How Does Your Investment Advisor Compare To A 3-Fund Portfolio
HTML-код
- Опубликовано: 2 июл 2024
- So you've been using an investment advisor to manage your investments. They have your money in 10, 15, 20 or even more funds! And you start to wonder just how the performance of this absurd portfolio compares to a simple, 2, 3 or perhaps 4 fund portfolio.
Here's how to evaluate your advisor's portfolio with a free tool.
Join the newsletter: robberger.com/newsletter/?utm...
------------
Investing Tools
------------
My Book (Retire Before Mom and Dad): amzn.to/2MsRJ9B
Personal Capital (Investment Tracking, Retirement Planning): go.robberger.com/personal-cap...
New Retirement (Retirement Planner): go.robberger.com/new-retireme...
Stock Rover: go.robberger.com/stock-rover/...
M1 Finance $30 Bonus (IRA & Taxable Accounts): go.robberger.com/m1finance-bo...
------------
Credit Cards & Banks
------------
My Favorite Credit Cards: www.allcards.com/best-credit-...
My Favorite Online Banks: www.allcards.com/best-online-...
------------
Popular Videos
------------
1️⃣ How to Create a 3-Fund Portfolio: • How to Create a 3 Fund...
2️⃣ How I Manage 28 Accounts in One App: • How I Manage 28 Financ...
3️⃣ 7-Step Financial Checkup: • A 7-Step Annual Financ...
#retirement #investing #robberger
ABOUT ME
While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom (amzn.to/3by10EE)
LET'S CONNECT
RUclips: / @rob_berger
Facebook: / financialfreedomguy
Twitter: / robert_a_berger
DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.
AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning at no cost to you I earn a commission if you click through and make a purchase and/or subscribe. However, I only recommend products or services that (1) I believe in and (2) would recommend to my own mom.
Before we fired them our advisor had us in 16 funds. At the time we had less than 250k invested. Best decision we made was to fire them.
Our advisor had us in over 60 investments before we terminated them. Now I’m left trying to clean up the mess. Lost over 25% last 3 years. Large national financial group.
Damn!! 😅 the market has a lot of loopholes but I’m glad I can make good earning with a profitable strategy
sue him
I’m right in there with ya, MarkAz. Except I was only stuck with 50 holdings to clean up. I’m down to about 40 now. 30 of which are individual stocks. I’ve resigned myself to the fact that it’s going to be a multi-year effort. What a nightmare.
@@marygaus 10 ETFs and 30 stocks sounds like a very nice portfolio to manage. Or, do you think Rob Berger has only 3 ETFs in his portfolio?...
@@phd_angel4192
He prob has more but some may do better with less but still enough diversity.
Very well done Rob. Easy to understand explanations with visuals. Thank you.
Well done...new subscriber. Thanks for this info as it was very helpful.
Some people don't want to be bothered managing their money at all. In my dad's case he enjoyed the face to face contact of an Edward Jones or a Bank based advisor. I don't think he cared about it having lower returns cause otherwise it would just be in CDs at a bank. He had fewer funds but he could have just been put in a single balanced fund.
Love these videos, keep up the great work.
I can’t believe I never found this channel sooner. This is the format and information I’ve missed since DoughRoller Money changed. I’m glad to see you own DoughRoller again too. Just wish I would have known about this channel the past few years.
Thank you Rob. Very helpful.
Like always, great content Rob!
Excellent video, Rob. And I don't even have an advisor-created portfolio.
Great content!!
Advisors know there is no way to justify their fee with a simple portfolio of index funds.
You are right. They have to make it complicated to try and justify their fees. They want you to believe that they are doing something very hard.
This is an excellent, excellent video that has convinced me that simplicity is the way to go. I used to want to put money in every great fund that came along, but what was great for a couple years in a row, might be more average for the next 2 years. We talked to an advisor and decided that her fees along with moving us out of current funds would not be advantageous for us. I wish I could give this video 5 stars.
