Hello everyone

[spitfire]

Just found this site by accident. Retired this year.
Investigating investment strategies on line and with planners.
Anyone have any advice/thoughts on putting all or most of money with one fund family or investment firm? Seems like an "eggs in one basket" situation.
Thanks.

[charlie]

Hi Spitfire,

Many of us on this forum are comfortable with most
of our money invested with Vanguard. And, many
of us think you should ditch the planners.

Cheers,

Charlie

[BUM]

Welcome spitfire. I second what charlie said....all in favor?

[MRGALT2U]

Well, I have no stocks but otherwise Charlie and I frequently agree. We are in the same age bracket which may account for it. Re. "ditch the planners",
agree 100% on that advice.

JG

[wildcat]

If you need a financial salesman or I'm sorry planner use a fee-based only. Don't get me wrong some are professional but I would never give them my money. I agree with the wise guys around here. Vanguard with give you the most bang for your buck. And I suppose you could have found this website by accident but I say it was fate

[azanon]

For all-in-one's I also like T. Rowe Price, Fidelity, or American Century. * But Vanguard is great too. * Lot of these guys here are index fund junkies, so vanguard probably has the best offering in that regard. *I personally like a mix of index and active management, but get my index fix from my federal TSP.

I disagree with a general premise of this site; *I think investment fees is actually a minor factor, compared to simply choosing the correct asset classes, proper weightings, and sticking to your plan long term (no market timing). *I think some could pick a fund company with even nasty loads on top of the fees (like American funds), but if they picked the proper asset classes and proven fund managers, they'll do just fine, maybe even great. *

If you do your homework, there are some damn good actively managed funds out there. *Take one I own for instance; *American Century Equity Income. *Can you say "owned" S&P500?

I use American Century and USAA.

[Helen]

Quote:

I disagree with a general premise of this site; *I think investment fees is actually a minor factor, compared to simply choosing the correct asset classes, proper weightings, and sticking to your plan long term (no market timing). *I think some could pick a fund company with even nasty loads on top of the fees (like American funds), but if they picked the proper asset classes and proven fund managers, they'll do just fine, maybe even great. * If you do your homework, there are some damn good actively managed funds out there. *Take one I own for instance; *American Century Equity Income. *Can you say "owned" S&P500? I use American Century and USAA.

Yikes, they got to you .... that sounds like propaganda from the financial sector. *Investment fees have nothing to do with asset allocation. *Vanguard and Fidelity have hundreds of low cost load free funds of which you can create a portfolio based on just about any asset allocation plan. *So why not pick low cost funds to implement your assets allocation plan ?

Have you ever run the numbers to see what a 1% management fee actually costs an investor over a 40 year period of time ? * You lose 1% of your portfolio's ability to compound each year over a forty year period of time - ouch !!!! *Here's a very simplified example:

$10,000 invested for 40 years with no mgmt fees earning 7% per year = $163,114

$10,000 invested for 40 years with 1% mgmt fees earning 7% per year = $109,574

That's a huge difference !!!!

Another way to look at it is - If investment fees costs someone 1% per year and they are trying to live off 4% of their portfolio per year then that's a pretty big chunk of change. *That 1% could be your fun money in retirement.

More than 85% of actively managed funds can't beat their index fund counterpart over long periods of time. *So what are you really getting for that extra you are spending ?

So, yes asset allocation is important, but don't negate the importance of keeping expenses low as well.

-helen

[BUM]

You go girl!

[ESRBob]

Azanon,
Pick up a copy of Larry Swedroe's books from the library, e.g. What Wall Street Doesn't Want you to know. Its pretty well loaded with stats and studies to back up Helen -- I know it's nice to find a good fund, but the fees do matter over the long run.

Interestingly, I still find some value funds which seem to consistently beat the value indexes, e.g. VG Windsor II.

I am thinking it might be because the index is only re-set once a year and some value plays run through their cycles in less time than that, or need to be bought into the fund after a pratfall during moment of maximum pessimism. The lift isn't much, 1% or so, but it means a lot to see an actively managed fund consistently beat its real index (notice I am not comparing Windsor II to SP500, but only to Value Index. windsor II and most other large value has trounced SP500 or large growth at ytd, one, five and ten year)

[rapoole]

Hi Spit-

On the subject of fees and mutual funds, read Bogle on Mutual Funds. Jack Bogle is the founder of Vanguard funds, but he also wrote the best book ever on mutual funds. He argues persuasively that indexing is the way to go, and that low fees are crucial to long term performance.

