Do you understand your personal finances?

[NajdorfDefense]

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I've decided if I ever suck at online poker for some reason I could be a money manager and do better for my clients than 95% of the people out there.

Edit: 95% is probably selling myself short.

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Broker/Salesman? - I'm sure you could.

Money Manager? I'm sure you would not be in the top 5%.

I'm clearly marking a boundary btw actual investing, and sales of fin'l products.

[NajdorfDefense]

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No different than a doctor, lawyer, or acc't. And yet people famously don't shop around for the lowest-priced heart surgeon, or defense attorney.

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Well, I thinks it's quite a bit different than that.

That's all I'm saying, that a lot of people of people (assets under 500k, say) would be better off with 100% of their funds in VFINX rather than looking for professional advice. (And of course, I'm not saying that is the best solution, just an improvement for many of them.)

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Again, I feel this is not good advice. Bad advice is not much of an improvement over bad advice with high fees.

To me, this is exactly the same comparison as going to a bad lawyer, or a bad and expensive lawyer. You should not hire either of them.

This is a roundabout way of me saying you have to educate yourself, I suppose.

Optimal low-cost, low-effort would be to get a recommendation from a local, fee-only fin'l advisor. Talk to the guy twice a year, pay $25-100/hr or whatever, and get a complete fin'l plan that incorporates all aspect of your life, or investing life.

[Soh]

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100% asset allocation to equities

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What does this mean?

Thanks

Soh

[daryn]

i might be the rare case that has no idea and DOESN'T want to learn, really.

[BeL0wMe]

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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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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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Clipper and Muhlenkamp? Christ those funds suck, Fido Value (FDVLX) is almost as bad. Glad I manage my own money, seeing now what the professsionals invest in, and what poor choices they make

[NajdorfDefense]

Muhlenkamp has beaten the market by 440bps annually for the last 10 years after fees. Twice in the last 5 years he ranked in the top 1%.
FDVLX by 410 bps.
CFIMX has changed managers, but by 340bps. Obviously a manager change should cause one to re-think an allocation.

Your primacy bias is astounding.

[spider]

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Again, I feel this is not good advice. Bad advice is not much of an improvement over bad advice with high fees.

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Naj, calling low cost index funds "bad" is going a bit far.

I get your sentiment but this is just not how things are for many people. Forget the doctors & lawyers and think about middle class working people which are a much bigger part of the population. I can't come up with a precise number, but for sure more than 50% of all people out there with saving > 10k would get better returns going 100% VFINX over whatever they are doing now. Hell, as an example look at some of Metetron's posts on the finance board where he won't even concede that his bond funds should go in his non-taxable account rather than taxable. How do you rank him compared to the general population?

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Optimal low-cost, low-effort would be to get a recommendation from a local, fee-only fin'l advisor. Talk to the guy twice a year, pay $25-100/hr or whatever, and get a complete fin'l plan that incorporates all aspect of your life, or investing life.

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Absolutely, this is great advice. But how many people are doing this?

[NajdorfDefense]

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Again, I feel this is not good advice. Bad advice is not much of an improvement over bad advice with high fees.

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Naj, calling low cost index funds "bad" is going a bit far.

I get your sentiment but this is just not how things are for many people.

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Optimal low-cost, low-effort would be to get a recommendation from a local, fee-only fin'l advisor. Talk to the guy twice a year, pay $25-100/hr or whatever, and get a complete fin'l plan that incorporates all aspect of your life, or investing life.

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Absolutely, this is great advice. But how many people are doing this?

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Spider, I believe you said 100% VFINX, to be clear. Putting all your eggs in a solely large-cap, US-basket, [that's less tax-sensitive than even a few good active managers] is not good advice.

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people (assets under 500k, say) would be better off with 100% of their funds in VFINX

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I never said indexing was bad, no need to put words in my mouth.

[spider]

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I never said indexing was bad, no need to put words in my mouth.

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Alright, my bad. We probably agree 90% here, I just think you underestimate how poorly the average American allocates their savings.

And as far as 100% VFINX, I should probably qualify that I am thinking of someone young and saving $X each year. It would be a pretty horrible allocation for someone retired or close to retirement and I certainly am not saying it's a great idea for anyone.