Rob, yet another valuable video, thank you! I did not know you could keep adding more assets in backtesting in Portfolio Visualzer, and have long been wanting to compare my self-managed portfolio that has now transitioned to the 3-fund portfolio + 3 tilts + 3 individual stocks vs the 3-fund portfolo. The default amount of assets that you can input is 10 assets, so making this comparison would need the space for 12 asset, which I thought was unavailable! I know this seems so trivial, but when you don't know something, you just don't know it, LOL! I can also now compare it to VBIAX as well to make future decisions about fully simplifying my portfolio to make it the easiest for someone else to manage it when/if I am no longer able to manage it myself. I realize these are just planning tools, and I am very happy to have them.
9:00
Why do people pay an advisor? I can think of only 1 positive reason and that would be to keep them invested during a market correction. Personally, if I was a broker/advisor I would not be able to sleep at night knowing that I was a parasite on my client's retirement funds.
as we already know, every benefit claimer so parasite on tax payers money - can sleep very well. human nature? horrible parents?
Yep that's their value
It is more for people that are 100% insecure.
Hi Mr. Berger, I think you were mentioned in the latest KIPLINGER’s magazine for July 2023 interesting article. Great article about VANGUARD.
I've been retired for 2 years and am extremely happy with a small number of ETF passive index funds with very low fees. It was my great fortune to find Rob's videos just in time! BTW, the advice from my brokerage firm has been overly complicated and not supported by good reasoning. Glad I've had a plan and stuck to it.
I’m in the same position, but I’m always worried that the market will tank and I will lose 30% and then it takes years to get it back.
@@theotherview1716
Thru history often not taken yrs. But some say now good time to maybe double cash holdings incl HISAs - 5% hold 10%, 10% then 20% etc. Spouse and I put 2 yrs of appx expenses in laddered GICs and some in money market fund. No bonds. Cheers
as a quant i want to say that there is a difference between professional money management and personal. its not to complicated to hold even 100 funds if its a managed portfolio and the team deciding the allocation is research driven.
the only issue is that this costs more then its worth.
@@jmc8076everyone currently says that you should not hold bond funds, so you should absolutly do that 😂
@@theotherview1716 I share the same concern at 67
I am with Creative Planning a fiduciary type advisory firm and I am quite happy.
Great video, I've been pondering the effectiveness of having an investment advisor to know if it’s worth it
An advisor may provide personalized guidance, but it's essential to assess their track record and fees.
I've been with my advisor, CHRIS RYAN STEWART, who doesn't just push products but genuinely helps me navigate the market.
CHRIS RYAN STEWART is someone I'd like to consider, but I'm also curious about the 3-fund portfolio approach.
@@Jonesmatsunagai just searched the full name on the INTERNET. Thanks it was top result
Well presented, by a straight shooter, no b.s. guy.
Why do advisors have clients in so many funds? So they can what they call rebalance them periodically and make a transaction fee paid by the fund. Not only are you paying that fee plus the AUM fee, you're also paying the expense ratio of the individual fund or ETF. Now that's ridiculous and we only have ourselves to blame for being naive to the insidious thievery of the financial industry. Thanks Rob for the education and enlightenment you provide. You're the best!
Totally agree. They also get kickbacks from different funds for just placing money there. I can’t imagine accepting a perpetual 1-2% expense when it’s not that difficult to manage your own allocations.
They never rebalance. I worked with several advisors over the years, and they won’t touch legacy securities.
I’m 29. My 401k is 100% VTSAX (VTI) and my Roth IRA is 70% VTI 30% VXUS. Simple and easy
Better than nothing for sure, but you are missing out on some really good ETFs.
@@phd_angel4192 like what?
Stick with your plan. It’s a good one. Ignore the noise, and you’ll do extremely well over the next 30+ years until retirement.
Thank you, Rob, very enlightening. Never had an advisor but was invited to a steak dinner, and now we're trying to decide if we should let them invest our money. It's pretty scary.
26 funds for me, I am still trying to figure out what to do. One good thing I did, I fired my financial adviser. It was really a Creative Plan.... .
I got into the personalized planning through my job 401k and Roth. They have me on 9 or 10 different funds. Been researching them and some of them have a pretty high expense ratio and not much return. I'm thinking about getting rid of all that and going to a simple 2 or 3 fund. Tossing around the idea of 75% S&P, 15% international, and 10% total bond. Also thought about 90% S&P and 10% total bond.