FYI, Vanguard is a longtime leader in the low fee area, but in the past couple of years, Fidelity seems to have gotten religion, and now is quite competitive. For example, Fidelity's S&P 500 index fund now has fees of .10%, compared to .18% at Vanguard. Typical fees for actively managed equity funds are 10 to 15 times that much.

Welcome to the board. There are some pretty interesting characters here.

rapoole2000

[cfcf]

The vast majority of active posters to this forum seem to handle their own finances, and seem to go with index funds. (I realize there are probably 100x more people lurking here that might do otherwise).

For those of you who despise financial planners and decided to pick and manage your own portfolio, can you please comment on your view and handling of things such as:

fund picks
Morningstar, Value Line, other industry ratings
fund risk
fund turnover rates
manager longevity
fund longevity
fund performance relative to indices & peers over various times
tax efficiency of holdings and buy/sell decisions
when to buy/sell new shares
when and what to rebalance
x-dividend dates
short/long term capital gains
making the best of losses
etc.

These are all things a good account manager considers or does (for a fee), and I'm just curious if people in this forum have a method, routine, or crib sheet on how to handle all this information and decision-making.

Thanks!

cfcf

[charlie]

Hi cfcf,

You can eliminate many of your questions by just
buying low cost index funds.

The first thing you need to do is pick the stock/bond
ratio that you can stick with through thick and thin.

If you are just starting, DCA or value average into
your funds with new money to keep them in
balance.

You can be a "lumper" or a "splitter" .....a la a
Target Retirement fund or take the "coffeehouse"
approach. I think either will do just fine over
the long term. The more aggressive among us
like to spice up things with REITs, and international
stock and bond exposure. But, IMHO, those only
add a little return at the margin over the long term.

Accumulation and Distribution are quite different.
Personally, I think you can put things on autopilot
during accumulation and not worry about it.

Distribution is harder, I think, because you need to
take care not to sell off you stock accounts in a down
year and you need to maximize income from your
bond funds.

As for tax-sheltered vs. taxable accounts, you need
to put tax efficient stock funds and tax deferred
bonds like I-bonds and EE bonds in your taxable.

Put assets like TIPS, small cap value, REITS, bond
funds and other tax inefficient investments into
your sheltered account.

When you are drawing down, rebalance annually
by selling your winners, if any.

Keep 3 years of withdrawal in cash to cushion
bad stock years and allow rebalancing during
the drawdown phase.

During accumulation, take advantage of company
matching in your 401k ......but don't overdo it.
I think taxes are likely to be a lot higher in the
future. After getting the company match, invest
in a ROTH up to the max and then put what
ever you can into a taxable account. Remember
that you will only be paying capital gains taxes
and tax on dividends at 15% max (if that holds up)

Cheers,

Charlie

[Ol_Rancher]

Most of my equity money is in American Funds but unless you get to a decent breakpoint (mine is 2% rather than the 5 3/4 %) you should go with Vanguard.

I have been satisfied overall with the American Fund family in up and down markets. They are prudent with relatively low turnover, pay decent dividends, and the front load means most investors are buy and hold. Their fees are low compared to most all other managed funds.

Worth you time investigating them if you can lower that 5 3/4 %

[MRGALT2U]

I had American Funds in a 401K before I retired. I liked them okay.
Thus, when my broker suggested them for my IRA I agreed.
(Bonds only). Even with the front end load, it's done well IMHO.
A few months ago I was reading MONEY or KIPLINGERS or?
and they listed their version of the "50 best funds", stock and
bond. Nice to see my American bond fund made their list.

JG

[BUM]

Quote:

Originally Posted by Ol_Rancher Most of my equity money is in American Funds but unless you get to a decent breakpoint (mine is 2% rather than the 5 3/4 %) you should go with Vanguard. I have been satisfied overall with the American Fund family in up and down markets. They are prudent with relatively low turnover, pay decent dividends, and the front load means most investors are buy and hold. Their fees are low compared to most all other managed funds. Worth you time investigating them if you can lower that 5 3/4 %

Among the best funds I've ever owned was the American Fund for Growth. A few years ago my blankety-blank EX broker sold it. I loved that fund. Now I'm a confirmed "no-loader".


BUM

[renferme]

I will agree with most: use Vanguard and ditch the planners.
Don't be lazy; do it yourself; the Vanguard people will help.
Read Wm. Bernstein's book "The Four Pillars of Investing".