Because based upon what you wrote, it doesn't look like a 401(k) to me.
The big US indexes are in the 6-7% YTD.
Yes and no. Personally, I'm an Efficient Market Hypothesis guy which leads me to believe that anyone who says they can consistently beat the market is likely not telling the whole truth. Building on that, I'm not a believer in very active management and I prefer a more passive approach - though obviously I prefer some management when new information comes in.
How different are the investment portfolios you both are managing? Different classes of assets perform differently year-in and year-out, and you're not going to get the same performance out of a each. In other words, no single investment type (REITs, Large Cap, Small Cap, Emerging Market, etc) has ever consistently performed "the best" (see chart above)...so I'd simply ask if that is a trend or a one year anomaly? If it's a consistent trend, then yeah, I'd ask what you are paying for. If it's not, IMO it's to be expected.
Questions for you:
How did you choose the firm you are working with?
How did you choose the individual broker/advisor?
How old is the broker/advisor?
How long has your broker/advisor been in the business?
How long has he/she been with the firm?
Have you run a 'BrokerCheck' on this person?
Did this person make a serious effort to get to know you prior to making investment recommendations?
Did this person make an effort to educate you re. investing and investing wisely?
You mentioned " I am none to thrilled with their performance as I will owe them several thousand dollars for "taking care" of my investments."
This appears that you're saying you pay them after a certain period of time. I've been in the business for 43 years and while there are several ways a broker/advisor can be compensated, I've never heard of the method you seem to be using.
There are absolutely active managers out there who beat the passive management system and some which do so by a mile over time.
I know there are. Never said there weren't. Statistically it's almost impossible for someone not to do that. The EMH guy in me says that there's quite a bit of luck and good fortune in those cases as well, and I bet they still get beat by the market at times.
Mint, 24% YTD in this market is phenomenal.
Depends. What kind of holdings are they invested in? What kind of advice have you given them about how aggressive you want your portfolio to be, how much risk you want to take on, and how diversified you want it?
The holdings that have been killing me this year are my US Debt, Emerging Market, and Large Cap International Indexes. My US Equity Indexes (Large Cap, Mid Cap, Total Market) are doing much better. But I want the diversification and I want the risk profile I have. It means some years I lag behind the market, some years I crush the market.
NvaGvUp's Link
'BrokerCheck' is a way for you to see the regulatory history of a broker, including disciplinary actions.
https://brokercheck.finra.org
It's not perfect because it does not include settlements made by a firm to a client if no formal complaint was filed with a regulatory agency. But it's a good place to start.
Compared to what?
Those numbers are based on 'cherry picked' dates, so are meaningless without comparing them to a comparable investment performance.
'From 10/6/17 to 10/5/17 I'm 15.17% YTD Thru 9/30/18 23.78%"
Check your dates, because your second date (10/05/2017) is BEFORE your first date (10/06/2017).
Compared to the broader market performance. He said YTD his return is 24%. YTD, the DJIA has returned 7%, the Russell 2000 has returned 6%, the S&P 500 has returned 8%. The total market funds I've looked at have returned about 9% YTD. Sure, you can cherry pick stocks and funds that have returned more.
What is his asset allocation?
How much risk is he taking to get those returns?
What, therefore, is his risk-adjusted rate of return and how does that compare to similar portfolios with his asset allocation?
Here are the 10-year annualized average returns for each fund including principal and reinvested dividends.
1. Blue Chip - 15.50%
2. Health Science - 18.94%
3. Communications and Tech - 17.89%
4. Bond Fund - 8.24%
YTD, the top 3 funds are all over 20%. I'll let Kyle figure out the "risk-adjusted" part. Overall, I've been very pleased with the growth. Now, I'm more concerned with protecting it.
Matt
I realize its not what most on here would answer but truth be told, I don't care that much. I will have enough to live on when I decide to retire and if I won't be able to make it I will just keep working. :)
Sorry, should have been 10/6/17 to 10/5/18
Pure luck and risky since I'm in one fund this year in this 401K/PSP
Lord Abbett Growth Leaders Fund
(Yes, I know point drops are meaningless on their own; yes, Trump has little to nothing to do with this...but he does like to take credit for things without providing any context and for which he has nothing to do with).
Raising rates has multiple impacts. One is that stocks don't like it.
The other is that it is disastrous for the federal budget due to interest on $20 trillion.
I have no proof that the fed is politically motivated, but there are some reasons to wonder.
Matt
No touting here. I knew I was at risk, and acknowledged it. I just haven't heard any ideas that I like better than what I'm doing.