We had to fire ours too. I didn’t like his 20 fund approach and it wasn’t making anything more than a 3 fund at Vanguard. Plus, whenever we spoke he wouldn’t talk about money with me. My husband said I had to stop talking to him.
thank you
Book marked this to show a couple of friends who are trudging along with this sort of high fee multi fund complex.
Excellent and valuable video! Your free advice is priceless. After watching your video for a while I also recently terminated my Fidelity financial advisor service. They put my money into more than 20 high fee obscure mutual funds and still performed below 60/40 stock/bond portfolio year after year. I am paying Fidelity advisor 1% total asset fee to get below benchmark performance for many years. It is a complete waste of money. I will follow your valuable advice and put my money into 3 Vanguard index funds from now on. Thank you so much!
Cant you just leave the funds at fidelity and just get your own funds thru them like the fidelity equivlent of vanduard VTSAX as an example ? just to make things easier
Fidelity has similar index funds, many with lower expenses than Vanguard. So you can certainly do a 3 or 4 fund portfolio with Fidelity Funds.
A complicated mix of investments from multiple different fund families including narrowly focused strategies like commodities, REITs, precious metals, etc. makes the portfolio look more “high level” and strategic than a simple mix of index funds, thereby allowing the advisor to justify their 1% fee.
The primary goal of a complex investment plan is to make more money …. for the advisor.
no, to maximize for the sortino ratio which the portfolio did, the fee is the issue not the 18 positions
I had an advisor in 2008. After the crash, the portfolio took 6 years to get back to even. The S&P 500 took 4 years. I fired her after that. Advisors make money in fees, but don't have a better crystal ball than the S&P 500. What was I paying fees for? Not CAGR. Not lower volatility. What else counts?
I just moved away from my advisor ... we were in 92 stocks and 30 different ETF's. I am now convinced that they make it look complicated so you wont leave. They underperformed the S&P 500 for the last 5 years with this complexity.
Now working to clean up the mess ... contemplating the mix of VOO, VTI, RSP, VO, VIGI, VXUS etc ... as usual I am overthinking it, but I wont be in 120 different holdings.
I do have concern that the top few holdings in VOO now represent 30% of the index ... so feel that I have to diversify some of that risk.
VOO has allowed me to retire at 49
I would just go with VTI and drop the VOO & RSP (S&P Funds) and VO (Mid Cap). Reason being is 84% of VTI is the S&P. Add in VXUS and some BND. Keep it simple.
never argue against the market, just take it all.
you will lose if you think
Having 18-30 mutual funds! How many different ways do you need to own the same assets?
Agree Rob, 30 funds is ridiculous. Do they get extra commissions for all those funds?
Used this video and a lot of other reading to fire my Raymond James guy after 18 years
I did the calculations and I paid him 87k or 8700 a year for his complicated 16 fund portfolio.
Now using 4 fund diy and would have beat his performance on the 5 and 10 yr return
Thx for the easy explanation!
Rob, you are funny. I would love to hear the response from an advisor when asked, "why am I in all these rediculius funds?" Lol
I would love to hear the response too.
Ditto
I asked mine why he has me in nine funds/etf’s in a 401k rollover. He said to stay diversified. I want to fire him and do it myself, but my wife insist on staying with him in case something ever happened to me.
@EdNelson There's no question that a financial advisor can be very valuable for people as you describe. But I cant help but think that some "advisors" take advantage of th ignorance of people to put someone in 18 different products. They make it so complex and unnecessary that the average, non-investment savvy person won't understand enough to question it. Maybe these are loaded funds too, where their profits become first priority. A fee-only advisor has no conflict of interest, in this case.
Most Lifecycle Funds seem to utilize a good 15-20 different funds. Vanguard only uses 4, however.
Nailed it.
We have our mother with a large national investment management firm with a 1% of balance fee. We have her there for her peace of mind and due to another financial relationship.
At our last year end performance review, (obviously a negative return) I asked why their very complex portfolio, even including individual stocks, under performed my simple passive index fund portfolio both in good times and particularly over a bad year? (With similar risk investment mix.)
Upon closer examination, I asked whether they intended to double weight in certain areas due to owning specific stocks individually and inside index funds. Their answer? That was an error… at the corporate level by the “Chief Investment Officer’s” team!?! In other words, the weighting error reproduced across their clients in the US! Very embarrassing for them. At a very recognizable investment firm brand.
