Should I be happy with these results

[savory]

Yes, but the amount of taxable income you get is driven by the trading practices of your manager(s).

A typical active manager might have a 100% or higher annual portfolio turnover. This will (hopefully) produce gains but because the gains are realized quickly you will find yourself paying taxes on them immediately and probably not at the long-term gains rate either.

A strategy that is more buy-and-hold might well (actually probably will) produce more gains but since they are not realized quickly you will not pay taxes on them until the manager sells them after a long-term gain holding period. So you benefit from a tax-free loan from Uncle for a while, then you pay him at a reduced rate.

There are also "tax managed" mutual funds that have tax avoidance as a fundamental strategy. DTMEX, for example.

Thanks, the FA is now following a lower tax strategy but it was not too bad before. They simply do not trade often.

Future Advisers does a very good job of tax loss harvesting. They report events as they happen. After mentioning this to my FA, he began to employ a similar strategy, which has been helpful. Unfortunately, I needed to tell him. This is a weakness of the FA. He should be telling me.

 

[ERD50]

Thanks, the FA is now following a lower tax strategy but it was not too bad before. They simply do not trade often.

Future Advisers does a very good job of tax loss harvesting. They report events as they happen. After mentioning this to my FA, he began to employ a similar strategy, which has been helpful. Unfortunately, I needed to tell him. This is a weakness of the FA. He should be telling me.

I'm not quite sure how to process that. You trust them with your money?

-ERD50

 

[LOL!]

One needs to confirm that the advisors are toeing to a 60/40 asset allocation (like the 'benchmark' funds I listed) most of the time. If they are going to 100% equities, then their performance is not remarkable I would think.

 

[ERD50]

One needs to confirm that the advisors are toeing to a 60/40 asset allocation (like the 'benchmark' funds I listed) most of the time. If they are going to 100% equities, then their performance is not remarkable I would think.

But if they are going to 100% equities at the right time, and going below 60% equities at the right time - that would be remarkable performance.

Can they do that? Long term? And call both the "load up" and "dump" points? And do it above and beyond their fees? Color me skeptical.

-ERD50

 

[savory]

One needs to confirm that the advisors are toeing to a 60/40 asset allocation (like the 'benchmark' funds I listed) most of the time. If they are going to 100% equities, then their performance is not remarkable I would think.

I am using a targeted return that helps me through my retirement. If I understand firecalc, one option is an equity percentage we enter. I want that return or better. So, I think we all use a portfolio return of some sort and likely conservative.

In the example of the various funds shared earlier, the return over the same period is low 50% to mid 70% for 60/40. A very big spread. Would the same advice be provided about measuring performance if I said I want the VWNEX return in my 60/40 portfolio. After all, it is a 60/40 investment,

I have provided direction to the FA that I want a 60/40 return, after commissions, which is in the mid 50% range. A reasonable return, I think. How he gets there, I am less concerned. That suggests a level of trust and monitoring. I understand he could put me in a risky position but they have yet to do that and I do not expect it. I do not understand why they would do that. But that is not to say, I have stopped monitoring as evidence of this thread.

While I understand the concept of higher risk by the level of equities, it seems that we all measure our success by actual return. Not even 60/40 appears to have the same risk/return.

 

[Ready]

What your FAs are doing is gambling with your money. When you gamble, sometimes you win and sometimes you lose. But even if you start off winning, there is no guarantee that over the long run you will keep winning. Everyone gets lucky once in a while, but there is no proven strategy for what your FAs are attempting to do here. They are just guessing which stocks will outperform an index, and they are guessing when the market will rise or fall.

I'm not saying you shouldn't do this if you are comfortable with it, but I find it laughable when FA's claim they have a strategy for doing this. There is no strategy. They are just guessing and hoping to get lucky with your money while collecting fees regardless of which way it goes for you.

 

[abirdinthehand]

Hi,

For some of my investments, I use 2 FAs that purchase stocks/bonds, not funds. My strategy is 60/40 but they have flexibility based upon their market view. So, they can go above/below based upon their desecration. Both claim to follow a similar strategy but their assessment of stocks/segments to purchase is different. Consequently, the difference in performance. (There is more which I will be happy to respond but not really part of my question)

I began investing in 2011. From 2011 - 2016, I have had growth in one adviser of 53% and the other 84%.

How does that compare to the performance of your portfolio and can you let me know if it is a buy/hold mutual fund portfolio.

Thanks

Congratulations ! In 25 years you will have 41 billion dollars.

 

[savory]

Congratulations ! In 25 years you will have 41 billion dollars.

For all the years I have been on ER, posting and replying, this is the first time I have received a sarcastic and unhelpful response to one of my posts.

I expect that when there is nothing helpful to add, it is simply not added my members. Perhaps this was an attempt at a joke in which case I might appreciate the comment but I am having trouble finding the humor.

 

[MichaelB]

Congratulations ! In 25 years you will have 41 billion dollars.

It's often difficult to distinguish humor from snark. Why not stop by and tell us about yourself, here Hi, I am... - Early Retirement & Financial Independence Community