Matt
Colin Kaepernick files trademark for image of his hair and face
Please share how your investments went today, and we'll compare.
Matt
Mr. PigDoc,
I can't answer for anyone but myself, but yes I do have money on hand to buy stocks if I want to and they're cheap enough. I do have the bulk of my money in a 401k and it did lose value today. It will rebound and then some. I'm not to worried about it.
LOL. Do you really think renewable energy is the only thing I'm invested in? Yes cellulosic ethanol has been disappointing. You were right, I was wrong, so far.
My offer to compare stock-based investments remains. I didn't inherit my retirement.
Matt
No thanks PigDoc. I doubt if anyone here would care about my finances other than myself. In short, stocks I watch and own were a cheaper buy today. I did buy stock today. You'll have to take my word for it.
I agree, nor am I. So what are we arguing about?. Corn fuel? Please.
Matt
At that age that we no longer need to take the risk.
Big believer in the market for 35+ years though, and glad we were.
Good for you! How'd your stocks do today?
Matt
You know the answer to your question. Diversify for risk/reward. Most of us would take 40%.
PD is either very bright, very lucky, or both. Good job PD!
Get your rulers out;)
Since you do it for a living you already know each investor is different. Don't piss into the wind on this one. I have corresponded with PD before, very intelligent and self made.
I can think of reasons one would not want funds tied to a formal retirement vehicle, and sure you can also. Especially with that amount of worth to work with.
You are both impressive, but I have a nephew that at a minimum has built more than twice you combined, and is still in his 40s. Guess what, puts his pants on the same way I do. Character is what counts. PD a Naval Academy grad, he has character and so do you. I respect you both.
We have successful families on both sides. Robin and I are the least well off, and since we are good we find comfort that the rest are even better.
I just need enough to bribe St. Peter. ;)
Yes I understand how IRAs work. So does PD. Again, there are legitimate reasons, especially with significant wealth, that an investor may not want to place assets in one. You may find that absurd, but when someone with a minimum of $10M decides to take a different approach, I think I will pass on questioning their intellect and wisdom. But that's just me.
I think I’ll buy some stock in Piggy’s empire. LOL.
Matt
As so often, your question was answered, just not the way you wanted. As is also so often, you try and respond in a manner that you think makes you look like the smartest guy in the room.
As you know, I answered in a way that suggested you quit being an ass, which obviously comes naturally to you. Nice try being critical of PD by doing the same thing.
Educationally and professional experience having been a paid commercial portfolio manager, I know enough to recognize your retail experience is not in the same hemisphere as to what PD is talking about. It is obvious he doesn't suffer fools well. I could learn a lot from him.
I have a seven figure net worth, and the majority is not in tax advantage retirement vehicles either. As you said, big deal. As others said, there are reasons.
Go argue with a post now.
Huh?
I do love irony.
Matt
HFW, what was that you said about character?
WTF is wrong with you people? Honest to God, we're now in a dick measuring contest over who has greater net worth. Assailing each others professions from stating "jacking off pigs" to calling a successful financial adviser a "parasite".
Yeah, we get it. Piggy's been successful. Congrats. Seriously, congrats. Don't need to be a dick and remind everyone how rich you are. Kevin, you've been successful has well. 'Grats to you. But for heavens sake stop wallowing in the minutiae. Pretty sure that everyone that's has investments like Piggys, NGU, BEG's all know that.
And for the rest....don't make me get the wooden spoon out.
For a guy who claims to not “suffer fools”, he sure seems intent on engaging with and belittling them.
Matt
Keep it real indeed.
Carry on.
Actually, I'd call that insecurity, not arrogance.
Matt
A self admitted term from Mr. PD himself. He is now getting the argument he wanted so badly when he first posted on this thread. KPC, I'm jealous. I thought I was the only person who had the honor of getting an obscene PM from Mr. PD.
Now you're taking glee in other people's misfortune?
You, sir, are a miserable human being.
Matt
You mean like Trump does?
Matt
In the end we'll all be living on $35k per year, each to their needs, each to their abilities and all...
Amassing 20M is no easy feat., pigs feet or otherwise. That is what I call bringing home the bacon. Good for you. I don't believe you need to further defend your position or explain anything to anybody about how you invest.
The Rock
I think the advent of online trading, where any yahoo with a computer can make their own trades, has contributed to these irrational sell-offs. Savvy investors knew the rate hikes were coming. After all, the feds told us so, repeatedly. These investor wannabes hear about the hikes on the news, the day it happens, and they panic sell.
My prediction is the markets will bounce right back, just like they did last March.
