Rate my advisers portfolio please.

[jpg7n16]

He gave his 60 day notice and said he would no longer do anything for me. He was insulted with my "rear-mirror view... Your account has had a return of 7.4% a year over the past five years, 8.1% a year over the past three years, and 5.6% over the year ending 2/2012."

Isn't that a bit hypocritical to say not to look in the past, and then give you past returns as reasons why?

But yes, he's done well for you. He was more conservatively invested through the 08 fall than you normally would have been, so that was to your benefit. Doesn't mean it was right for you, but just that it happened to work in your favor. Here are the figures for a Target Date fund over those same timeframes:

Vanguard Target Ret 2030 Inv CL (VTHRX)

YTD Performance 9.51% (as of as of 03/23/2012)
1 Year* 2.77%
3 Year* 22.63%
5 Year* 2.19%
* Performance as of 02/29/2012

Dont any IFA's charge fee's based on performance?

Legally, you're usually not supposed to.

From: SEC Raises Threshold For RIAs To Charge Performance-Based Fees

The Securities and Exchange Commission issued an order today that raises two thresholds as of September 19 that determine whether registered investment advisors can charge performance-based fees.

Under the order, a person or company will need to have at least $1 million in assets under management with the investment advisor or have a net worth of $2 million at the time a contract is signed to be charged performance-based fees, which allow an RIA to charge a percentage of capital gains or capital appreciation earned by a client's funds. Such fees often are charged by hedge fund managers.

From: Series 65 Study Guide - Client Communication and Compensation - Investment Advisory Contracts | Investopedia

SEC Rules on Written IA Contracts
SEC rules impose the following conditions on a written investment advisory contract:

• Performance-based fees are generally prohibited (we'll discuss further in the next section

From: Series 65 Study Guide - Client Communication and Compensation - Compensation | Investopedia

As mentioned above, performance-based fees are generally prohibited. Only two types of clients may be charged such a fee:

• Registered investment companies (mutual funds)
• An individual with an account value in excess of $1 million (Uniform Securities Act), or
• An individual with an account value in excess of $750,000 AND a net worth of at least $1.5 million (Investment Advisers Act)

In these cases, a performance-based fee (known as a "fulcrum fee") is permitted. A fulcrum fee provides for a base fee to be paid to the adviser, with additional fees permitted for performance above a specific benchmark. However, this is allowed only if the base fee would be reduced equally for inferior performance beneath the benchmark.)

[rerod]

Well, my Dads farm sold and I just received the majority of my part. I have already started a transfer of these funds to my Prime Money Market at Vanguard and am now faced with the decision on how to invest it with Vanguard. If I invest all of this new money in the total stock market fund (VTSAX) It would increase my stocks percentage from 32% to 58%. Still a little shy of the 70/30.. But closer, and I wouldnt have to sell any of my other funds. As conservative as it is..There was some thought put into my present portfolio.

8% VINEX Vanguard International Explorer Fund
30% VBIAX Vanguard Balanced Index Fund Admiral Shares
20% VWEAX Vanguard High-Yield Corporate Fund Admiral Shares
36% VFIJX Vanguard GNMA Fund Admiral Shares
6% VTIAX Vanguard Total International Stock Index Fund Admiral Shares

Pretty easy fix. Just wondering about timing..

[rerod]

Still sitting on the side lines with this cash. sigh This is a suger high.. Isn't it? How will the market react when Romney looses?

[rerod]

Tough crowd..
My bad on the rep dem stab. I bet market will drop temporarily if Obama wins. But Im still bearish long term if Romney wins

So I guess my conservative portfolio is appropriate for now

[Petunia 100]

Hi Rerod,

If you're worried about investing a lump sum at what may be a market peak, remember you don't have to go "all in". You can decide to move X dollars per month/quarter/year into stocks and just leave the rest in cash in the meanwhile.

[rerod]

Thanks.. Yes Im dollar cost averaging.

I know it would be bad.. But I'm almost wishing on another 08-09 dip

[disneysteve]

Thanks.. Yes Im dollar cost averaging.

I know it would be bad.. But I'm almost wishing on another 08-09 dip

Those who are young and early in their investing lives hope for low prices and market dips to load up on cheap shares.

Those who are older and nearing or in retirement hope for bull markets and rising values because they need those investments to start funding their living expenses.

