Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 05-29-2012, 06:40 AM   #21
Dryer sheet wannabe
Hud3's Avatar
 
Join Date: May 2012
Location: Nevis, West Indies
Posts: 22
Quote:
Originally Posted by borschelrh View Post
...Some are fees within fees so it is a hidden cost and some were even as high as 5% plus whatever other fees were added after that. I used 2.5% as a low estimate...
Vanguard tells me that my overall portfolio management costs are 0.14%. And, as an owner of Vanguard funds, I share ownership of the company and it's "profits", viz.

Quote:
Invest at Cost

We're different from other mutual fund companies because we're owned by our funds, which are owned by our clients. We don't generate profits for private owners or stockholders. We return profits to you as cost savings, so you keep more of your investment return
I wonder if they're fibbing...
__________________

__________________
Hud
Hud3 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-29-2012, 08:37 AM   #22
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
Originally Posted by frugalinvestor View Post
Besides inflation and healthcare costs as huge wildcards for those of us seeking FIRE in about 20 years, realistic annual stock returns are the great unknown in the next 20 years.

When I attempt to get to the "number" I need, I figure the overall market will return as follows. I would like to hear what others see as realistic after inflation returns:

total us stock index 4%
Total intl index 3%
Total bond index 1.5%

Am I too pessimistic?
Long term TIPS are under 0.5%. (I used to think that was a "safe" investment, but now I'm beginning to understand that there is more political risk there than I thought.) So your bond index doesn't look pessimistic to me, that suggests a 1.0% spread over treasuries, net of defaults.

The S&P 500 has a dividend yield around 2%. Shiller's P/E10 is over 20. If earnings go up 2% faster than inflation, and the P/E doesn't change, then prices will go up at a real 2%, giving a 4% real return. The number of US workers isn't going up at 2% per year, so that means real US profits per worker have to grow faster than inflation. Seems like a challenge.

But, the S&P 500 isn't US stocks anymore. Even companies domiciled in the US get much of their revenue from foreign operations, so it's possible to invest in "US" stocks and get international growth rates. That's a tangle I can't imagine unraveling.
__________________

__________________
Independent is offline   Reply With Quote
Old 05-29-2012, 08:54 AM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,468
Quote:
Originally Posted by borschelrh View Post
....Letting passive traders such as mutual funds manage your accounts (same for 401K accounts) is just putting money in the pockets of those fund managers. Typically it is a 2.5% take on your entire account per year whether or not you actually made any profit so calculate that into the equation as well. .....
Ignorant comment. My aggregate expense ratio is 0.16% and the industry average is 1.12%. Where in the world do you get the idea that 2.5% is typical? Perhaps you are paying too much.
__________________
pb4uski is online now   Reply With Quote
Old 05-29-2012, 08:57 AM   #24
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
Keeping fees to a minimum will make any return you get better. My 401a fees are 0.75% which I consider high, but that's offset by the 6% employer contribution. My 403b and 457 plans both have total fees below 0.1%.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Old 05-29-2012, 09:45 AM   #25
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 514
Quote:
Originally Posted by borschelrh View Post
You can diss it all you want but we make 100% a year in bad years.
Really?

Guaranteed?

Will you put that in writing? 'Cause if so, I'll give you my entire portfolio.

No? Didn't think so.
__________________
kombat is offline   Reply With Quote
Old 05-29-2012, 09:49 AM   #26
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 514
(Re: Passive funds charging fees of 2.5+%)

Quote:
Originally Posted by borschelrh View Post
Actually take a look at them, it is buried in there. I was surprised when I actually took the time to analyze my 401K accounts before I transferred the ones I could to Scottrade. Some are fees within fees so it is a hidden cost and some were even as high as 5% plus whatever other fees were added after that. I used 2.5% as a low estimate.
Those are for actively managed funds, not passive. Nobody pays 2.5% for a passively-managed index fund.
__________________
kombat is offline   Reply With Quote
Old 05-29-2012, 10:01 AM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,288
Quote:
Originally Posted by borschelrh View Post
You can diss it all you want but we make 100% a year in bad years.
And how many years have you been investing


And what is a good year
__________________
Texas Proud is offline   Reply With Quote
Old 05-29-2012, 02:21 PM   #28
Moderator Emeritus
 
Join Date: Oct 2007
Posts: 4,929
Quote:
Originally Posted by kombat
(Re: Passive funds charging fees of 2.5+%)

Those are for actively managed funds, not passive. Nobody pays 2.5% for a passively-managed index fund.
Well, unless they are stuck with a 401K run by an insurance company. DS is stuck with one of these. Reading the prospecti is... interesting. One fund simply invests everything in QQQ, and charges a management fee of 1.2% this year. Definitely not vanguarding...
__________________
M Paquette is offline   Reply With Quote
Old 05-29-2012, 02:36 PM   #29
Full time employment: Posting here.
EvrClrx311's Avatar
 
Join Date: Feb 2012
Posts: 524
Quote:
Originally Posted by borschelrh View Post
You can diss it all you want but we make 100% a year in bad years.
I'll stake you another $100K and I'll let you keep all of the returns above 50% a year...

wait, this smells a lot like a Ponzi...