Matt
That was classic, thanks. And I agree.
HDE, got the PM, thanks. Getting accepted is the hard part. I tried, did not happen.
Based on results, looks like the right decision was made.
Lots of millionaires next door.
As long as your OK not owning anything, you will never pull ahead.
"I would not be surprised if there are some very well-to-do members on here that do not brag or mention their wealth."
Yep. Debt free since age 41, but who cares really anyway 'cept me...
Maybe the best post of this seemingly endless thread and spot on
To that point I have 7 clients that come hunt with me every year that are either close to being Billionaires or in three cases multi billionaires. Except for one each of them process the great quality of being humble, generous, kind and full of genuine class. Always willing to share advice without being condescending. Genuinely GREAT Men. Secure in themselves.
Something very lacking with some in this thread
It's like meeting celebrities or famous people. My first question or what I look for is are they nice people. The game fortune etc Is not the determining factor in what type of person they are
OK Continue on with the tape measure conversation
In most years this isn’t a big deal. But it is this year because stock buybacks have become so important to maintaining share prices. Goldman Sachs estimates that the 500 biggest American companies alone will spend $770 billion on stock buybacks in 2018. That’s up 44 percent from last year. So a temporary stoppage of buybacks could easily cause the market to plunge.
Remember that December’s huge tax cut for corporations has gone mostly into stock buybacks, as many of us had predicted -- not into employee wages or new investment.
(Facepalm)
The Rock
The Rock
Chad, is your friend's company in an IRA? LOL!
It is obvious some of us subscribe to the Dave Ramsey, 'The Millionaire Next Door' approach to building security. Given my level of risk aversion, I am comfortable with that.
Then there are others here who are at a level most of us will never have the guts to even try. I love their success stories. I share them with my students. Capitalism, it makes dreams come true!
Personal debt and business debt are not the same thing and you are wise to keep the two separate.
So, if being debt free is not the secret to success, what is? Guarantee you cannot answer that question for me...
LOL, send me another obscene pm. It's been a pleasure contributing to your tantrum today.
Personal debt freedom can be managed to one's benefit if one thinks in longer terms and is smart about using the tools available to them. Debt freedom probably wouldn't apply to businesses due to their cyclical nature or adaptive business strategies.
Edit: happiness is a state of mind.
Speak to our accountants. They would be best to answer your questions and set you straight. We were established by my grandfather in 1954, construction projects operating nationwide. I am merely advised when and how debt is necessary and advantageous. I make the final decisions but have rarely if ever not followed the advice of our business accountants. There may be a better way. I am fine. Don't worry about me and the captains of our ship. That you would need an explanation of business and debt is a red flag I would heed.
The Rock
Frank, I agree, the real Rocco is much more interesting than Pluto.
Matt
"....When people are fearful, be greedy".
Matt
And, as long as we're talking about Grandfathers, mine was a self made millionaire and never worked for one jackwagon employer his entire life. He started and sold many successful business and didn't carry many, if any, personal debt notes. When he wanted something, he whipped out the Benjamin's.
So don't sit there and try to explain to me the disadvantages of not becoming personally debt free. Being able to tell any employer to pound sand at a younger age because they cannot use my debt against me is a pretty successful story up to this point.
Cheers...
Say you want to buy a new $40K pickup. You can either finance it thru the dealership for 4% interest, or you can pull $40K out of a investment that consistently earns 10% each year, and pay cash. Which would you do?
Matt
Yes how sweet it is.
GG - Ill play. I'm no "money master" for dang sure. But if I read your post correctly, I'd err to financing most of the truck. Why pull out 40K from an investment of some sort that is rolling 10% in. I may generate some debt, but the 4% interest would mean I functionally still make 6% on that investment (IE, making 10% on the invested 40K, losing 4% on the spent 40K so in effect, I'm 6% in the positive).
In that scenario, I've taken on the debt, but I'm making more $ long term than if I'd spent what I had invested.
Is that what you were drilling at? That's the approach I've taken to things, so I'm very curious? Being self employed leads one to want to save what they earn...
Yes that's the simple point I'm making. Debt, even personal debt, makes a lot of sense in certain situations.
I also understand what HDE is getting at. You can't live on credit cards and expect to get anywhere.
Matt
10% ROI - $40,000 for 5 yrs would make you about $24,420.
All that calculated....if you use a market based investment and the market goes south.....all bets are off. You could loose some of your initial investment, any gains and still owe on a $40K car loan.
"I also understand what HDE is getting at. You can't live on credit cards and expect to get anywhere."
