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How to convince a co-resident to choose a passive fund over an active fund?

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  • How to convince a co-resident to choose a passive fund over an active fund?

    Hello,

    I have recently taken a big interest into finance and during some of our morning conference time each week we have been going through the WCI book. One of my co-residents has been doing a great job saving but in addition to having his money with an advisor charging 1% AUM fee he is also has most of his money in FAGAX with ER of 1.060 (he apparently isnt paying any of the up front fees).

    I have been urging him to go the passive route with VTI. His argument is that the 15 year average return for FAGAX is 15 % while VTI is only 10.36. He knows that past performance doesn't dictate future performance. He is happy paying the 1% since FAGAX has a 4.7% greater return. What would you say to him to convince him that passive investing is the best way to accumulate wealth over the long term?

    P.S. this same guy lost $ 1000 on GME over the past couple weeks.

    Thanks!
    Last edited by Peds; 02-10-2021, 11:47 AM. Reason: spell check

  • #2
    It sounds like he isn't asking for your input. You can only do so much. It's the same reason why I don't sit in the room and argue with chronic pain patients.

    Comment


    • #3
      Originally posted by sportsdoc12 View Post
      What would you say to him to convince him that passive investing is the best way to accumulate wealth over the long term?
      nothing.

      let him make/lose more money than you.

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      • #4
        Unless you are planning on marrying him I would shrug and move on with my life.

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        • #5
          Sounds like someone who doesn't necessarily make the best decisions. Try to point out the fact that given the AUM fees and ER on that fund he is indeed NOT getting the returns he thinks he is. Pure silliness.

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          • #6
            Originally posted by Anne View Post
            Unless you are planning on marrying him I would shrug and move on with my life.
            Anne beat me to it. I opened up the thread just to say unless you are married to the co-resident, it isn't your problem.

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            • #7
              Originally posted by sportsdoc12 View Post
              Hello,

              I have recently taken a big interest into finance and during some of our morning conference time each week we have been going through the WCI book. One of my co-residents has been doing a great job saving but in addition to having his money with an advisor charging 1% AUM fee he is also has most of his money in FAGAX with ER of 1.060 (he apparently isnt paying any of the up front fees).

              I have been urging him to go the passive route with VTI. His argument is that the 15 year average return for FAGAX is 15 % while VTI is only 10.36. He knows that past performance doesn't dictate future performance. He is happy paying the 1% since FAGAX has a 4.7% greater return. What would you say to him to convince him that passive investing is the best way to accumulate wealth over the long term?

              P.S. this same guy lost $ 1000 on GME over the past couple weeks.

              Thanks!
              why do you care, looks like his fund beats yours.

              Comment


              • #8
                Originally posted by sportsdoc12 View Post
                Hello,

                His argument is that the 15 year average return for FAGAX is 15 % while VTI is only 10.36. He knows that past performance doesn't dictate future performance. He is happy paying the 1% since FAGAX has a 4.7% greater return. What would you say to him to convince him that passive investing is the best way to accumulate wealth over the long term?

                P.S. this same guy lost $ 1000 on GME over the past couple weeks.

                Thanks!
                Obviously not if he is making that argument.

                Comment


                • #9
                  "What would you say to him to convince him that passive investing is the best way to accumulate wealth over the long term?"
                  Absolutely nothing. The sounds of silence.

                  Comment


                  • #10
                    Well we are definitely not getting married. Sounds like I should just shut it and move along! Probably the best advice out there. Thanks guys.

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                    • #11
                      My chief resident yelled at me as a pgy3 when I pointed out during a "financial" presentation that the advisors speaking to us had a high aum and loaded funds and were basically salesman.

                      Comment


                      • #12
                        Originally posted by ACN View Post
                        My chief resident yelled at me as a pgy3 when I pointed out during a "financial" presentation that the advisors speaking to us had a high aum and loaded funds and were basically salesman.
                        He probably didn’t want to lose free steak dinners.

                        Comment


                        • #13
                          Our financial lectures came from an advisor who was married to one of the residents a class ahead of me. He would manage assets for free for all of the residents just to get them through the door. I just looked him up, and evidently he is fee-based without any useful credentials. I think his wife is now an attending there. So even if you know he is fleecing your co-residents, you have to hold your tongue. I wonder if he is still showing up to PGY4 didactics and fishing for clients there. I wish my job were that easy.

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                          • #14
                            Originally posted by ACN View Post
                            My chief resident yelled at me as a pgy3 when I pointed out during a "financial" presentation that the advisors speaking to us had a high aum and loaded funds and were basically salesman.
                            dang. Reminds me of when I was doing one of my fellowships and the program coordinator sent out an email about a financial presentation by an advisor. Turned out to be a NWM agent. I went to her office and politely explained my feelings. Needless to say, said agent didn't come give a talk

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                            • #15
                              Sad. Most docs fall into this trap. Not much else you can do. Probably not worth your time and energy unless he is a very close friend and asks your opinion.

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