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Financial Company called me today
Old 05-06-2019, 09:15 PM   #1
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Financial Company called me today

I'm assigned an adviser and she calls every now and then. I pay nothing for her advise and will help me with transactions, advise etc. with no fees, no charges.

She told me my equity funds have increased 10% from my original plan over the last three years. So on this one portfolio I'm 73/27 ratio. She was wondering if I wanted to rebalance and if not if I want a automatic rebalance if it gets to high and want to stay in my perimeters.

My question is this. Would it be a wise idea for an automatic rebalance of my account? If I want 70% equities it would have to hit 75% before it would automatically rebalance. I also plan never to have too use this money so I want it to grow if at all possible.

What is your thoughts?
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Old 05-06-2019, 09:19 PM   #2
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If it is a taxable account, I would not set up anything automatic. I want control over when I create taxable events so I can manage my income taxes.

If it is not a taxable account and there is no cost to do so, I would consider it.
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Old 05-06-2019, 09:56 PM   #3
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SecondCor521 >> it is an IRA no taxes will be paid until RMD. I asked about fees or charges to have this done, and she said there is no charge for those services. The company is Homestead Funds and have been very good in helping and giving advise.
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Old 05-06-2019, 10:29 PM   #4
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Well then, I would consider it something that would be OK to do.

I personally don't do anything like that, although I don't think I really have a good reason not to. Probably because I still want to monitor things and make the AA moves myself as somewhat of a control freak.
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Old 05-06-2019, 11:03 PM   #5
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I do have that automatic rebalancing service with DHs IRA at T.RowePrice. Every quarter, they rebalance his 2 mutual funds to the ratios we specified. There is no cost, and I dont see any downside.
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Old 05-06-2019, 11:28 PM   #6
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..... I also plan never to have too use this money so I want it to grow if at all possible.

What is your thoughts?
If you want it to grow why not let it ride? If you never use this money what happens to it? Kids or other heirs or charities?

I'm likely to increase my stock allocation between now and the end because I doubt that I'll need it or spend it all and my heirs are younger and would be 100/0 or 90/10 so letting the stock allocation creep up makes sense to be because to some extent I am investing it for them as much as me.
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Old 05-07-2019, 12:23 AM   #7
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This is pretty good service IMO. What firm?
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Old 05-07-2019, 04:12 AM   #8
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This is pretty good service IMO. What firm?
The OP said above "The company is Homestead Funds and have been very good in helping and giving advise."
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Old 05-07-2019, 06:20 AM   #9
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If I want 70% equities it would have to hit 75% before it would automatically rebalance. I also plan never to have too use this money so I want it to grow if at all possible.

What is your thoughts?
You wanted a 70% equity portion. That being the case, it sure seems you should sign on to the [free] automatic rebalancing. The portfolio will definitely grow as the market goes up. Markets also go down, though, which is why we all choose our own equities/bonds ratio. I suggest you accept this service. Keep in mind if the market tanks, your ratio may go the other way and then rebalancing will mean buying equities in a down market.
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Old 05-07-2019, 06:48 AM   #10
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Great advise and again I thank you for your knowledge. So, does anyone see any negatives to rebalancing verses just letting it ride like I have done through out my 40 years of investing?

This company has been top notch and have helped me often in decisions and questions on my investments. If I do rebalance she said to call her and she would walk me through the processes on line on the web site. I might do it today if I can get a little more confidence builder from you folks. Lol
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Old 05-07-2019, 07:04 AM   #11
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If you plan never to touch the funds I see no downside to simply letting it ride.
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Old 05-07-2019, 07:13 AM   #12
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FWIW, Homestead Funds seem to have a relatively high expense ratio compared to similar funds elsewhere. I would think about whether that's the best place for the money.
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Old 05-07-2019, 07:16 AM   #13
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^ I would imagine over time when letting it just ride my equity funds would increase, is that true? I been wanting to increase them but I have had good luck not doing anything so I have let them rise and fall on their own.

Yes, I want it to grow for charity and heirs. So, to get the most out of these funds, letting it ride my be the best advise to max my growth.
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Old 05-07-2019, 08:18 AM   #14
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FWIW, Homestead Funds seem to have a relatively high expense ratio compared to similar funds elsewhere. I would think about whether that's the best place for the money.

Cheaper then some and of course higher then a couple companys that most use here. I have been with them and feel comfortable with them and there are things they do that don't cost so I will stay with them with this account.
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Old 05-07-2019, 09:30 AM   #15
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^ I would imagine over time when letting it just ride my equity funds would increase, is that true? I been wanting to increase them but I have had good luck not doing anything so I have let them rise and fall on their own.

Yes, I want it to grow for charity and heirs. So, to get the most out of these funds, letting it ride my be the best advise to max my growth.
That is what I would think... if you don't need the money let it ride and it is most likely that there will be more for your heirs and charities... why don't you talk over that angle with your FA and see what she thinks?
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Old 05-07-2019, 12:36 PM   #16
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That is what I would think... if you don't need the money let it ride and it is most likely that there will be more for your heirs and charities... why don't you talk over that angle with your FA and see what she thinks?
Thanks for your advise, I do appreciate your knowledge. They seem to want me to totally understand that I could loose a lot of money if things went south. My impression is she watches out for me and gives advise to make sure I understand.

So, pb4uski if I let thing just ride will my equity funds most likely keep going up in percentage? I'm also talking very long term commitment.
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Old 05-07-2019, 01:08 PM   #17
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I think it is well established that over the long run that equities outperform fixed income.... the ride might be more bumpy, but the returns are better. So therefore, a rising equity portfolio would reasonably be expected to outperform a 70/30 portfolio that is rebalanced annually.

Ask her the same question and see what she says.

Obviously, future results could differ from past results and it may not work out, in which case heirs and charities will get less than what they would get with 70/30 rebalanced... but if that happens they will never know that you took an educated gamble with "their" money that didn't work out.... same if you let it ride and it works out... all they'll know is that they are getting a bundle of moolah.
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Old 05-07-2019, 01:16 PM   #18
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Thanks Sir, I appreciate that and remember I know very little about financing and like I said before if not for the one thing I did right (save) I would be still working today. Lol

If I would have had this site 35 years ago and I wouldn't have made so many mistakes along the way.
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Old 05-07-2019, 02:27 PM   #19
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@street, I think that you have a good handle on what you are you doing. I suggest, though that you run your current fund mix through PortfolioVusualizer and compare the results against a low cost total US market fund. That will make it clear what you're paying in fees and any fund underperformance . You can then decide whether the good service you're getting is worth the cost. I'm not prejudging here, simply suggesting that you take a disciplined look.
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Old 05-07-2019, 05:04 PM   #20
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@street, I think that you have a good handle on what you are you doing. I suggest, though that you run your current fund mix through PortfolioVusualizer and compare the results against a low cost total US market fund. That will make it clear what you're paying in fees and any fund underperformance . You can then decide whether the good service you're getting is worth the cost. I'm not prejudging here, simply suggesting that you take a disciplined look.
Thanks for making me aware of that and I will look into it. I guess there really is places to do business for free. I didn't think there was a free thing left in this world besides walking. Lol

Thanks I will do some looking.
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