hrs. Impacting health. Take too much time from enjoying life. Think I can RE.

Met with Edelman associate yesterday. Actually thought our pension and SS could handle basic expenses. Their numbers not so rosey. I was counting on BIG reduction in taxes, no more retirement savings. Today re-calculating, just my post retirement living expenses not matching theirs. Hmm.

Anyway - real question here is. I l liked what I heard with regards to establishing a strategy and sticking the course thru rebalancing. We got a free copy of Lies about Money and had good portfolio guidance and how to allocate based on needs, timeline, risk amongst US Stocks, International Stocks, Bonds, and Hedge Positions.

They pushed for further diversification using large number of ETFs in different sub classes like Large Cap Value, Large Cap Growth, Small Cap, ... within US Stocks. Similar for International Stocks, Bonds, and Hedge Positions.

My question is - can a normal FIRE'er accomplish somewhat similar diversification using Vanguard mutual funds in the different classes or worth the 1.4% (approx) fee (ouch).

Appreciate anyone who has used/heard of Edelman or doing just that on their own. And did your taxes/expenses go down after retiring? Still can't figure their numbers.

Thank you FIRE'ers.

Kannon
1.4% is theft. Don't do that.

I do the "slice and dice" thing with lots of funds, growth/value/small/large plus REIT and Energy. It doesn't necessarily give you more diversification, but instead more chances to rebalance and a different weighting of each category than the market.

Here's what I did for my Mom. I expect to rebalance once a year, when I have to take her RMD's. Other than that it just sits there, no work at all.

25% S&P 500 index
25% Total US ex-S&P 500 index
25% Global ex-US index
25% Bond index

(Edited to add: this portfolio owns nearly every stock in the world, so diversification isn't a problem.)

I use Fidelity, but Vanguard has the same indexes. They all cost less than 0.10% I think. 25% bonds is lower than average for a retiree, but she doesn't make any withdrawals normally.

As a DIY'er, you hardest decision is probably what you want your portfolio asset allocation to look like. After that the mechanics of maintaining it are not hard. However, there is more to retirement than just investing. Tax strategies are something you also need to pay attention too.

I didn't see that anyone mentioned FIRECalc (have you tried it?) I'd trust your expense projections (don't forget healthcare, non-recurring expenses, and what happens if one spouse dies if that applies), but make sure you aren't planning on 10% growth each year from stocks. FIRECalc will help with that.
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Old 10-05-2014, 11:28 AM   #43
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Great thread. I 've been reading books and will pick up on the suggestions here. When I was working I didn't have time or just wasn't focused on the fees. I have an Edward Jones advisor but was thinking about doing it myself.
Great idea, ED will charge you alot. Front end loads, 12b-1 fees, deferred sales fees, don't know if they charge wrap fees. They also make investing look very difficult, so you feel very confused and need their help. Same advise, you're educating yourself(great job), get the running shoes out and run away.

Don't get me wrong, there was a time when some advisors helped some folks, who's only alternative was a savings account or bonds. That was when DIY was difficult, pre-index funds, pre-internet, basically last century.

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Old 10-05-2014, 12:18 PM   #44
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It isn't rocket science, and it's not like performing an appendectomy on yourself. That's what the industry wants you to believe.



-ERD50

When I pulled my funds from Ameriprise, my FA kept trying to scare me asking, "do you really think you're ready to perform open heart surgery on yourself?" The more he talked, the more full of rubbish I realized he was.

I'm very grateful to this forum for encouraging me to gain more financial control of my future. Four months ago I started reading and although my eyes glazed and the higher math (calculating risk, P/E, futures, hedged bets) didn't sink in, I became convinced that all I needed was to select an Asset Allocation of lowest cost funds and rebalance once a year. I was frustrated selecting my AA at first because I couldn't find a great explanation of how to derive one's ideal mix (e.g. Bogleheads suggested no more than 10% in REIT funds, but why?). But I kept reading and asking and reading (turns out other index funds already have good REIT exposure) and finally accepted that there is a bit of art to it and everyone will have different risk and performance.

