What benchmark to you go by.

[My Dream]

Not sure if I'm using the proper terminology but we're visiting our financial adviser tomorrow and it seems he takes a different approach each time he explains how our portfolio is doing. I invest a small portion of the portfolio and it appears I'm doing a bit better interest wise then the adviser but then I wouldn't take the same risks on a much larger portion of the portfolio.

Either way, I base how well I'm doing on where the Toronto Stock Exchange (I'm Canadian) is at on a specific time period. In other words. If I take any time period, let's say Jan 1st 2010 and use that as a starting point, on an amount of $100,000.00 and the TSX is at 10,000. As of today if the tsx is at 10,500. then that equates to a 5% increase, if my portfolio has gone up 5% then I'm following the tsx. I would like to beat the tsx by 1%. Does that make any sense? What I'm saying is I use the tsx as my benchmark.

Any thoughts?

 

[RetirementColdHardTruth]

Trying to beat an index is a fools game. What you need to do is make sure you have a good asset allocation using large cap, small cap, medium cap, international, us bonds, international bonds, REITS, cash. Search the Lazy Portfolios on google to get you started. I was in coffee house portfolio with a bigger portion of stocks due to my age at 38. I was up 21% last year. It was a really good year.

Don't fall for the financial planners sell. He will always compare you to something he has done better than.

Diversification through asset allocation is the best way to move forward. One you are comfortable learning about the lazy portfolios, it will be time to move onto MPT modern portfolio theory. Again you can find a sample portfolio for MPT on the Internet, just search for MPT vanguard funds.

Good luck and Stay thirsty my friend.

 

[LOL!]

One must create a composite benchmark that matches your portfolio. This has been discussed a few times. One can use Target Retirement funds as a benchmark, but only if one has the same amount of stocks, bonds, value, blend, growth, large, med, small, investment grade, junk, foreign, emerging, developed, developing, domestic, etc. This is not impossible to do, but do not fool yourself.

See: https://personal.vanguard.com/us/funds/tools/benchmarkreturns and the portfolios at Index Funds - DFA Advisors - DFA Funds - Dimensional Fund Advisors Approved.

For my benchmark, I use an index portfolio I constructed with the same numbers in a M* 9-box style grid, same average market cap, and same US, foreign stocks and bonds percentages. If I buy-and rebalancing, I will hit my benchmark. If I conduct transactions, then I will go above or below my benchmark. I try to make transactions so that I end up above my benchmark and above the corresponding benchmark at ifa.com .

 

[My Dream]

I really appreciate your replies but to truly understand the message you're trying to get across I need to be better educated in the world of finance and one day doesn't give me enough time, therefore, thank you for trying everyone.

 

[LOL!]

Here's some advice for one day: Blow off your advisor. They suck money out of your pocket, unless they prevent you from doing something stupid which causes you to lose more money than they suck away from you.

 

[My Dream]

This is our 4th advisor and the ONLY reason we still have one is I'm not educated enough to do my own investing. Sure I invest $100,000.00 on my own and take chances but not with 10 times that amount.


That's sort of like me saying, if you don't like the way your BMW dealer is rebuilding your engine, blow off your mechanic and buy your own "engine rebuild kit" and do it yourself. True the metaphor isn't exactly the same but then frustration has the better of me.

I've been a member of the Financial Forum for many years and I was starting to learn a lot. I appreciated most of the replies but have come to the realization that I just don't have the thick skin needed to take some of the comments in my threads. Sure I can put them on ignore but some respected members base there reply on those post that I would other wise have on ignore therefore the replies wouldn't make sense otherwise. For that reason alone I decided to leave.

LoL, I've read and follow many of your thread/posts and I know you're only trying to help, but I've been down this road many times and it always leads to the same path. I need to stand up to my advisor and show him I know what the hell I'm talking about and don't even think about babbling me with your B** S***.

Sorry folks, the shows over.

 

[RonBoyd]

I need to stand up to my advisor and show him I know what the hell I'm talking about and don't even think about babbling me with your B** S***.

Sorry folks, the shows over.

I'm confused. Is the second half of that (run-on) sentence directed at your Advisor... or at us?

Apology accepted.

 

[East Texas]

Is your financial advisor one who charges a straight fee for advice or one who earns a commission from any financial products that you purchase? I only use the former to eliminate the financial incentive of pushing certain products.

 

[My Dream]

I'm confused. Is the second half of that (run-on) sentence directed at your Advisor... or at us?

Apology accepted.

My advsor, since there is no value added in making a reply like that to people that are only trying to help me.......oh and the statement above was obviously directed at me.


I would appear I need to be more educated in other aspects.

Is your financial advisor one who charges a straight fee for advice or one who earns a commission from any financial products that you purchase? I only use the former to eliminate the financial incentive of pushing certain products.

They charge a comission at an amount of around $12,000.00 per year.


Sorry folks, I'm done with this thread and thanks for trying.

 

[LOL!]

Although My Dream has checked out of their thread, are there financial advisors in Canada that charge 0.25% of assets under management and follow a low-cost passive-management mostly index fund philosophy?

Certainly, in the US there are a number of such advisors that one can latch onto.

 

[kumquat]

Although My Dream has checked out of their thread, are there financial advisors in Canada that charge 0.25% of assets under management and follow a low-cost passive-management mostly index fund philosophy?

Certainly, in the US there are a number of such advisors that one can latch onto.

With a $1M portfolio, I doubt he can do better than a about 0.75% for asset based advice. There are a few who charge hourly, but they are few and far between.

 

[REWahoo]

Certainly, in the US there are a number of such advisors that one can latch onto.

Yep, here is one: Portfolio Solutions

It is owned by Rick Ferri, a frequent Bogleheads contributor.

 

[Nords]

It is owned by Rick Ferri, a frequent Bogleheads contributor.

... and a recovering Marine Corps aviator... and a good guy.

 

[traineeinvestor]

At the risk of getting off topic, I have to ask why people are obsessed with benchmarking their portfolios against an index in the first place?

I would have throught that it is more important to benchmark your investments against your needs, objectives and risk tolernaces in the first instance. If you have constructed a portfolio which includes a mix of fixed income, equities and cash then it seems (i) odd and (ii) dangerous to benchmark the whole portfolio against a stock index - you are not comparing apples with apples and run the risk of drawing erroneous conclusions (especially if looking at relatively short time periods like one year).

Benchmarking the equities in a portfolio against a suitable index is a different matter and is a useful exercise, if for no other reason that if you are not beating the index then you might as well save yourself a lot of time and effort (and possibly risk exposure) by simply investing in the index.

On advisers generally, a good adviser can add value if you lack either the time or the knowledge to do it yourself. Given what they cost, taking the time to learn to do it myself is a good investment and one that will pay off through reduced fees.

 

[LOL!]

At the risk of getting off topic, I have to ask why people are obsessed with benchmarking their portfolios against a [single stock] index in the first place?

Fixed that for you.