A myth and misconception about credit cards especially high figure limit business related cards. Credit cards are used in savvy business short term business transactions, if accepeted, that would fall within the 30 days+ the grace period window. Appreciable interest on your balance is avoided if paid in full. Monthly revenue streams should dictate the use of the credit cards limit, obviously to avoid at all costs the interest incurred, by paying in full. Credit cards companies realize that a high percentage of consumers lack the temperance, willpower and discipline required, even though they may be capable, to pay their balance in full, when the option is offered to pay the minimum. Businesses on the other hand , for the most part, disciplined, or should be, know the advantages of "free" money, all things being compared and equal, for this short window and will max out their credit card if need be for revenue relief. Our American Express cards cover materials and costs and at times the monthly statement is eye popping. Invoice grace period + the credit card window grace period (don't push up too hard against this date) used in conjunction is a powerful financial tool. Discipline. When the bill comes due transfer the funds or write the check and eat hot dogs if you must that night but pay in full. The filet will be waiting for you with the garnishes.
The Rock
I hear you. I burn up my Visa and Corp. Am Ex cards every month too, for convenience sake. But they get paid in full every month, religiously. Carrying high balances and making minimum payments, on the other hand, doesn't get it done.
Matt
You are an ass. It's really that simple. Chad answered your once again anal attempt at being significant. Please, leave my name out of everything, quit pretending I am a post.
Sometimes other things factor in than just raw base numbers. heheheheh.....
Carrying forward those balances will get it done...and well done to boot. ;-)
The Rock
Seems in this world a good bit of deals or "sales" work that way, folks think they're getting a great deal. Kinda like folks bragging about their tax "refunds" .... or rather how much they overpaid.....
Hijack over...... carry on..... =D
CAN get it done, if you're leveraging those balances against higher returns than the interest on the cards. Unfortunately, I don't have that luxury often, ;-)
Matt
Matt
Credit Cards: One of the most brilliant financial aids and traps devised by man, about as close to genius as you can get heavily balanced for the institution. The 40's, 50's on the street they would wear see through socks, a fedora, and were called "shylocks". The 70's forward they were called " loansharks" wearing leisure suits and a baseball bat working out of the back of a two-tone Cadillac. Now they have drive thru windows, ATM'S all backed by the FDIC. That is what I call a "transformation".
The Rock
Good point. When I first met my wife she had no concept of interest and money management. She had every credit card known to man and carried high balances on most of them. If her paycheck covered the minimum payments, she thought she was doing fine. When I showed her what she was actually paying for all that "stuff", she said, "that's a rip-off!". She proceeded to tear up all her cards right in front of me. I was in love.
We later married and bought our first house shortly afterwards. At the closing table for the mortgage loan, I watched her go straight to the bottom line to see what we would ultimately pay for the house, including interest. She literally wanted to walk away from the deal. LOL.
Flash forward 28 years. I recently overheard my wife schooling our 22 year-old God-daughter on the dangers of credit card debt. I smiled and thought, "that's my girl".
;-)
Matt
You are Cabela's worst nightmare!! LOL. I wish I would have had your foresight. I've always politely declined their offers for a card, but I may have to rethink that.
;-)
Matt
No debt with no interest due and we can do what we want to do. So for the last 16 yrs we have no real worries. No debt and no interest is the secret.
A friend said it was not wise to pay off RE mortage early as I get no interest deduction on IRS taxes. His finance advisor said to keep your RE financed at 90% of value to get maximum IRS tax deduction. My take was since I in about 25% IRS tax bracket I only got about 25 cents on every dollar of interest paid and 75 cent was thrown away. He looked at me with a blank stare and he said would have to talk to his finance advisor to see if my idea was correct. Either way I'm RE payment free and no further worries.
We use a credit card for all purchases plus and insurance monthly payments on RE, cars, health, and plus RE taxes. But the CC is paid off monthly and no interest charges paid. Plus with we get about $1.00 off per gallon on gas from the CC rebates.
As KPC said a keeper no doubt. She seems to have had your back while you were out breaking it. :-) The little things can add up real quick. That is a good woman.
The Rock
As a self-employed architect and spec home builder, my money came in large chunks each time I sold a home. We used that money for larger material purchases and investments. My wife's steady and respectable paychecks paid the day-to-day bills.
I lost interest in my profession 15 years ago, while my wife has continued to be inspired and excel at hers. We now own a successful business in her line of work. ( I won't mention what line for fear of Piggy belittling us.). Now, I watch over the eggs, while my wife makes them.
That's my girl.
Matt