So if I can manage my own funds efficiently, so can most any strong saver. And at the very least, one should know the criteria for evaluating ethical and competent Financial Advisors.
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Old 10-05-2014, 12:40 PM   #45
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FIRECalc shows that a wide range of stock/bond ratios can be successfully employed. Financial advisors can claim it is hard to pick exactly the right AA, but I think the truth is that there are many AA's that will do just fine and you can probably find an FA that would recommend any of them. So there is no one perfect answer, but if you are somewhere near the norm and stick with you AA you should be OK.

The last thing my Mom's FA asked me was to give me the symbols of the funds I was going to use for her so he could look up total fund expenses, including trading costs. Sorry, broad index funds also have very low trading costs, they weren't going to exceed his fees alone.
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Old 10-05-2014, 01:01 PM   #46
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I used to talk to Ric on a pre-internet Bulletin Board, back when his business was basically just him and his wife. He seemed pretty smart, but even back then I didn't buy into his methods. He's gotten incredibly rich since then, to the extent that he's got a minor league baseball stadium with his name on it. I can guarantee he didn't get all that money from investing his own money in mutual funds. I also know a few people who invested with him. I haven't seen their stadiums.
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Old 10-05-2014, 01:29 PM   #47
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Most of the fee based on acct. size advisers use no-load funds, and adsorb trading cost / fees on stocks, that being said, the fees most charge including Edelman start at 2 % for the smaller accounts, and drop for larger accounts.

I would not call it theft , but that is a lot of $ to pay . Do they add value above the fee ? You would need a rear view miror and 20 year time line to see the results.

It would be hard to beat an s and p or dow index fund over a 20 year time frame.

Can these advisers pull your financial boat out of the water to avoid the occasional huge damaging financial waves ? If not , what good are they.
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Old 10-05-2014, 01:38 PM   #48
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One thing that is obvious to me is that I know several EDJ advisors a neighbor, colleague and college classmate. If they can do it with other people's money why can't I do it with my own. I just have to get smart and do my due diligence.
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Old 10-05-2014, 01:55 PM   #49
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I used to talk to Ric on a pre-internet Bulletin Board, back when his business was basically just him and his wife. He seemed pretty smart, but even back then I didn't buy into his methods. He's gotten incredibly rich since then, to the extent that he's got a minor league baseball stadium with his name on it. I can guarantee he didn't get all that money from investing his own money in mutual funds. I also know a few people who invested with him. I haven't seen their stadiums.
He manages over $13.5 billion in assets and sells millions of books.

Yes Ric is doing well after 25 years.

With 25,000 clients you would think he must be doing something right. Or thats a lot of really dumb people using Edelman financial to build wealth.

It would be interesting to have Edelman himself justify his high management fee
in this thread. Or one of his many advisers.
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Old 10-05-2014, 02:41 PM   #50
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..............With 25,000 clients you would think he must be doing something right. Or thats a lot of really dumb people using Edelman financial to build wealth. ..........
Good point. Think how many heroin addicts there are. Must be a good product.
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Old 10-05-2014, 03:31 PM   #51
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Good point. Think how many heroin addicts there are. Must be a good product.
Think how many Americans don't save for retirement.

25,000 investors save with Edelman.
You can rip on Edelman all you want. I don't care.

I am just happy that these 25,000 people are saving for retirement and probably not doing heroin.
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Old 10-05-2014, 03:41 PM   #52
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Think how many Americans don't save for retirement.

25,000 investors save with Edelman.
You can rip on Edelman all you want. I don't care.