Me--->
__________________
EvrClrx311 is offline   Reply With Quote
Old 05-29-2012, 03:04 PM   #30
Recycles dryer sheets
 
Join Date: May 2009
Location: Balatonfured, Hungary
Posts: 69
Another article: Mutual Fund Trading Costs Go Unreported - WSJ.com

Perhaps it is more in line with 1.2% BUT reading on it I believe I am correct in what I am saying. There are a lot of hidden and deeply buried costs which may be hidden in the transaction fees. These funds are making their managers wealthy and operate at a profit. 1.2% is a bad business model so the money is coming from somewhere so you need to look closer at where that might be coming from. Plus they invest your money for their own purposes and do not share those profits with you.

For my corporate 401k I was not only charged fees as part of the mutual fund packages offered but also had to pay $150 a year for the privileged of having a 4091k with my company. As I said before I do not want or need anyone to manage and use my money.
__________________
borschelrh is offline   Reply With Quote
Old 05-29-2012, 03:07 PM   #31
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,137
Quote:
Originally Posted by borschelrh View Post
1.2% is a bad business model so the money is coming from somewhere so you need to look closer at where that might be coming from. Plus they invest your money for their own purposes and do not share those profits with you.
I understand they invest heavily in tinfoil futures.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 05-29-2012, 03:26 PM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
IOW...
Attached Images
File Type: jpg dont_touch_my_junk.jpg (25.7 KB, 154 views)
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 05-29-2012, 03:31 PM   #33
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
I don't know what kind of real returns to expect over the next 20 years, but if I can achieve 2.5-3% (right in line with my planned WR), I'll be happy.
__________________
FIREd is offline   Reply With Quote
Old 05-29-2012, 08:05 PM   #34
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
Quote:
Originally Posted by borschelrh View Post
Another article: Mutual Fund Trading Costs Go Unreported - WSJ.com

There are a lot of hidden and deeply buried costs which may be hidden in the transaction fees. These funds are making their managers wealthy and operate at a profit. 1.2% is a bad business model so the money is coming from somewhere so you need to look closer at where that might be coming from. Plus they invest your money for their own purposes and do not share those profits with you.
The vast majority of participants in this forum probably agree with your sentiments regarding mutual funds. Therefore, they seek out low fees and are well aware of the transaction costs associated with mutual funds. I think you should research Vanguard Admiral Class funds.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Old 05-29-2012, 09:28 PM   #35
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,468
Quote:
Originally Posted by borschelrh View Post
Another article: Mutual Fund Trading Costs Go Unreported - WSJ.com

Perhaps it is more in line with 1.2% BUT reading on it I believe I am correct in what I am saying. There are a lot of hidden and deeply buried costs which may be hidden in the transaction fees. These funds are making their managers wealthy and operate at a profit. 1.2% is a bad business model so the money is coming from somewhere so you need to look closer at where that might be coming from. Plus they invest your money for their own purposes and do not share those profits with you.

For my corporate 401k I was not only charged fees as part of the mutual fund packages offered but also had to pay $150 a year for the privileged of having a 4091k with my company. As I said before I do not want or need anyone to manage and use my money.
The article is a perceptive glimpse of the obvious. The fact that transaction costs are not included in expense ratios and will vary with trading activity is well known, but an investor with a similar portfolio of individual stocks making the same trades would incur the same costs so it would be a wash.
__________________
pb4uski is online now   Reply With Quote
Old 05-29-2012, 09:32 PM   #36
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
I think this may become my all-time favorite thread.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 05-29-2012, 09:41 PM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,468
Where is Porky when you want him?
__________________
pb4uski is online now   Reply With Quote
Old 05-29-2012, 09:46 PM   #38
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,137
Quote:
Originally Posted by pb4uski View Post
Where is Porky when you want him?
Day trading...
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 05-29-2012, 09:59 PM   #39
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,468
__________________
pb4uski is online now   Reply With Quote
Old 05-29-2012, 10:24 PM   #40
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,695
Quote:
Originally Posted by borschelrh View Post
Another article: Mutual Fund Trading Costs Go Unreported - WSJ.com

Perhaps it is more in line with 1.2% BUT reading on it I believe I am correct in what I am saying. There are a lot of hidden and deeply buried costs which may be hidden in the transaction fees. These funds are making their managers wealthy and operate at a profit. 1.2% is a bad business model so the money is coming from somewhere so you need to look closer at where that might be coming from. Plus they invest your money for their own purposes and do not share those profits with you.

For my corporate 401k I was not only charged fees as part of the mutual fund packages offered but also had to pay $150 a year for the privileged of having a 4091k with my company. As I said before I do not want or need anyone to manage and use my money.
Many of us here, as ReWahoo noted, use Vanguard. Also we are not locked in 401k's. Take a look at their ETF index funds which have ER's of 0.10%. Some of these ETF's with low bid ask spreads are: VTV (large value index), VEU (international), VOE (mid value index).

We are on thread drift here and I'll get off this subject.
__________________

__________________
Lsbcal is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 10:07 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.