Big Box fund managers that actually make money on your investment? HELP!!

Zero coupon bonds are bonds that pay an interest rate, but have, uh... no coupons. They are paid in full at the term. Simple: $100 5% bond for 1 year term, zero coupon: Today's value=$95. You give them $95 and they give you a zero coupon bond promising to pay you $100 in a year.

The phun part is where cities and other districts are taking out like 30 or 40 year zero coupon bonds. They get a million dollars today and "promise" to pay you a billion in 40 years. Sure. That will work. Detroit has a bunch of these. Most states that have their E36 M3 together have passed laws banning municipalities from issuing these things.

wbjones wrote: that depends on how well you know your advisor (or in my case my broker) …. even though he / his firm had nothing to do with my 401k, he was willing to sit with me and figure out what my best choices were within the structure of my 401k …. this with 2 caveats … he does handle my IRA's, and we've been good friends for 30+ yrs

Betterment, Future Advisor, and other similar options are not a "he" or a "they" or anyone you would be friends with. You are paying for an algorithm which runs hundreds or thousands of simulations on asset allocation across classes and industries (using low-fee ETFs), and then makes selections based on data you provide it (years till retirement, risk adversity, other assets). And they automatically re-balance based on performance.

I'll take the cold calculated numbers-based approach over a human with influences or potential conflicts every time. And at lower cost.

you do your way, I'll do mine … my retirement accounts have grown by ~ 34% over the last 2 1/2 yrs (while pulling out $1500 per mo) and the fee has been minuscule … and like I pointed out earlier, he also (for no charge) sat down with me and went over my 401k options (not his company) and helped me pick out the best options .. I realize that my situation is sorta unique … but just thought I'd throw it out there

Um, well yea, look at the growth of the S&P 500 in the past 2.5 years.

http://finance.yahoo.com/echarts?s=%5Egspc+interactive#%7B%22range%22%3A%225y%22%2C%22scale%22%3A%22linear%22%7D

As has been said, unless he is BEATING the market, he isn't worth it. And 34% over 2.5 years is 12% returns.

http://quicktake.morningstar.com/index/IndexCharts.aspx?Symbol=SPX

If you look at the bottom of this page, you'll find the S&P 500 average return over various years.

you fail to take into account that I've been pulling out $1500 a month during that entire time (which I did mention) … so if added in that would GREATLY increase the return (that would add an additional $40k+ .. so yeah, I'm fairly pleased with the rate of return …works out to ~45% return over the 2 1/2 yrs

wbjones wrote: you fail to take into account that I've been pulling out $1500 a month during that entire time (which I did mention) … so if added in that would GREATLY increase the return (that would add an additional $40k+ .. so yeah, I'm fairly pleased with the rate of return …works out to ~45% return over the 2 1/2 yrs

That's very impressive. I wish I had your guy.

wbjones wrote: you fail to take into account that I've been pulling out $1500 a month during that entire time (which I did mention) … so if added in that would GREATLY increase the return (that would add an additional $40k+ .. so yeah, I'm fairly pleased with the rate of return …works out to ~45% return over the 2 1/2 yrs

I'd like to see some more info on this. Not to prove you wrong, just because I'm curious--these folks aren't a dime a dozen. It is easily possible to make $1500 a month just on dividends.

Are dividends computed in the returns? Are they reinvested? Were there some bonds that cashed out during those 2 years in that evaluation?

Ask your fund manager, bookie or whatever if he can give you a number that represents your net return for the past year. No words, just a single number.

Never met one who could. (edit) and not be lying.

wbjones wrote: you fail to take into account that I've been pulling out $1500 a month during that entire time (which I did mention) … so if added in that would GREATLY increase the return (that would add an additional $40k+ .. so yeah, I'm fairly pleased with the rate of return …works out to ~45% return over the 2 1/2 yrs

So... why aren't you giving out this guys info hand over fist so we can all make him and ourselves a little bit wealthier? :p

My experience with funds that I have no real input into were 401's, one was a Roth and two were 'conventional'. The Roth was with Edward Jones, after ~8 years it had less in it than I started with and the broker nicked me for about $40 annually. Plus hit me for a $200 fee to close the goddamn thing. EJ can kiss my ass.

Then we move to the Principal; that thing rollercoastered like hell, typically peaking in late March and it never rose above the amount my employer and I put into it. After watching that one do stupid stuff for a long time, I waited till it peaked then rolled it into a Vanguard IRA. Principal tried their damndest to get me to stay, after years of watching them make money and me make zip no way.

Then there was the one with Wachovia (before they sold to Wells Fargo) that I did via Hendrick when I worked there. It moseyed along returning about 2.8% annually, the choices I had were limited and none of them seemed to pay any more. So blammo I rolled it into the Vanguard. They didn't argue, just sent me the check.

So now we come to the present. Over the last few years the Vanguard has averaged almost 10%, and here's the good part: that's steady as a rock. It seems nearly impervious to market shocks, meaning I don't see 18% one month only to watch it plummet the next month, wiping out all my gains. I wish to hell I'd done that five or ten years earlier. Hindsight is always 20/20...

mtn wrote:

wbjones wrote: you fail to take into account that I've been pulling out $1500 a month during that entire time (which I did mention) … so if added in that would GREATLY increase the return (that would add an additional $40k+ .. so yeah, I'm fairly pleased with the rate of return …works out to ~45% return over the 2 1/2 yrs

I'd like to see some more info on this. Not to prove you wrong, just because I'm curious--these folks aren't a dime a dozen. It is easily possible to make $1500 a month just on dividends. Are dividends computed in the returns? Are they reinvested? Were there some bonds that cashed out during those 2 years in that evaluation?

