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investment manager fee
Old 04-14-2004, 02:20 PM   #1
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investment manager fee

About 1 year after I retired I gave a large chunk of my retirement portfolio to an investment manager. He has done a good job but charges 1% of the balance as a fee. I recently realized that this would amout to 1 million over the next 30 years. I could do a lot with that over that time. So could my heirs. Should I just put everything in a balanced fund and forget it?
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Re: investment manager fee
Old 04-14-2004, 02:25 PM   #2
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Re: investment manager fee

Read "the four pillars of investing" by bernstein, almost anything by bogle, or for a quick run through, read my "book report" on the four pillars over in the investment section.

Short answer: yes, you would probably be as well or better off investing in low cost index funds, and a balanced index fund is a good place to start. A little more asset allocation to some foreign, reit, and small cap funds and you're 99% of the way there. For under .25% per year on average.
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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Re: investment manager fee
Old 04-14-2004, 05:04 PM   #3
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Re: investment manager fee

Oldcrowcall, I wouldn't even consider paying someone 1% per year. At a 4% withdrawal rate, that's one fourth of your income! Not only that, you expose yourself to someone else's potential mistakes. I simply would not trust someone with my only means of support. It's way too important not to do yourself.
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Re:  Congratulations!
Old 04-14-2004, 05:16 PM   #4
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Re:  Congratulations!

You've just put a financial manager on the road to ER-- a couple more clients like you and he'll be retired in no time!

If you're still working and have no free time, then it might be better to pay someone to manage your money while you do what you do best-- earn more of it. Hopefully you're earning faster than your advisor is.

If you choose to remain blissfully ignorant, then you should pay someone else to manage your retirement funds.

If paying 1% to someone lets you sleep better at night, then that's what you should do. But the fact that they won't return your money if they lose it would keep me awake at night.

If you have any interest at all in managing your money (which is probably one of the reasons you're at this board) then you should read a Bernstein or Armstrong book and go buy some index funds.

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Re: investment manager fee
Old 04-15-2004, 06:28 AM   #5
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Re: investment manager fee

Thanks for those insightful and humorous answers! I am going to go read the books recommended.
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