It all depends on your point of view.

[rerod]

Those who are young and early in their investing lives hope for low prices and market dips to load up on cheap shares.

Those who are older and nearing or in retirement hope for bull markets and rising values because they need those investments to start funding their living expenses.

It all depends on your point of view.

My point of view is.. "I may never use much of this money since I will spend my tiaa cref first". So I should probably invest it more for my children's time line..

I moved a bit Friday..

VINEX Int. Explorer Fund 3.9%
VTIAX Total Int. Stock Index Fund Adm 5.9%
VTSAX Total Stock Market Index Fund Adm 3.4%
VBIAX Balanced Index Fund Adm 17.3%
VWEAX High-Yield Corp Fund Adm 11.1%
VFIJX GNMA Fund Adm 20.1%
VMMXX Prime Money Market Fund 38.3%


Plenty of cash on hand at this time for investing a chunk if we fall of the "cliff." in 2013. Or just dollar cost averaging if I have the patience. But I want most of the money invested aggressively within a 5 years, coming out of a solid bond fund instead of sitting in the money market hopefully.

What my question is.. I'm spoiled using a easy "total bond market" account like in my tiaa-cref retirement, combined with one domestic and one international equities fund. Three whole funds.. Does Vanguard have a total bond market fund? And are VWEAX and VFIJX good cash holding spots at this time for short term before investing?


suggestions?

[andrewkr80]

Hi there,

I work in the financial planning industry in the UK (based in Glasgow).

My gut feeling is that paying an adviser to use passive instruments (index trackers) means that you are not getting a brilliant deal. A good adviser should be able to identify in most instances the 20% of actively managed funds that consistently beat the index and create a properly asset allocated portfolio that matches your attitude to risk. My personal view is that your portfolio cannot generate any alpha and should therefore be at the barest minimum cost (I would grudge paying more than 0.3% per year really).

I note that your adviser only charges if your portfolio gains and that sounds great but I would double check that as it is totally unheard of over here, perhaps you are not getting full disclosure. Also check if this is based on nominal or real outperformance ie after accounting for inflation.

I know that in the states passive investing is very popular (Vanguard have launched here as well) but in the UK we have mutual funds called Investment Trusts which date back to the 1880's (they originally invested in the emerging markets in the United States!). These funds can often have annual charges of only 0.5%. I think that's a great deal for a fund that has a chance to beat the index! I wonder if you can access them over there as this is better than the 2% you often get from a standard mutual fund (unit trust).

Anyway, hope that's helpful!

Cheers,

Les

20% of funds consistently beat the index? This is news to me and would love to see numbers backing up this claim.

[jpg7n16]

So I guess my conservative portfolio is appropriate for now

Do what? You wanted to leave the advisor because he was not aggressive enough, and now you're wanting it to be conservative??

I moved a bit Friday..

VINEX Int. Explorer Fund 3.9%
VTIAX Total Int. Stock Index Fund Adm 5.9%
VTSAX Total Stock Market Index Fund Adm 3.4%
VBIAX Balanced Index Fund Adm 17.3%
VWEAX High-Yield Corp Fund Adm 11.1%
VFIJX GNMA Fund Adm 20.1%
VMMXX Prime Money Market Fund 38.3%

I don't like this at all. It is not anywhere aligned with your goals, or what you told us you wanted. You wanted to be more aggressive, and now that you've taken the reins, you've moved even further off track.

You moved it around based on fears of a fiscal cliff, not based on a sound investment strategy. Investors who base their decisions on emotion significantly underperform.

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=3&cad=rja&sqi=2&ved=0CC4QFjAC&url=http%3A%2F%2Fwww.qaib.com%2Fpublic%2Fdownloadfile.aspx%3FfilePath%3Dfreelook%26fileName%3Dadvisoreditionfreelook.pdf&ei=c-GXULK_CIr22AXTh4CICA&usg=AFQjCNFwWBetw8xOGdROK8RQS4BwUts0Hg

I don't like what you've done w/ the portfolio. I don't think it's anywhere near what you want/need. I don't like your strategy to DCA in over 5 years. And I stand by my previous statements in this thread that you would benefit from an advisor, and that just because you can manage your own accounts for free based on what you read online, doesn't necessarily mean that you should.

What other alternative do you have? Put it all in cash until you trust someone? That's directly against your growth objective.