this is all (well 50%) is in two different American Funds (my Roth IRA) …the other half is in 7 different funds … we studied long and hard as we picked the "winners" … essentially what we did was look at each category we had to choose from ( i.e. financial, tech, Real Estate, large cap, bonds …. etc …

then we picked the top 10 performers in the category I chose, then looked at how they handled the "crash" of 2008 … and then picked one from each category that I'd settled on that did the best (combined growth the last 5 yrs [with a peek at the last 10 yrs] and how they did in 2008) and divided up my investment $$$ by the amt. we settled on

I've been drawing from my Roth, and it's pretty nearly kept up with my monthly withdrawals … and what it's lacked has more than been made up by the growth of the other IRA

is this the sort of info you were after ?

as for dividends … these are both IRA's … so any growth / dividends are re-invested …as pointed out, the only withdrawals are my monthly income …. and as long as the market is on this bull run, I'm phat … another 2008 would cause me some problems

NOHOME wrote: Ask your fund manager, bookie or whatever if he can give you a number that represents your net return for the past year. No words, just a single number. Never met one who could. (edit) and not be lying.

not sure what you're implying … wouldn't the 2 IRA's added together (at the first of the yr) and then added together (at the end of the yr + what I withdrew = what you're asking for) ?

there's no churning going on … we picked the funds, parked the money there and except for withdrawals, haven't touched it

HiTempguy wrote:

wbjones wrote: you fail to take into account that I've been pulling out $1500 a month during that entire time (which I did mention) … so if added in that would GREATLY increase the return (that would add an additional $40k+ .. so yeah, I'm fairly pleased with the rate of return …works out to ~45% return over the 2 1/2 yrs

So... why aren't you giving out this guys info hand over fist so we can all make him and ourselves a little bit wealthier? :p

his name is Benn Grant, he's with Wells Fargo Advisors, Asheville, NC

and like I said, he and I have been good friends for more then 30 yrs …. while I would assume that he'd be as diligent about anyone else's investments … I can't / won't make that guarantee

Looks like The O has decided to make this a priority:

http://www.bloomberg.com/politics/articles/2015-02-23/obama-to-lead-push-to-toughen-broker-rules-for-retirement-funds

My experience with Edward Jones underscores the need for this.

Curmudgeon wrote: Looks like The O has decided to make this a priority: http://www.bloomberg.com/politics/articles/2015-02-23/obama-to-lead-push-to-toughen-broker-rules-for-retirement-funds My experience with Edward Jones underscores the need for this.

^^^This.

Anybody who does not KNOW that the system is rigged to rip them off, should not be putting money into a mutual fund. I am not sying that you should not go into the room full of criminals, but you need to be very aware that all brokers are working against your interest. If they weren't, they would be fired.

The most amazing thing about the White House announcement is that if qualifies as news to anyone who has not been in a coma for 30 years. It speaks to what a docile flock of sheep the North American public has become. Honest to God, there should have been public lynchings on Wall street in 2008, not BONUSES. Good news for the Americans is that it is ten times worse in Canada where fees are well over the 2% mark with undeclared extra fees on top of that.

Bloomberg) -- The Obama administration is picking a fight with Wall Street over the handling of Americans’ $11 trillion of retirement savings, accusing brokers of skimming significant sums annually from small investors and urging new protections against biased financial advice.

I don't mind that this occurs so much for non-tax sheltered savings where you can choose your funds/investments as you wish. The fees are published and nobody is forcing your hand.

I hate that this occurs for in company retirement plans (tax-sheltered). If I want to get my company match and utilize the tax benefits of a 401k, I have no choice but to put it in a plan with much higher expenses than a Vanguard equivalent.

Mine isn't too bad in the grand scheme of things, and my wife has direct access to Vanguard funds through her 403b which is great. But many people are screwed with plans are way more expensive. Actually, her initial fund selection, the auto-invest-based-on-age plan, had an expense ratio of well over 1%. Insane.

Yeah, the fees etc were buried in the info I got on my 401k's. Even worse was the limited number of funds available to choose from, I got into a sorta low risk but low return fund in one, which turned out to be a wise decision; it didn't make much but it did post gains continually. The other was higher risk but rollercoastered and they didn't have much else to choose from.

Getting away from 'professionally managed' funds was probably the smartest thing I've ever done. I'm sure there are folks out there doing well with them, but I am not one of those.

mtn wrote: Get into a Vanguard index fund, and leave it be. Most money managers CANNOT beat the market on a regular basis; those that do typically have costs high enough to make it not worth it.

So I've talked to some people in the investment management space and netted the following:

Because of the demise of big pension funds nearly everyone now has to manage their own retirement savings, and because interest rates for low risk investments (savings accounts, etc.) are so minimal, we are all plugged in to the stock market via our 401(k), IRA or college savings accounts.

Now consider that practically every novice investor has an unbalanced portfolio (rebalancing needs to be done on a recurring basis if only to adjust to market drift), and their portfolio's earnings are undermined by high fees and significant tax consequences for trading and withdrawing funds.

What a good investment advisor does (and a robo-advisor does better) is start with your current portfolio of investment accounts and holdings, then models your ideal holdings based on your circumstance, psycology and investment objectives, then rebalances your portfolio to maximize diversification & tax efficiency while minimizing expense ratio & transaction costs ...within the constraints of your unique portfolio situation.

The robo-advisory platforms do this via algorithms based on integer linear programming, and charge very low fees to do so. Unless all your investments are locked away in things you can't control, utilizing an inexpensive advisory platform (some of these services are free, people!) seems like a no-brainer.