Ah, the old 1% ripoff management fee.😂😂😂
The pitch I got was that my investment blend had more risk than needed. That was the only valid point, though the risk was only somewhat higher.
Another point they made, which was not discussed here, was the constant rebalancing, which I don't do on taxable accounts. I do passive rebalance, by investing new deposits, to avoid taxes. This method may not achieve the desired blend percentages.
Maximum number of funds: Large cap, Mid cap, Small cap. Growth, Blend, and Value. That's nine. Bonds long, intermediate, short. That is a total of 15 funds. Most funds would orverlap anyway. All I use for both retirement and general brokerage is 7 funds. Great video Rob.
What about international exposure?
You can add international, both developed and EM separately, plus some alternatives. Still, you approach is much better than “3 ETF portfolio” idea.
You shouldn't be paying a financial advisor who is simply putting funds in a portfolio. Funds already have a portfolio manager, so it makes no sense to pay another person 1-3% on top of that.
Thanks, Rob. A MAJOR piece that is not included is risk! At 70 years old, I want to minimize the effects of a bear market, but realize I've got to have income. SO, YOU did what I might do (include major bond investments). The overall growth went down but I still have beer money! BTW, I've done quite well with Jack Bogle's approach, may he REST IN PEACE!!!
George
Jacks approach is what? Keep a few proven index funds that fit ur strategy?
Bogle had it right
Haven't read ALL the comments but, with 543 positions amongst five sleeves in my Fidelity managed account, I suspect I win the "Crazy Number of Positions" award. Where is my trophy. 😉
With any moderate amount of investments or going into retirement with different types of funds I think an tax advisor as a one time visit is more valuable for the semi-savy investor.
I'm so thankful I found your videos. Great information. I realize I don't have much knowledge in investing but becoming a nerd in it. I own a business and hear the best investments I can do is 1. Roth IRA 2. SEP 3. Traditional IRA. Then have a portfolio in each. Is that accurate? Maybe you can do a video on the best investments for business owners. Thank you again.
those are not investments. those are tax advantaged accounts where you could then deposit money and have investments inside them.
This hits home. I'm no guru, but my mom (77 years old) has $7,000 in her IRA and her investment advisor (through my dad's pension fund) has her in 12 funds. That's insane.
They are simply allocating based on a model portfolio, I think. And you are right, it is insane.
Rob, where can we find the Portfolio Visualizer tool? There are several things that show up in a Google search for that name.
Hi Rob, does portfolio visualizer only work with USA based funds? i would like to see eg. South African Balanced fund compare to Vanguard VT. I cannot seem to find the fund name in the backtest.
Hi Rob. Do you use the free or the paid version of portfolio visualizer?
How does this compare to stock brokers. Dont they do Mostly stocks instead of funds?
I ditched fidelity management. they were charging .8% plus the mutual fund loads . All they did was put >90% in US total stock market, total US Bond market and an International fund. the balance was less than 2% each in a myriad of random mutual funds mostly around $1,000 in each fund. I can do that for nothing
Sounds like a good move!
Rob do you like BND over VGSH? I really don’t see the benefit of having long term bonds the way that BND holds. VGSH is all short term and is less interest rate affected than longer term bond funds, it also yields competitively to longer term bonds without the interest rate worries.
Bob - That portfolio visualizer doesn't seem to give the true CAGR. If you click on metrics, the value it gives as the CAGR is actually for the geometric mean annualized, which is not the same thing. Thoughts? I ran it for the fund AGTHX and the CAGR it is given is for the geometric mean, which it states in the metrics, but that's not actually the CAGR. Does that site not have the ability to calculate the CAGR?
Hello Rob!
You’ve been posting amazing videos and have really helped me on my financial freedom journey. Although I understand the probability of someone like me beating the S&P 500, like many others I still want to and have been trying. So far, I’ve been investing 30% in individually picked stocks. I am beginning to feel like I should opt for ETF’s but before I do, I want to be able to compare my return to the S&P 500 to convince myself.
