Thoughts on Fees ??

[gerntz]

I did not mean they get 33% of the total, but 33% as much as you get. You get 3 dollars and they get 1. So they get 1/3 of what you are getting.

No. He said he gets $40 & FA gets $10 or 20% of total take or 25% of what he gets/takes. Of course he could choose to take $100 or $0, & FA still gets $10.

 

[FlaGator]

I knew I should have explained this better. Example: your projected total SWR is 4%. If you have a 1M portfolio, you can then safely withdraw $40,000 per year. If your FA is taking 1%, then they get $10,000 per year. You get only $30,000 (you have already determined that that the total SWR is 4% or $40,000 no matter where it goes, the total is always only $40,000).

This means you get $30,000 per year and they get $10,000 per year. They get 33% as much as you get, from your own money. That is $25 to every $75 you get, or $33 to every $100 you get, or 10K to every 30K you get.

I did not mean they get 33% of the total, but 33% as much as you get. You get 3 dollars and they get 1. So they get 1/3 of what you are getting.

To my mind this is the correct way to look at it, because what you really care about after determining the SWR is how much YOU get to spend, not the total withdrawal. So... the FA gets to spend 1/3 as much as you, are they really worth that?

My numbers were correct, but I did not explain it well. Hope this does better.

That's one way to look at it.

Here's another:
Year 1:
1,000,000 portfolio at year end.

FA takes $10,000 (1%)
SWR of 4% on $990,000 = $39,600

Year 2:
5% pre-tax return on 950,400 (990,000-39,600) = 997,920 at year end
Less 1% to the FA (9,979) = 987,941
SWR of 4% on 987,941 = 39,517 (997,920-9,979*.04)

Help me understand which is the better way to look at, and why.

 

[CaliforniaMan]

That's one way to look at it.

Here's another:
Year 1:
1,000,000 portfolio at year end.

FA takes $10,000 (1%)
SWR of 4% on $990,000 = $39,600

Year 2:
5% pre-tax return on 950,400 (990,000-39,600) = 997,920 at year end
Less 1% to the FA (9,979) = 987,941
SWR of 4% on 987,941 = 39,517 (997,920-9,979*.04)

Help me understand which is the better way to look at, and why.

$39600+$10000 =$49600 which is a 4.96% withdrawal rate, not 4%. You are seeing a higher withdrawal amount because you are in actuality using a higher withdrawal rate.

 

[jimbee]

Post #32:

"But that assumes DIY is frustrating"

Once again, the mention of frustration originated in skipro33's post, ERD50's post just expanded on it. ERD50 did not decide if someone else was frustrated with DIY investing. Skipro33 stated he did not want to frustrate himself trying to figure it out.

 

[ERD50]

Originally Posted by gerntz View Post
Post #32:

"But that assumes DIY is frustrating"

Once again, the mention of frustration originated in skipro33's post, ERD50's post just expanded on it. ERD50 did not decide if someone else was frustrated with DIY investing. Skipro33 stated he did not want to frustrate himself trying to figure it out.

I wasn't following gerntz's comment, but maybe some further context will help?

What I was trying to say is, it looks like Skipro33's "frustration" comes from trying to make it complicated. But "lazy portfolios" are not complicated, take almost no time/effort to set up and 'maintain', so if he were to follow that mode, I would not expect him to be frustrated.

Does that help?

-ERD50

 

[sallie50th]

I have been paying 1% to advisor, now planning to transfer all to Vanguard advisor at one third current cost. Have some money in Schwab not-so-Intelligent Portfolio, which has lost money for these past 2 years, although in conservative plan. I really know how to pick ‘em. Please tell me I can count on Vanguard to do better for me.

 

[VanWinkle]

I have been paying 1% to advisor, now planning to transfer all to Vanguard advisor at one third current cost. Have some money in Schwab not-so-Intelligent Portfolio, which has lost money for these past 2 years, although in conservative plan. I really know how to pick ‘em. Please tell me I can count on Vanguard to do better for me.

You should do at least .70 better due to lower costs. Most people lost some
last year, but 2017 should have been up over 12% with a 50\50 portfolio.

 

[travelover]

....... Please tell me I can count on Vanguard to do better for me.

You really have to compare to bench marks. For example, your domestic stock returns should at least be equal to a S&P 500 index.

 

[sallie50th]

Thank you

I feel better already. Why pay people to lose my money? I can do that myself for free.

 

[VanWinkle]

I feel better already. Why pay people to lose my money? I can do that myself for free.

Great quote sallie50th, Just buy the market with index funds in a asset allocation you can live with. If the market gains, you gain.

 

[Dtail]

These days if you are buying index funds and self managing, your fees should be under .05%.

 

[travelover]

I feel better already. Why pay people to lose my money? I can do that myself for free.

Because they hope the FA will do better than the market. Once in a while, they do. Hope is eternal.

 

[HI Bill]

My example is I have a WR of 4% and a fee of 1% and the guy is making me 18% so my net worth is increasing at 13%.

I your guy named Bernie? We should all use your advisor!