|
|
01-20-2009, 12:37 PM
|
#121
|
Recycles dryer sheets
Join Date: Sep 2006
Posts: 312
|
Quote:
Originally Posted by ERD50
So, let's make the generous* assumption that the entire 4% withdraw from this portfolio is taxable at a 25% marginal rate (the average tax rate would likely be much lower). 25% of 4% is.... 1%. So, it would seem like the best they could do is break even if they eliminated all taxes - and that would also imply no dividends or taxable interest from that portfolio, since those are not offset by capital losses.
...
Does that sound about right?
-ERD50
|
Yes, just my point. The notion of paying 1.85% instead of ~0.15% for "tax awareness" falls apart when it's recognized that the 1.6% difference itself would likely cover all of the taxes on withdrawals. Indeed, it would be very easy for the active-management scenario to come out behind.
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
01-20-2009, 12:54 PM
|
#122
|
Recycles dryer sheets
Join Date: Sep 2006
Posts: 312
|
Quote:
Originally Posted by FinanceDude
American Funds equity funds:
Just to be precise.........
|
Great. Or, actually, astoundingly horrible!
But hey, convince an extra pensioner to put her CD in the fund and you've got your boat payment for the month! If you smile enough as you promise the sky, the old lady is none the wiser, and everyone else is happy!
|
|
|
01-20-2009, 12:55 PM
|
#123
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,888
|
Quote:
Originally Posted by FinanceDude
American Funds equity funds:
$1- $24,999 - 5.75%
$25,000-$49,999 - 5.0%
$50,000-$99,999 - 4.5%
$100,000-$249,999 - 3.5%
$250,000 - $499,999 - 2.5%
$500,000 - $749,999 - 2.0%
$750,000 - $999,999 - 1.5%
$1 million plus - NAV
Just to be precise.........
|
Of course, *if* one were to split a $800,000 portfolio across 42 funds, that would be about $20,000 in each fund, getting into that 5% range.
-ERD50
|
|
|
01-20-2009, 01:00 PM
|
#124
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
|
Interesting discussion regarding the fees overwhelming any potential tax benefit. "25%" just sounds so much greater "1%", I think many folks probably miss the picture on the relative total, cumulative costs of taxes and investment expenses. The only way the fees can make any sense is if an investor believes the manager will somehow increase his/her total returns by at least the same amount.
|
|
|
01-20-2009, 01:30 PM
|
#125
|
Thinks s/he gets paid by the post
Join Date: Feb 2005
Posts: 2,032
|
Quote:
Originally Posted by ERD50
Of course, *if* one were to split a $800,000 portfolio across 42 funds, that would be about $20,000 in each fund, getting into that 5% range.
-ERD50
|
Uhh not quite
The aggregate purchases are considered together for the load.
|
|
|
01-20-2009, 01:33 PM
|
#126
|
Thinks s/he gets paid by the post
Join Date: Feb 2005
Posts: 2,032
|
Quote:
Originally Posted by ERD50
OK, but just because the average person you have observed *has* done poorly, there is no reason that they *need* to do poorly.
Especially if they come to this forum for some advice, resources, and perspective. It's easy to do it wrong, but I don't think it is hard to do it right. You just need to get the basics.
-ERD50
PS - That is just a general comment, not directed at the OP in any way.
|
I think you're overestimating the power of an internet forum
Lots of people know the right thing to do, they just don't have the will or the stomach to do it.
Why do people hire personal trainers? It's not because they need somebody to show them what to do every time, they need the reinforcement and the oversight. In many ways financial advice is the same.
|
|
|
01-20-2009, 02:38 PM
|
#127
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
|
Quote:
Originally Posted by ERD50
Of course, *if* one were to split a $800,000 portfolio across 42 funds, that would be about $20,000 in each fund, getting into that 5% range.
-ERD50
|
Not at all. The OP is in a "wrap account" where he is paying the ER of the fund AND a 1% management fee "wrapped around" the funds. So, the "REAL" ER is probably 2-2.5% or so.
You are talking about avoiding brekapoints, which is another discussion entirely.......
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
|
|
|
01-20-2009, 02:44 PM
|
#128
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
|
Quote:
Originally Posted by Grep
Great. Or, actually, astoundingly horrible!
But hey, convince an extra pensioner to put her CD in the fund and you've got your boat payment for the month! If you smile enough as you promise the sky, the old lady is none the wiser, and everyone else is happy!
|
a)I know nothing of the situation of how your friend invested, what was discussed, etc.
b)You can have all the spite you want for whom did this to your friend.
c)One of the things I do often on here is correct misinformation.
d)Who are you referring to when you say "YOU" in the last paragraph above?