I have no idea how to calculate my returns. I have been investing for the last 3 years. Although I invest equal amounts every month (since the last 12 months), before that it’s been different amounts. Do you know tools/methods where I can calculate the exact return of my portfolio to the S&P? My portfolio has around 30 companies at this point. I don’t invest equally in each company. Thank you!
Rob, thanks so much for your videos. I currently have a complicated portfolio and want to just have a simple 3 fund portfolio. What advice can you give me on how to sell the other funds or what other things I should be thinking about to make it all simple going forward?
If all in ira or 401k then easy. Just sell them all and buy the three fund. If taxable account then have to factor in the taxes of course. Sell any in losses. Then sell the others up to your loss amount. Any remaining you may have to sell over time/years to reduce the tax impact.
I think you switched over to Monte Carlo Simulation there didn't you? Only Monte Carlo has the Fee Structure modelling option.
Wonder what expenses paid over a 7 year period for those 18 etf?
Cool, this video is about what is known in sports statistics as WARP ("Wins Above Replacement or Wins Above Replacement Player, commonly abbreviated to WAR or WARP, is a non-standardized sabermetric baseball statistic developed to sum up "a player's total contributions to his team" [above and beyond an 'average' player']".
So is your advisor giving you "alpha" or just doing what you could do yourself with a three-fund plain vanilla portfolio?
@Rob berger Hi Rob 👋 Thank you for all you do, i have a question please, i am planing to start building my Roth IRA and looking into different brokerage, i see a lot of options in M1 finance and others but at the same time the name of Vanguard is attractive although their platform not as efficient, however my main concern here, if i opened a Roth IRA with M1 finance or any other brokerage went out of business for any reason, what would happen to my Roth Ira?
Advisors exist solely to make money for advisors.
Welp, at least there’s a plan!
Thanks for the strategy. What is my response to my advisor when he/she comes back with, "well that's historical data and past performance is no guarantee of future performance," to presentation of the data? (Advisor basically discounting Portfolio Visualizer analysis for decision making)
Well, it's no guarantee of future performance, but it's certainly a guarantee of past underperformance!
5 total:
Fidelity blue chip
Mid cap
Small cap
Fidelity 500 index
PIM Total ret A bonds
Doesn't matter if an advisor is good if they are not honest and fiduciary in nature.
Great information. Over any 15 or 20 year period, over 90% of professionally managed mutul funds underperform their S&P 500 benchmarks. Thus, why pay for the extra fees to do worse?
the average investor underperforms the market by 3%. justifying the advisor fee imo.
the issue is in the missing financial education and human to acknowledge that the index is the best option there is
@@robinspanier7017There are certainly structural reasons why most people have never even heard of index funds.
Bad incentives lead to dishonest, harmful behavior.
Wall Street has a huge conflict of interest: it's in their best interest to make investing seem very complicated and to try to aggressively put the client in as many commission-paying funds as possible.
If most people actually knew how easy it is to get the market return and how few people outperform the market, the more probable it would be that people would just invest in index funds.
In my country, the average person e.g. my family member years ago
#1 was afraid of losing all the money by investing.
#2 thought that investing is about picking individual companies.
#3 she didn't probably even know about the phenomenon of trying to beat the market, because market return was not something she knew.
When I finally started investing in ETFs in summer 2019, I managed to convince her to invest in them, too.
She invested in S&P500 and MSCI World. She intuitively understood the concept of diversification, but she didn't understand that she was already very diversified (although biased towards the US). So, she ended up buying into an IPO of a local company, and she also invested in a couple of local, well-known companies. Luckily, no more than 20% of her portfolio is in these individual stocks.
Well, in her quest to diversify her investments, she was almost persuaded by another bank to invest in their funds, but I'm glad she didn't. They had absolutely exorbitant fees, like 2.69% a year.
Loved this video. Is there a way to compare my investment advisor who buys only individual stocks not stock funds to just a few funds? thanks.
the same way, just plug in the. individual stocks in the. portfolio instead
I will play a bit the devil advocate: should you not compare the advisor portfolio with a portfolio of index funds having the same weigh on each asset class? The large cap US market is the asset class that did the best in the last 10 years, especially the large growth US. If you did the same analysis from 2000 to 2010, the lost decade for the large US market, the result might be different (I realize it is probably not possible as some of those ETF/mutual fund did not exist). I remember at that time on the bogleheads forums, comparing portfolio with index funds and same market weight on each class was a recurring argument at the end of the 2010 when people were showing the poor performance of total US market index funds vs more complex portfolios with managed funds. As an anecdote, I remember many posts from mid 2000-2010 decade on "why even be on US market, why not 100% emerging market?". Of course this was the time when emerging market stocks returns crushed the US market. Did not repeat itself next decade.