I am just happy that these 25,000 people are saving for retirement and probably not doing heroin.
That's the bad thing about today's environment. I hope I can convince my kids they have to save and invest.
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Old 10-05-2014, 03:48 PM   #53
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1.4%!!! Holy dogfarts! Run. They are trying to scare you into paying TEN TIMES what a low cost index portfolio will cost you. This stuff is not rocket science. If you were able to accumulate that kind of money through your own efforts, you will be able to figure out the 4th grade math necessary to manage it yourself.
The guy has a regular radio show on the weekend and his advice is solid as far as I am concerned but his fees are a bit high. I agree with Brewer here though and you can find a low cost portfolio with index funds at a Vanguard.
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Old 10-05-2014, 04:12 PM   #54
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Think how many Americans don't save for retirement.

25,000 investors save with Edelman.
You can rip on Edelman all you want. I don't care. ...........
We get it. You drank the Kool Aid and liked it. I'm not buying it.
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Old 10-05-2014, 04:17 PM   #55
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I know several married couples that stress over saving and investing because they dont agree on how to invest it. So they use a FA at Fidelity.
I'll concede that's probably cheaper than a divorce.
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Old 10-05-2014, 04:41 PM   #56
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Those pirates over at USPA/IRA (then "First Command", and maybe rebranded as something else by now) preyed on military personnel for years with high cost products and tremendous front end loads and fees. There were plenty of retired senior NCOs and retired officers who participated in the fleecing of junior folks. It was an outrage, but there were some people who at least did get the idea of saving as a result of this, and they are probably better off than if this outfit had never existed. That doesn't mean that it is an honorable business or a net "plus" to society.
I think Edelman is better than that crew (which isn't saying much), and provides the handholding that some people need. But it comes at a tremendous cost, and others do provide the same thing at much lower rates.
I'd list Rick Ferri among the "good guys," too. He's written lots of books on how to do your own investing, and he shares his knowledge and reserch online for use by DIYs. If you want, he'll do it for you for a fee of .37% per year, but he never pretends he's doing anything that clients can't do for themselves.
On the positive side--Edelman runs a long radio show on the AM news station in my town, so I guess he's helping to keep that radio station in business, which is good for me.
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Old 10-05-2014, 05:12 PM   #57
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His radio show is carried in my area also. I stopped listening to him when he advised listeners to have a large mortgage. May be ok for some but not for me.


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Old 10-05-2014, 06:38 PM   #58
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Those pirates over at USPA/IRA (then "First Command", and maybe rebranded as something else by now) preyed on military personnel for years with high cost products and tremendous front end loads and fees. There were plenty of retired senior NCOs and retired officers who participated in the fleecing of junior folks. It was an outrage, but there were some people who at least did get the idea of saving as a result of this, and they are probably better off than if this outfit had never existed. That doesn't mean that it is an honorable business or a net "plus" to society.
I think Edelman is better than that crew (which isn't saying much), and provides the handholding that some people need. But it comes at a tremendous cost, and others do provide the same thing at much lower rates.
I'd list Rick Ferri among the "good guys," too. He's written lots of books on how to do your own investing, and he shares his knowledge and reserch online for use by DIYs. If you want, he'll do it for you for a fee of .37% per year, but he never pretends he's doing anything that clients can't do for themselves.
On the positive side--Edelman runs a long radio show on the AM news station in my town, so I guess he's helping to keep that radio station in business, which is good for me.
Yeah I remember the USPA seminar I didn't buy into it. I didn't have a problem with it but it was definitely a sell job. What I didn't like was the "lets get our families together" only to get the Amway pitch.
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Old 10-05-2014, 07:41 PM   #59
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We get it. You drank the Kool Aid and liked it. I'm not buying it.
Ric Edelman has a good radio show. He gives solid advice and often tells his listeners that investing is not hard. He encourages DIY for people who want to go that route.

So why do you have such a problem with him. He helps people invest and save for retirement. Thats a good thing.

His investors are still going to build wealth even with that fee.
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Old 10-05-2014, 07:50 PM   #60
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1.4%. That is reason enough to start throwing poop.
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