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Re: So much for ER in 2010... (longish)
Old 08-15-2006, 11:43 AM   #21
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Re: So much for ER in 2010... (longish)

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Originally Posted by bongo2
retirement in your 40's, but, for many reasons, very few people seem to make it.**
For many reasons, I believe the same thing.* Without a full breakdown of total expenses (current and future), expected retirement income (gross/net) and ratio against current income, it seems hard to establish if there actually is a "plan" with the information given.

All references to investment expenses in the subject responses are just "part of the whole" (and a very small one at that) but don't necessarily answer the question "can I/we retire in our 40's?

Without going into detail, I can give you an example of what I'm saying, as related to our own plan:

My retirement is set for January 1, 2007 (my wife at June 1, 2007), both at age 59.

Our retirement goal in $$$ is set at our current net income, adjusted to a gross value to include taxes (that eliminates our current retirement contributions, and also reduces our taxes due to our "state income tax on retirement income"), rather than the classic 85% of income.* We will in fact, be retiring at slightly over 100% of current income, adjusted for 3% inflation, going forward (we can debate that one in another thread!)

Our expenses are broken down by category, by month, based upon actual expenses* during the last 10 years.* This is done to reflect those items that are not actual, but expensed over a long term period (such as roof, heat pump, water heater, etc.) for a period other than one year.

While validated through 5 separate software tools, we also took the "offine forecast" of 25x our first year income requirments (e.g. 4% withdrawl), and meet the expected results in "six different measurement/tools".

In addition, for the investment mix of 55/45 that we currently hold (reduced from 90/10 5 years ago), our actual expense ratio is 0.59% against our entire portfolio.

I'm not saying what you should do - I'm just showing an example of what we did to validate our decision to retire at the age of 59 (early? maybe not, but it's still better than 62/65/later).

- Ron
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Re: So much for ER in 2010... (longish)
Old 08-15-2006, 12:07 PM   #22
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Re: So much for ER in 2010... (longish)


Peggy,

You should certainly look into lower expense/better return funds. You're paying twice: once for the higher expenses, and second for the weak performance of your funds vs. the benchmarks (at least all the ones I checked).

You should also check how you are calculating your returns. Even with the funds you're in, you should have seen at least some returns in the last three years. Certainly better than flat. (You might be flat over the last five, but your original post said last three years).

Mark
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Re: So much for ER in 2010... (longish)
Old 08-16-2006, 03:28 PM   #23
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Re: So much for ER in 2010... (longish)

Peggy, plug all of your portfolio into the Morningstar fund X-ray to get a read on total fund expenses, then ask your charming, personal friend at AG Edwards about your AEG account expenses. The sum of those two is where your returns went. There was nothing left for you. Store your portfolio in M* xray, then input a similar portfolio using Vanguard funds. Look at the difference in total expenses.
I've paid as much as 2% and 2.5% to my former advisor for investing me in high expense funds from Oppenheimer and Morgan,Stanley. He wouldn't combine my two accounts to get past the break points. The leech retired at 50 to beachfront in Australia. He was getting small kickbacks from the expensive funds, some of which even had front loads, or B and C shares that cost more over time.
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Re: So much for ER in 2010... (longish)
Old 08-16-2006, 03:32 PM   #24
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Re: So much for ER in 2010... (longish)

Heyyou is on the money. I got away from AG edwards last year. If I had the money in fees I paid these guys over the years I'd be retired already.
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Re: So much for ER in 2010... (longish)
Old 08-16-2006, 04:58 PM   #25
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Re: So much for ER in 2010... (longish)

Wow... nice thing at morningstar...

I was surprised to see I was at .36 for my Vanguard portion... but my 401 is probably higher...
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Re: So much for ER in 2010... (longish)
Old 08-21-2006, 03:29 PM   #26
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Re: So much for ER in 2010... (longish)

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Originally Posted by justin
1.8% is just the start of the true cost.* Front end and back end loads (if applicable).* Bid/Ask Spreads.* Market Impact costs.* Trading commissions.* All the costs add up quickly.*
Those costs occur at Vanguard too...............it's not like they get trades for free and the load funds have to pay...............
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Re: So much for ER in 2010... (longish)
Old 08-21-2006, 03:35 PM   #27
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Re: So much for ER in 2010... (longish)

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Originally Posted by FinanceDude
Those costs occur at Vanguard too...............it's not like they get trades for free and the load funds have to pay...............
Yeah, but index funds typically trade a LOT less than actively managed load funds. That means there is a lot less to pay in commissions and bid-ask spreads.

Careful, your bias is showing.
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Re: So much for ER in 2010... (longish)
Old 08-21-2006, 03:39 PM   #28
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Re: So much for ER in 2010... (longish)

The other thing is that many funds have a kickback type arrangement with trading costs and spreads. Yes Vanguard has costs but they don't ream their shareholders in hidden and undisclosed (extra) costs.

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Re: So much for ER in 2010... (longish)
Old 08-21-2006, 05:04 PM   #29
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Re: So much for ER in 2010... (longish)

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Originally Posted by FinanceDude
Those costs occur at Vanguard too...............it's not like they get trades for free and the load funds have to pay...............
I'd prefer costs due to bid/ask spreads, market impact costs, and trading commissions on 10-15% turnover per year in a vanguard index fund versus triple digit% turnover in a lot of the funds the OP mentioned. That is, if my goal is to save more money for myself and pay less money to the specialists, market makers, and brokerages. Some people just like paying more for less, though. So to each their own.
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Re: So much for ER in 2010... (longish)
Old 08-21-2006, 09:04 PM   #30
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Re: So much for ER in 2010... (longish)

Another vote for getting to lower cost funds.