There can be a weird dynamic with advisors and their clients. I think a lot of people are actually afraid to ask their advisor about their investments. I know a person who swears they have the best advisor and would trust them with their life, but when I asked how the advisor invested their assets, they didn't have a clue.
i an pretty sure the advisors are all doing the same based of models quants provide, atleast thats what i see working as a quant.
that beeing said, their job is not to produce alpha but to keep the average person from performing as expected which is a few percent worse then the fee
Keeping it simple is good, though I like to have investments in silos based on risk. Growth and tech funds isolated in a risky silo, balanced and value funds in a middle silo, and a safe silo with CDs now that rates are good. That way any volatility is constrained to a section of my portfolio.
Investments can be like guitars and shoes. I woman friend once said "why do you need so many guitars? Why don't you just get one really good guitar?" My response was "Why do you need so many pairs of shoes? Why don't you just get one really good pair of shoes?" I think a reasonable variety is fine as long as you are able to keep track of what you have and don't end up with a lot of duplicates.
Do it yourself with 3 funds. VTI or VOO for stocks. BND for bonds. And cash (hunt around for best yield periodically). Set them to automatically reinvest dividends.
It's hard to lose with that type of portfolio. Over the long term of course
I have a suggestion get rid of the bonds...Go with..VTI..SCHG and VT
What is your advice for moving out of a managed Fidelity portfolio? Do you ask them to simplify and then stop management?
use a robo advisor or do it yourself
This is exactly how my father $$ was being spread out at Edward Jones. I finally talked him out of leaving them but then the guy he went to at Chase started doing the same thing. Frustrating.
I’m 57 and want to be more conservative. Is the idea now to invest in four funds?
US total stock
US total bond
international stock
International bond
Vanguard return on PRWAX 10 year is over 10% average dividends reinvested.
Actually it is 15.4% average return per year for 10 years dividend reinvested. Why would anyone in their right mind be satisfied with 6%?
isn't PRWAX T.Rowe Price not Vanguard?
I have 60 etfs in my portfolio...i guess I'm a ridiculous guy 😂
If you are doing it yourself and not paying an advisor and are comfortable with YOUR reasoning, then go for it.
As long you know what you're doing
In example I have 10 etfs - 2 core and 8 satellite, core stands for 80% of my assets, rest is just my fun and what keeps me investing. Works great
@Bart Z Right, I'm sirusly invested in in around 4. The rest I agree with you are just for fun..
Are there financial advisors that will look at what you've set up and advise based on a one-time fee for their service? Maybe a flat rate or hourly one.
@Michael Rabourn, yes there are. Some use the title certified financial planner and don't sell commissioned products. They'll just advise based on a one time fee and offer you their advice and asset allocation recommendations in a report.
@@warsurplus Thanks, any thoughts on how to find one?
@@michaelrabourn1966 A simple google search on fee-only based financial planners brings up several organizations that credential them. There are several articles from reputable sources speaking about the same. If the financial planner states that his/ her advice if free, then look deeper. They're being compensated some other way, probably by sales loads, or high expense ratios of underlying assets that they're peddling.
@@warsurplus OK, thanks
@@warsurplus Great information! And some do much more than have you take a risk tolerance questionnaire and give you an asset allocation.
lets say im an investment advisor who wants to recommend low cost ETFs to my clients. what is a reasonable fee for me to charge them for my assistance/advice/service?
All we need is just one fund the Balanced Index Fund..... A quote from Jack Bogel..... your thoughts???
We don't have just one fund, but we have used Fidelity Balanced for years to add the bond component and have been extremely pleased. It is a Morningstar 5 star fund.
How do you simplify without a major tax hit that an advisor put together years ago that has around eight mutual fund assets? Another question if I have a portfolio with 15 5o 20 index ETF's in an IRA should I sell them at what ever value they are regardless of cost basis to consolidate into a three ETF portfolio?
