Hello all,
I recently became familiar with the Bogleheads and finished the bogleheads guide to investing and going over common sense book now and it has made a huge impact on how I think about handling our money. Have been going over a lot of post through this forum and also through reddit site. All very helpful.
I only wish, I had known about all of this view of investment a few years ago, as we have been extremely lucky to avoid serious rip off by financial advisors but still, we were a bit too late and got involve in an investment situation about a year ago and since I have been reading and understanding better all of this, now I want to do some changes but, my wife, is a bit hesitant as I am not a financial expert nor have any background on it, I understand her hesitation, though I have tried my best to explain what little I have learnt from the books and the forums. I wanted to share our main situation, in case I am missing/mistaken, and have some feedback.
Between my wife and I, is about 700k per year and increases every few years. No major debt except our mortgage, no kids. Before any investment, for the last maybe 4-5 years we save in our individual pay checks per month around 35%. I do own few stocks, long-term.
From what we have saved, a year ago, a financial advisor recommended to use Assetmark in which of course he receives some of the fee. We invested only 25k and since January this year, contribute 1k per month, fee is supposed to be 1.45%, 1% for the advisory and .45% for don't know exactly.
They have different investment profiles, from 1 through 6, initially we were very cautious as we did not know much so we did profile number 2 which is a 80% bond conglomerate and 20% equity as ETF that trail mid-small cap, all US only. Two months ago, we increased our risk profile from 2 up to profile 4, which is 80% equity based on ETF's and 20% bonds. ETF trail mid-small cap. None trail the S&P. The higher the risk profile, the higher the hypothetical rate of return.
This is profile #4:
LQD, USIG, GOVT, USMV, MTUM, SPIB, SPLTL, MGK (~26%), MGV (~20%), VMBS, VOE, VOT, VBK, VBR (all except for the bonds/mortgage have low fees 0.07 or less and bonds up to 0.59% exp ratio) with a hypothetical annualized return of 7.69% in the last 10 years. According to my financial advisor, "after fees", I asked lol.
So, I used this calculator (https://www.schwabmoneywise.com/investm ... calculator) for the following:
25k initial plus 1K monthly at a return of 7.5% with 0 fees in 20 years = $646,730
Same thing with fees of 1.45% = $ 539,159
Difference is $107,571
Even if after of before his fees, just to get the point across, the fees is money lost the way I see it. And this is without us, really starting to make larger contributions (which is what we want to do).
Just by looking at VOO over the last 10 years, had average return of 12.9% and expense is 0.03%.
So my plan was to open an account in vanguard, invest there under VTSAX or VOO 65%, VTIAX 15%, VBTLX 20%
We had a meeting with the financial advisor, and I straight up, respectfully brought up, why should not we simply invest in an index fund ourselves and avoid the fees. His argument is that it is one of the smallest fees and that in the future, as "our partnership" matures, he would be able to assist us in different ways to shelter from taxes and what not. He was not specific. And that the fee, is basically the price to keep him around.
I understand his line of work, he is trying to make a living and I respect that, I do like him as a person but ultimately that can cost me, if my wife and I, contribute to our full capacity, ( I calculated), paying him/financial institution 600-900k in 20 years for fees, then I am not interested.
In the future, if my mental capacity is decreased, my wife could not handle it, I can see the use of financial assistance, even better, close family or friend looking into our best interest. But for now, am I wrong to want to get rid of that small investment now and just go full throttle on our own ? am I missing something? or is just the system trying to make it look more complex than my way of seeing it? Even my wife, who has not yet read any of the books is lifting an eyebrow when I am explaining why is not a good choice to rely on the financial advisor.
Is my prospect three fund choices a good idea?
I am continuing to educate myself but though I get starting with asking in this forums thoughts on this.
Any feedback, appreciated in advance. Thanks.
I recently became familiar with the Bogleheads and finished the bogleheads guide to investing and going over common sense book now and it has made a huge impact on how I think about handling our money. Have been going over a lot of post through this forum and also through reddit site. All very helpful.
I only wish, I had known about all of this view of investment a few years ago, as we have been extremely lucky to avoid serious rip off by financial advisors but still, we were a bit too late and got involve in an investment situation about a year ago and since I have been reading and understanding better all of this, now I want to do some changes but, my wife, is a bit hesitant as I am not a financial expert nor have any background on it, I understand her hesitation, though I have tried my best to explain what little I have learnt from the books and the forums. I wanted to share our main situation, in case I am missing/mistaken, and have some feedback.
Between my wife and I, is about 700k per year and increases every few years. No major debt except our mortgage, no kids. Before any investment, for the last maybe 4-5 years we save in our individual pay checks per month around 35%. I do own few stocks, long-term.
From what we have saved, a year ago, a financial advisor recommended to use Assetmark in which of course he receives some of the fee. We invested only 25k and since January this year, contribute 1k per month, fee is supposed to be 1.45%, 1% for the advisory and .45% for don't know exactly.
They have different investment profiles, from 1 through 6, initially we were very cautious as we did not know much so we did profile number 2 which is a 80% bond conglomerate and 20% equity as ETF that trail mid-small cap, all US only. Two months ago, we increased our risk profile from 2 up to profile 4, which is 80% equity based on ETF's and 20% bonds. ETF trail mid-small cap. None trail the S&P. The higher the risk profile, the higher the hypothetical rate of return.
This is profile #4:
LQD, USIG, GOVT, USMV, MTUM, SPIB, SPLTL, MGK (~26%), MGV (~20%), VMBS, VOE, VOT, VBK, VBR (all except for the bonds/mortgage have low fees 0.07 or less and bonds up to 0.59% exp ratio) with a hypothetical annualized return of 7.69% in the last 10 years. According to my financial advisor, "after fees", I asked lol.
So, I used this calculator (https://www.schwabmoneywise.com/investm ... calculator) for the following:
25k initial plus 1K monthly at a return of 7.5% with 0 fees in 20 years = $646,730
Same thing with fees of 1.45% = $ 539,159
Difference is $107,571
Even if after of before his fees, just to get the point across, the fees is money lost the way I see it. And this is without us, really starting to make larger contributions (which is what we want to do).
Just by looking at VOO over the last 10 years, had average return of 12.9% and expense is 0.03%.
So my plan was to open an account in vanguard, invest there under VTSAX or VOO 65%, VTIAX 15%, VBTLX 20%
We had a meeting with the financial advisor, and I straight up, respectfully brought up, why should not we simply invest in an index fund ourselves and avoid the fees. His argument is that it is one of the smallest fees and that in the future, as "our partnership" matures, he would be able to assist us in different ways to shelter from taxes and what not. He was not specific. And that the fee, is basically the price to keep him around.
I understand his line of work, he is trying to make a living and I respect that, I do like him as a person but ultimately that can cost me, if my wife and I, contribute to our full capacity, ( I calculated), paying him/financial institution 600-900k in 20 years for fees, then I am not interested.
In the future, if my mental capacity is decreased, my wife could not handle it, I can see the use of financial assistance, even better, close family or friend looking into our best interest. But for now, am I wrong to want to get rid of that small investment now and just go full throttle on our own ? am I missing something? or is just the system trying to make it look more complex than my way of seeing it? Even my wife, who has not yet read any of the books is lifting an eyebrow when I am explaining why is not a good choice to rely on the financial advisor.
Is my prospect three fund choices a good idea?
I am continuing to educate myself but though I get starting with asking in this forums thoughts on this.
Any feedback, appreciated in advance. Thanks.
Statistics: Posted by emma_25 — Fri Jun 21, 2024 8:34 pm — Replies 8 — Views 583