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
|
|
|
01-20-2009, 02:50 PM
|
#129
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,888
|
Quote:
Originally Posted by saluki9
Uhh not quite
The aggregate purchases are considered together for the load.
|
OK, I didn't realize they aggregate them. Thanks for the correction. - ERD50
|
|
|
01-20-2009, 03:01 PM
|
#130
|
Recycles dryer sheets
Join Date: Sep 2006
Posts: 312
|
Quote:
Originally Posted by FinanceDude
b)You can have all the spite you want for whom did this to your friend.
d)Who are you referring to when you say "YOU" in the last paragraph above?
|
b) I certainly do feel that selling a fund with an 8% front-end sales load (or 5.75%) is fully worthy of scorn.
d) Everyone all the way up the food chain who profits from such sales.
|
|
|
01-20-2009, 06:30 PM
|
#131
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
|
Quote:
Originally Posted by Grep
b) I certainly do feel that selling a fund with an 8% front-end sales load (or 5.75%) is fully worthy of scorn.
d) Everyone all the way up the food chain who profits from such sales.
|
So I guess you don't belive that people who choose one product/service over another should be allowed that freedom. Commendable ethical postion, should go over well at campus parties. But where does one draw the line? One of those cute college girls could get a haircut for $18, but she chooses to pay $100 because she thinks it makes her look better, or she likes the way the hair-guy flirts with her and pampers her.
I could have bought a Big Mac for dinner, but instead I saw a Chili's ad and paid way more. Somebody stole some money from me-the whole scum-sucking up-line.
Not many people left who don't know about no-load funds. So if someone pays a load they are getting something out of it. Maybe the salesman sleeps with Granny?
Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
|
|
|
01-20-2009, 07:53 PM
|
#132
|
Recycles dryer sheets
Join Date: Sep 2006
Posts: 312
|
Quote:
Originally Posted by haha
Maybe the salesman sleeps with Granny?
Ha
|
Ha, that post was in remarkably bad taste, besides being utterly orthogonal to my message.
If "Granny" knows full well of her options, and is offered full disclosure and achieves full understanding, and knowingly and willfully chooses the fund with 5-8% front-end loads because it is genuinely best for her, then more power to her.
But my point is that these absurd sales-loads exist primarily to entice salesmen to push the funds regardless of their true merits, or even in spite of their disadvantages. The enticements may be so great that salesmen will push or exceed the limits of what defines full disclosure. Secondarily, because of the absurd fees, these funds are unlikely to be remotely optimal for nearly any investor. I believe you know this.
|
|
|
01-20-2009, 08:09 PM
|
#133
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
|
Quote:
Originally Posted by Grep
Ha, that post was in remarkably bad taste,
|
Remarkable for some; comun y corriente para mi.
ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
|
|
|
01-20-2009, 08:24 PM
|
#134
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
|
Good hit, Grep.
But anyway Darling, I grant you that we don't agree on much of anything. I would consider agreement with you to be a danger signal.
You didn't address my point about free actions in a free market. A salesman is not required to find the optimal solution for someone, just something that is not illegally presented. Some funds with long term, highly successful records levy a load. And, if a load keeps an investor from chasing performance it is not necessarily bad.
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
|
|
|
01-20-2009, 08:34 PM
|
#135
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,021
|
Ha & Grep, if you'd like to continue this little dust-up I think Mudwallow.com is offering free registration today only. Even if you decide not to take advantage of their generous free offer, please take your spat offline.
__________________
Numbers is hard
|
|
|
01-20-2009, 08:38 PM
|
#136
|
Recycles dryer sheets
Join Date: Sep 2006
Posts: 312
|
Ha, I think I made my point about informed consent, potential conflicts of interest, and suitability clearly enough for almost anyone. Politics and philosophy would be for some other thread, some other day, maybe.
Have a nice day.
(Edit: Cross-posted with REWahoos. Sorry.)
|
|
|
01-20-2009, 08:41 PM
|
#137
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
|
Quote:
Originally Posted by REWahoo
Ha & Grep, if you'd like to continue this little dust-up I think Mudwallow.com is offering free registration today only. Even if you decide not to take advantage of their generous free offer, please take your spat offline.
|
No problem Cap'n!
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
|
|
|
01-20-2009, 11:34 PM
|
#138
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
|
Quote:
Originally Posted by Grep
But my point is that these absurd sales-loads exist primarily to entice salesmen to push the funds regardless of their true merits, or even in spite of their disadvantages. The enticements may be so great that salesmen will push or exceed the limits of what defines full disclosure. Secondarily, because of the absurd fees, these funds are unlikely to be remotely optimal for nearly any investor. I believe you know this.
|
No, they don't. Obviously you know little of the industry. However, I doubt a logical and non-emotional discussion would appeal to you, so I will bow out, and allow you to continue spouting misinformation based upon ONE situation with a family friend. In your mind, those of us experienced advisors who manage millions of dollars for clients couldn't possibly be doing anyone a service.........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
|
|
|
01-20-2009, 11:35 PM
|
#139
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
|
Quote:
Originally Posted by Grep
Ha, I think I made my point about informed consent, potential conflicts of interest, and suitability clearly enough for almost anyone. Politics and philosophy would be for some other thread, some other day, maybe.
Have a nice day.
|
Explain suitability, I am interested in your definition of it versus how FINRA and internal Compliance Departments define it..........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
|
|
|
01-20-2009, 11:55 PM
|
#140
|
Recycles dryer sheets
Join Date: Sep 2006
Posts: 312
|
Financedude,
Some will lean towards my view that 5.75-8% sales-loads are a moral hazard and are of ill-service to clients, and some will fall in with other views. So be it.
Have a nice day.
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|