If those are in an IRA there shouldn't be any tax consequences until you make the withdrawals. The only tax would be if those funds are in a brokerage account. Do some research to confirm this, but I'm fairly confident that this is correct.
@@supersteve8305 thanks for your reply. The mutual funds are in my brokerage account. I stopped using my advisor about 3 years ago because as far as I could tell after paying him for 10 years, 1 percent, it didn't seem like he was doing much to earn it. They are the same mutual funds from the very beginning, and have increased in value by quite a bit.
From my TSP account I moved a lump sums to both an IRA and a Roth, and didn't really know what I was doing and purchase like 20 or so ETF's for each account. Since then I have seen several YT videos saying to only have 3 or 4 ETF's. Hence my questions. Thanks
Nice job on this video Rob - I almost went with an advisor because I was looking for a comprehensive financial plan as I transitioned from working full time to retirement. My investing focus was changing (from pure growth) along with needing to think about RMDs, taxes, etc. What I found was that if you want these planning type services you need to have your assets under management which is then assessed a fee which works out to a truly ridiculous amount of money coming out of the portfolio regardless of performance. Is it possible to just purchase the planning portion for a reasonable amount?
Some advisors are willing to do a one-time or ongoing engagement for a flat fee but you know they're going to push back hard as that makes them far less money than having your hard-earned money under their management.
As @thedancam says there are other ways to access solid advisors. The world is constantly changing, and the way people can access investment advice is changing too. Happy to chat with you about how my firm does things differently. It may align with what you are looking for, it may not, but you will have more info. Cheers!
give chatgpt4 a try and ask it questions, its neutral in his motivation and certainly better then a advisor writing comments to get business
Wouldn't an even more helpful comparison be to compare the advisor's portfolio against the self-directed portfolio the investor would be likely to create on his own?
this would likely end up in a all world etf, increasinf the sequence of return risk and lowering the expected safe withdrawl rate
Hey, Rob. I've been following you for a very long time. I'm in the process of rolling over my 401k to an IRA at which point I will be creating my retirement portfolio which is a bid deal! I was thinking of going with Paul Merriman's ultimate buy and hold portfolio whom I know you've had discussions with in the past. His portfolio is more in the 10 fund range. Based on what you're saying here, you think a simpler portfolio is better. Your thoughts?
OK, sorry but I'm replying to myself. First of all, thanks Rob for showing us these tools and how to use them. Just went back and reviewed how you compared these and put in the Merriman recommended portfolio for Schwab and compared it to a simple two fund 70% total US stock index / 30% total US bond index and I was blown away at the difference. The simple two fund portfolio did nearly twice as well! This is making me rethink my strategy. Your timing is impeccable.
We are Fidelity customers. Could you suggest a total bond fund offered by Fidelity or the market for us to consider?
@@chrisa.515 thanks. I have both Bond funds.
If you look at most bond fund returns, they are usually lower than buying individual treasury bonds and holding until maturity. In the latter way, you don't lose principal. We do use Fidelity Balanced (FBALX) as it is a low fee managed fund with around 60% stocks and 40% bonds, but otherwise we are buying individual treasury bonds or brokered CDs with interest rates around 5%.
Good video Bob.I never had luck with advisors and all of them were from major investment banks UBS . This year, after 30 years without an advisor I finally tried one mainly because he made a friend 45 percent in 2022 while I lost 25 percent. the advisor convinced me to sell my Amazon Meta and Tesla last December to capture a tax loss. He managed to underperform the spy 500 by 6 percent as of today. I was thinking he might have noticed the tech rally but he kept telling me:" we beat the tech guys in the end. " I guess I was hoping my new advisor would react to changes in the market If I had bought a fund like VTI 40 years ago life would have been much simpler . Meanwhile I am ready for a market rotation out of tech.
Most advisors don't beat the general market and to make it worse, the ones that do manage to beat the market will then fail to repeat that performance in subsequent years.
@@alanvonweltin6820 google Buffett betting day traders and how it turned out. Read Buffets annual on how his money will be invested, not what you think
The answer is NO !
