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Old 11-23-2014, 05:23 PM   #41
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I'll be 65 in the spring so I'm getting lots of mail from insurance companies wanting to sell me medical insurance. But none of them offer free dinners. Or even lunch. Cheapskates.
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True Cost of Mutual Fund
Old 11-23-2014, 08:55 PM   #42
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True Cost of Mutual Fund

Quote:
Originally Posted by kannon View Post
Morning All -

Had visit with Financial Planner other day - free seminar - I try to pick up information.

I am still leaning towards doing my own "active" management using what I have learned on here, including using low cost Vanguard funds.

In the seminar the planner mentioned that you can't just go by the prospectus expense ratio. You need to include also the other "hidden" fees - management, admin, ... His focus was when you include those fees they are not much different than his charge of 1.4%.

So my question is how do I compare apples to apples??

Do I include the expense ratio and other fees identified in the prospectus against his 1.4%? Does his 1.4% include all of the mutual funds fees or are they on top of them (i.e., 1.4% plus expense ratio + ...)?

For our FIRE we are looking to need about a net 4% long term growth on our investments. Having high expenses can really put strain on fund performance.

Thanks

Kannon

He's merely trying - unsuccessfully in my book - to justify his undeserved fees. Just remember, 1% a year over 25 works out to him getting 25% of your returns.

Vanguard VTSAX has an ER of about .06%. Total. Compare that to his his 1.4%. My 7 digit portfolio averages a total cost of .08% a year. Had I paid some parasite 1.4% I might not have a 7 digit portfolio or any.

You have to ask him what his fee covers. Be prepared for him to be squirrelly, and having to keep trying to pin him down. Good luck.

But the costs of funds differ from company to company. Vanguards costs are what the fund's ER states. I'm stuck with some Oppenheimer funds for a few years, and they're completely opposite.

You don't need to squander your returns on a salesman whose job is to sell you his company's package - which will be expensive. Look hard at Vanguard. Others suggest Fidelity. Find low cost, no load funds to meet your needs. Get a little education. It's not rocket science. It's basic math.

Costs eradicate returns.


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Old 11-24-2014, 05:38 AM   #43
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Originally Posted by Amethyst View Post
Every other dinner has been hosted by financial advises looking for paying clients. I always wonder if they get any.

Amethyst

I think in the financial world vernacular the term is called "chumming" and very appropriate.
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Old 11-24-2014, 08:44 AM   #44
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Originally Posted by seraphim View Post

You have to ask him what his fee covers. Be prepared for him to be squirrelly, and having to keep trying to pin him down. Good luck.

But the costs of funds differ from company to company. Vanguards costs are what the fund's ER states. I'm stuck with some Oppenheimer funds for a few years, and they're completely opposite.

You don't need to squander your returns on a salesman whose job is to sell you his company's package - which will be expensive. Look hard at Vanguard. Others suggest Fidelity. Find low cost, no load funds to meet your needs. Get a little education. It's not rocket science. It's basic math.

Costs eradicate returns.


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Nice post. You mention 3 fund families. Two of them do not charge 12b1 fees or loads, and offer low cost index funds, the other provides high cost funds(with "c" class funds available) that sell through advisors.

All of this information is in the prospectus as required by law.

Take a little time and read the Mutual Fund Factbook (ICI). You will see fund fees dropping over time. It's no secret that no-load index funds from several providers are more popular and perform better than "loaded" funds that are sold through advisors. This ICI download will give you cost ratios for mutual funds in general over time, the trend is index funds and low cost ETFs. Why fight the trend? This FP/FA is living in the 1990's, don't support his outdated sales pitch.

http://www.ici.org/research/stats/factbook

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Old 11-25-2014, 03:51 AM   #45
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Originally Posted by Amethyst View Post
In addition to free dinners for investors, Mr. A., having reached RMD age, now gets invitations to tour local geriatric storage institutions.
I've never encountered that term- love it!

DH and I think the Motor Vehicle Department may sell our info. How else would AARP manage to time their first solicitation? I think mine arrived just about age 50.

I'm also tempted to try one of those "free gourmet dinners"- DH and I get one or two mailings a month. One actually says it's "recommended" for seniors with $500k+ to invest. Most, reading between the lines, are pitching some sort of annuities.

It might be fun to go and ask impertinent questions.
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Old 11-25-2014, 08:11 AM   #46
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I've never encountered that term- love it!

DH and I think the Motor Vehicle Department may sell our info. How else would AARP manage to time their first solicitation? I think mine arrived just about age 50.

I'm also tempted to try one of those "free gourmet dinners"- DH and I get one or two mailings a month. One actually says it's "recommended" for seniors with $500k+ to invest. Most, reading between the lines, are pitching some sort of annuities.

It might be fun to go and ask impertinent questions.
It is fun to go, but that's just me. I really get a lot of info by watching how others react to certain statements. Usually, someone glances over and raises their eyebrows at something bombastic.

Your data, such as age, zip code, income range, and many other characteristics is available for sale from many sources. It is just computers doing what they do best...

FYI, after attending these dinners, I usually file a report with AARP. They have a list of questions on their site, and you go down the list and fill in your answers, then email to them.
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Old 11-25-2014, 10:06 AM   #47
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I think I would rather go to the dentist that the "free" meal. Sounds like it it right up there with timeshare freebie pitches.
Agree. I went to a couple, and enjoyed my dinner companions but the food and the pitch were terrible. I don't get the draw of free food for millionaires, who for the most part are not short of provisions.

Ha
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Old 11-25-2014, 01:04 PM   #48
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I guess I am in ia lucky zipcode. We went to two such chicken dinners week before last (Actually, lunch and dinner on the same day) First was at Ruth Chris Steakhouse (pretty nice steak and scallops) and the dinner at another steakhouse where I had pork chops. No alcohol included.

The first was estate planning sales meeting. Mostly wrapped up around their "proprietary" living trust. The second was asset protection discussing insurance and trusts.

Well worth the hour or two invested to go to places we haven't eaten in before.
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Old 11-25-2014, 02:03 PM   #49
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I don't get the draw of free food for millionaires, who for the most part are not short of provisions.
How do you think we became millionaires?
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Old 11-25-2014, 02:54 PM   #50
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I sometimes imagine these fund advisors pre-gathering before their leader, who then gives a short to the point pep talk:



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