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Worth of a Financial Advisor

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  • #16
    Originally posted by Kennyt7 View Post
    According to Bogle in a personal account you lose 77% of your wealth when actively investing. Add on AUM fees and you are getting slaughtered. Learn this stiff. Its Second Grader material
    I like Bogle and Vanguard but if he had truly made this statement, it is rubbish. There are different types of active investors, from day traders to long term buy and hold investors. The day traders are akin to roulette players at a Las Vegas casino and can lose 70% or more. But the sensible buy and hold and reinvest the dividend active investors can do as well, maybe slightly better or slightly worse than the index.

    I looked at the 30 year yield of VSTAX. At 15 years it is 10.7% and since inception is 8.7%. I looked at the performance of my 40+ stocks I have had since 1990 in my Quicken and it is 9.5%. There are some big winners and some big time bankrupt companies ( Kodak) and some laggards but on the whole I mirrored the VSTAX. Not a 70% decline.

    Now if I had been jumping in and out it would be a different scenario.

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    • #17
      I am not speaking for Jack Bogle, but from listening to his talks and others that new him. Active investing and losing 77% wealth comes more from behavioral aspects of investing , than the actual investing itself. Basically investors repetitively make the wrong decisions at the wrong time, buy high and sell low and miss the best run ups.

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      • #18
        Originally posted by Random1 View Post
        I am not speaking for Jack Bogle, but from listening to his talks and others that new him. Active investing and losing 77% wealth comes more from behavioral aspects of investing , than the actual investing itself. Basically investors repetitively make the wrong decisions at the wrong time, buy high and sell low and miss the best run ups.
        Someone who is not a disciplined investor will lose even with indexed funds if he jumps in and out, buys high and sells low. Less likely to occur than a single stock like Tesla but can still occur. That is why you find people like the OP investing with AUM FA and justifying it - to help them not make blunders at the wrong moment and lose it all.

        I did dollar cost averaging with my stocks ( in the 90's and early 2000's when VG index were not mainstream) by reinvesting the quarterly dividends. When MSFT shares were laggards during the Steve Ballamer era the dividend money bought more shares of MSFT at $28 per share. Now at $330+ per share it is buying much much less shares with the money. But those past Ballamer era extra shares are generating more dividends.

        Finally i am not sure of the point of all the recent posts where the poster has AUM advisor but still is trying to justify it by showing a graph of how his FA tracked or beat the index performance and did not lose money. You want to pay AUM, go ahead an pay it. But why justify it when the evidence is clearly there that a passive low cost fund invested directly by you can give better returns. Is it to assuage the deep down regret and justify it with "vetted private investments".

        Whatever.




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        • #19
          Originally posted by Kennyt7 View Post
          According to Bogle in a personal account you lose 77% of your wealth when actively investing. Add on AUM fees and you are getting slaughtered. Learn this stiff. Its Second Grader material
          Lol. The guy sells index funds for a living. It is not bad info, but his blogs and books and talks all discredit active investing and point you to indexing (eg, his company's funds).

          Lose 77%? Maybe back when there were trade commission fees, annual fees, options fees, etc... there are none of those anymore.

          All you have to do is put your own historical account performance on a graph against S&P 500, and you see if you tracked, underperformed, or outkicked. Any major brokerage has this feature.

          ...as for the OP question, if you use AUM fee structure, you are paying too much. End of story.
          A good CFP is worth $200-400 per hour (depends on COL in the area and how busy the CFP is typically), but you should only need an hour or two per year. They really don't know much that you don't if you've been trading and managing accounts awhile. I use a CFP/CPA, and the bulk of our convos are more about what types of holdings should go where and what the breakdown of my "extra money" should go to (cash accounts, pay debt, mad money, etc). We chat occasionally about good companies or sectors or industries or the market climate overall, but we are just speculating and we know it... just like anyone else.

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          • #20
            Bogle calls it the TYRANNY OF COMPOUNDING. Go to a financial calculator and put it 8% versus 10% over 40yrs and see what happens
            2% is the average cost for the active investor
            ADD TAXES to the results for taxable accounts
            If investors understood basic math they would see the light
            The 77% I mentioned is from one of his books on funds

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            • #21
              According to Bogle a 10% return versus an 8% return over 40yrs in a taxable account,
              YOU LOSE 77% of your wealth!!!!!!!!!!!
              THE TYRANNY OF COMPOUNDING he calls it
              Read Bogle on Mutual Funds

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