Main question is, can you sue advisor for giving such a bad advise?
Yes !
I never understood the AUM metric. Why is managing 100k 10x easier than managing 1M? It's the exact same work, yet they get paid 10x more? Makes no sense.
My advisor created a portfolio of index funds (10 ETF's), they only recommend index funds. It has slightly underperformed a 4 fund (index fund) portfolio of my creation.
as a quant myself i disagree that this is insane. even 200 etfs would be feasible to optimize for a low turnover while targeting risk factors.
the big issue i have is with the fees and the expectations of such funds.
the goal of a good advisor is to archive a good sortino ratio (which the fund from the advisor provided btw) that beeing said.. advisors are a joke compares to the big guns, so its not a sure thinf that he will get a good result for your goals at all.
and then there is the cost issue ofc.. no one is worth 1% if he is not investing in rhe lowest liquidity assets for you.
dont overthing all of this financial stuff and stick with a acwi imi and a total bond mix so that you are very likely to finance yourself.
Hi my wife is 70 years old I am 66 years old we have $300,000.00 saved we are with Vanguard. We have a 40/60 plan now .Should we be in all index funds and I fee we should not be in any international stocks or bonds at all what do you think are mix should be at Vanguard, thanks for any help
I believe Rob would say you should keep 20% in bonds. Now, I think you should also have international ETFs because they tend to pay better dividends, which can provide some $$ income for you.
😀The average Joe Blow out there would probably do just fine in a TDF. Don't let trying for perfection stop you from a good reliable.portfolio.
Fire your advisor now! Buy VGT and or VITAX and reinvest the dividends for great wealth later! You don't need anything else. Nothing beats the ETF VGT or its mutual fund counter part.
Dangerous advice - VGT was down over 30% at one point last year; some folks may have panicked and sold out at the lows.
@@alanvonweltin6820 it has an average of 19% per year for the past 10 years. Who are you trying to kid. look at the 3 years prior to the down year. Up over 100% for those 3 years. Do some research.
VGT is tech stocks. Relying on a single industry is highly risky.
@@phd_angel4192 You only get rich taking risks. You think tech Blue Chip tech stocks like Apple are going away anytime soon? LOL!
@@billcarlson1730 lol - nice job missing the point
I appreciate your videos. But when you changed the three fund portfolio to include short term treasuries, it’s a little unfair. All you’re really showing is that a DIY investor can imitate a managed account when given the gift of hindsight.
But I think you have to compare what investor would have done if left to their own devices vs what the manager did.
I don't know how these people sleep at night. I bet he/she claims they are a fiduciary no less. This is close to criminal and anything you can do to open folks eyes is awesome.
The problem with your analysis is that you are assuming the current allocation of the complicated portfolio was in place for the entire 7 to 10 year period. I’m guessing that a few years ago the complicated portfolio would not have a 30% allocation in short term investments. If it did the investment advisor should be fired immediately!
Yeah… right… who they gonna believe? A guy with master degree or $12 calculator?
financial advisors who prob havent even read a book in their life on value investing. what a ripoff
If you need advice find a fee only advisor but paying someone 1% indefinitely for nonsense is ridiculous. Even if they provide good advice it is far too much to pay.
I doubt your portfolio has 3 ETFs only. That's a solution for lazy people. I also ran multiple portfolio scenarios and concluded that I need 10 to 15 ETFs to maximize growth and return.
To each their own! It doesn’t make you lazy!
I have 80% in SPY and 20% in FZILX. Simple and easy to manage.
How about this? I am 74 and retired and have been taking RMDs for the past 3 years. Recently I terminated my relationship with my financial advisor because I felt with the market being so erratic she was not doing any better than if I had a 3 or 4 Fund portfolio. Taking a deep dive I found I was holding 84 different positions in equities, mutual funds, ETF's, Index funds, bonds and cash. All of this is in the following: one Roth IRA, three Traditional IRAs and one taxable account. Is that a world's record? Now I am trying to sell off most of this and buy into a 3 or 4 fund portfolio; any guidance or suggestions would be helpful. . PS. However, Since January of 2022 my account is down a little over 7%
My suggestion is to have at least 20% in bonds; gradually sell growth stocks toward dividend-generating ETFs and stocks.