Quote:
Could we save more than 30% of our gross?
If you haven't yet become a frugalista, you could probably learn to save a lot more with no pain. With the help of this forum and The Tightwad Gazette, we now spend about $30K per year less than we used to, and don't miss the stuff we gave up.
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Re: So much for ER in 2010... (longish)
Old 08-21-2006, 10:12 PM   #31
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Re: So much for ER in 2010... (longish)

What bias? I have index funds myself.......

NO ONE really KNOWS what the trading costs are, because mutual fund companies ARE NOT required under SEC law to report them. I think WE ALL would be surprised at the true "costs" of mutual funds..............

Best objective resource I have come across is: www.fundalarm.com They have been around for 10 years, are run by a funny CPA (not many of those around), and his monthly highlights and commentary are hilarious...........he's a pretty big fan of no-loads.........
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Re: So much for ER in 2010... (longish)
Old 08-22-2006, 10:00 AM   #32
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Re: So much for ER in 2010... (longish)

Sorry for the delay in responding to suggestions, but RL has, as usual, interfered. Between DH sitting on a jury and our broker being on vacation, I've only just gotten more info.

First, AG Edwards has a $40 per year fee on IRA accounts (we have two regular IRA accounts with them and two ROTH IRA accounts, so $160 per year total), but no other brokerage fees.

Second, we've made an appointment with the broker for next Friday (damn jury duty, delaying everything), and we are going in with a comparable portfolio set-up from Vanguard (complete with comparison of expense fees and returns from Morningstar), and see what possible justification for remaining in high-fee funds there can be. We have a warped and twisted sense of humor.

Finally, thanks everyone for the suggestions and information. This board is THE resource for early-retirement-minded folks, and though I lurk more than post, I have learned an awful lot from y'all.

I'll let you know what the broker says. Should be amusing.


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Re: So much for ER in 2010... (longish)
Old 08-22-2006, 10:08 AM   #33
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Re: So much for ER in 2010... (longish)

peggy, just get ready for a full court press to try to get you to keep you with the vampires.
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Re: So much for ER in 2010... (longish)
Old 08-22-2006, 10:16 AM   #34
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Re: So much for ER in 2010... (longish)

Peggy,

I was also with AG Edwards. 2 years ago when I started to read this forum and the books that are mentioned here I woke up.

IMHO get your money away from those people as soon as you can. Everything they do is to generate money for themselves.

Everything I have now is with vanguard and I'm a happy camper.
I still have some Oppenheimer and DWS funds that my broker put me in years ago. The only reason I didn't sell them as of yet is because they are in taxable accounts and I don't want to have a taxable event while I'm still working. By next year I will be out of them also.

It does my heart good to know that vanguard and not my broker is getting the 12B1 fees until I sell them.
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Re: So much for ER in 2010... (longish)
Old 08-22-2006, 10:41 AM   #35
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Re: So much for ER in 2010... (longish)

Quote:
Originally Posted by brewer12345
peggy, just get ready for a full court press to try to get you to keep you with the vampires.
I'd bring a cross and a garlic necklace...............
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Re: So much for ER in 2010... (longish)
Old 08-22-2006, 10:47 AM   #36
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Re: So much for ER in 2010... (longish)

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Peggy,
It does my heart good to know that vanguard and not my broker is getting the 12B1 fees until I sell them.
Acutally, NO ONE should be getting 12b-1 fees. They were "invented" in 1980 by the fund industry to help the struggling mutual fund industry. The theory was that as the funds grew bigger, they could be elminated because economies of scale would allow it. However, the fund companies have been using it to pay brokers and soft money "donations" to many broker dealers.

Keep in mind companies like Vanguard and Fidelity PAY their 12b-1's to marketplace firms like Schwab and others to get distribution. Just want everyone to know that 12b-1's are a big monster, and unlikely to change anytime soon...........

Although I get some 12b-1 trailers, my shift to a fee-based business has nearly removed 12b-1's from my book..........and I have no problem with that.............
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Re: So much for ER in 2010... (longish)
Old 08-24-2006, 04:41 PM   #37
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Re: So much for ER in 2010... (longish)

I split off the discussion on SOX, ETFs and covered calls and put it in this thread: http://early-retirement.org/forums/i...p?topic=9264.0
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Re: So much for ER in 2010... (longish)
Old 08-28-2006, 09:39 AM   #38
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Re: So much for ER in 2010... (longish)

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I split off the discussion on SOX, ETFs and covered calls and put it in this thread: http://early-retirement.org/forums/i...p?topic=9264.0
I think that killed the thread............
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Re: So much for ER in 2010... (longish)
Old 08-28-2006, 09:44 AM   #39
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Re: So much for ER in 2010... (longish)

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Keep in mind companies like Vanguard and Fidelity PAY their 12b-1's to marketplace firms like Schwab and others to get distribution. Just want everyone to know that 12b-1's are a big monster, and unlikely to change anytime soon...........
Just so people don't get confused. Vanguard doesn't have any 12b-1 fees. That is why they aren't a part of any of the fund supermarkets.

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Re: So much for ER in 2010... (longish)
Old 08-28-2006, 10:41 AM   #40
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Re: So much for ER in 2010... (longish)

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Just so people don't get confused.* Vanguard doesn't have any 12b-1 fees.* That is why they aren't a part of any of the fund supermarkets.
Good point..........I will say I can buy almost ANY Vanguard fund my client wants, they just have to pay a $50 transaction fee that most clearing firms charge, and I beleive they split it with Vanguard............
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