Does Vanguard have a total bond market fund?

Yes. It's called the Vanguard Total Bond Market Fund. Also comes in an ETF version.

https://personal.vanguard.com/us/funds/snapshot?FundId=0084&FundIntExt=INT

https://personal.vanguard.com/us/FundsSnapshot?FundId=0928&FundIntExt=INT

And are VWEAX and VFIJX good cash holding spots at this time for short term before investing?

No. They are not cash funds. One is a high yield (aka high risk) bond fund, and the other mortgage backed securities.

If you don't know things like this, I'm really questioning if you should be in charge of the investing.

suggestions?

I'd suggest you invest more based on an overall strategy around your timeframe and risk tolerance, rather than on your fears about upcoming events. If you can't do that, you should find another advisor.

[rerod]

Do what? You wanted to leave the advisor because he was not aggressive enough, and now you're wanting it to be conservative??
I don't like this at all. It is not anywhere aligned with your goals, or what you told us you wanted. You wanted to be more aggressive, and now that you've taken the reins, you've moved even further off track.

Leave my adviser?
No, he quit, remember? I didnt agree with the conservative portfolio he bought for me.
If you look back. My first post showed my portfolio without the money market attached.. The house was just sold.
This is a better comparison which shows the 50k in equities I just bought..

VINEX 6.3%
VTIAX 9.6%
VTSAX 5.5%
VBIAX 28.0%
VWEAX 17.9%
VFIJX 32.6%

On the contrary.. I'm headed in the direction I wanted. But yes Im not very bull lately. And will take as long as I feel investing the cash thank you.

[jpg7n16]

Sure thing bud, let's take a look back. Since these are your own words, let's see what you really said you wanted...

Iv expressed to him that I dont want to miss the boat when the economy improves.. He has told me nothing has really changed, and he is still cautious.

Is my FA to conservative? Any input would be appreciated..

That seems too conservative to me.
I'd just let your FA know that you're willing to be a little more risky (assuming you are) and see what he then suggests.

I have expressed this idea to Dick.. His reply was " nothing has changed" and mentioned china..
I think he experienced shell shock, as we all did, when the market fell.

Does he know something.. or have a gut feeling which we dont?

So I guess my conservative portfolio is appropriate for now

On the contrary.. I'm headed in the direction I wanted. But yes Im not very bull lately.

"Is my advisor too conservative? I don't want to miss the boat when the economy improves."
"I've expressed to my advisor that I'd like to be more risky"
<then suddenly>
"I'd like to be conserative for now."
"I've made it even more conservative than what I was upset with my advisor over, therefore I'm moving in the direction I wanted."




Moral of the story, if the portfolio was too conservative at 66% bonds, 34% stocks -- then it's WAY too conservative at 36% cash, 38% bonds, and 26% stock.

And will take as long as I feel investing the cash thank you.

I guess that any input bit wasn't true then. You asked for input I gave it. Sorry you don't like it, but it's the truth. You are not invested appropriately based on the goals you put forward here in this thread.

You asked advice on "reshuffling" and my advice is not to take 5 years to do it. I don't believe that you should dollar cost average in a large lump sum of money, as the cost of sitting out of the market on 80% of your money offsets the benefit of averaging your money in.

I mean, why on earth would you want to take 5 years to get properly invested, when you could do it right now?

[rerod]

See what you fail to understand is that I just ran into cash. still with me?

And as of right now Im a bit more aggressive than earlier. still with me?

And when it comes to your advise.. I think Im just fine and you just run along now.. understood?

[Mr Nice Guy]

Wow OP, you literally just got free advice from a CFP and many others and are acting this way? I say you owe the man an apology, he just wanted to help.

[rerod]

Wow OP, you literally just got free advice from a CFP and many others and are acting this way? I say you owe the man an apology, he just wanted to help.

jpg has made some valid suggestions. It's the belittling manner in which he speaks which doesn't work for me.

How many times does he need to tell me its to conservative? I already know that.

How many times does he need to tell me my DCA in over 5 years is to long. for him.

I wonder if he has ever told a client.. "I mean, why on earth would you want to take 5 years to get properly invested, when you could do it right now?"
Thats a belittling question. Not a suggestion

"If you don't know things like this, I'm really questioning if you should be in charge of the investing".
I bet he says that to all his clients..think?