Re: Do you understand your personal finances?
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right, but as it turns out most of these professionals are a big waste of money, yet few people know that.
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O RLY? Are you going to prove 'most?' I doubt it.
I think if they put a random person in a target VGuard or Fido fund, it'd be better than what 90% of people could do on their own. Or a balanced fund. Something a broker could do with 10hrs of training, for example.
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I meant these guys dont beat the market, so ETFs are better. Obviously a financial advisor can do better than a doctor buying individual stocks.
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1) ETFs don't beat 'the market,' so aren't necessarily better than anything else. They're not even as predictable as they should be, according to recent research.
2) Not everyone's goal is to 'beat the market.' Most rich, successful people I know have other fin'l goals related to investing.
You take care not to define your terms, but I assume you mean the SPX. Most clients are very, very unhappy when you are down 20% with their money and the SPX is down 23%. Very unhappy.
A standard asset allocation program has been crushing the SPX since at least 2000, it would take any legit, competent fin'l advisor - fee only or broker, about 15 mins to do a minimal template that would have beaten the SP500 - if that was the bar you set.
Small caps also dominate large-caps over time. So it's very easy to beat the SPX as long as your universe includes simple things like small-cap stocks and Int'l stocks.
I believe long-term UST bonds were beating stocks from 1982 until relatively recently, and for far less risk. You should only put all your investable assets in the SPX if you're looking for 100% US large-cap exposure, which is going to be terrible advice anyway.
10 year returns -
VFINX {the market} returned 7.85% annually over 10 years.
Fido Balanced [incl bonds obviously] 10.7%
Fido Contra - 10.8
FDIVX - 13.2
FLPSX - 15.4
FDVLX - 12.1
DODGX - 14.1
CWGIX - 13.7
Clipper 11.8
Colum Acorn 15.1
Davis NY 10.2
ITHAX - 15.6
BJBIX - 16.9
LM Value Trust - 12.4
LAVLX - 14.7
Meridian Value - 17.9
Muhlenkamp - 12.7
Those are all 10-yr returns, all pretty much 3-10% over the SPX, annually, for 10 years [I own all of them for myself or my clients]. Meridian has more than doubled the return of the index, all returns after fees, of course, feel free to check some of these funds on MStar.
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