I've had my IRA in Betterment for the past 2.5 yrs. Betterment invests in low fee ETF's only and charges 0.15%/yr in fess. They allow the user to manage their portfolio only by changing the investment mix (stocks/bonds). My mix over the last 2.5 yrs has averaged at 40% stocks and 60% bonds. As of today my returns have been

Earnings over the 2.5 yr period: 6.5% or ~3%/yr !! Time weighted: 7.2%

I'm thinking this is pretty low even though my mix is high in bonds. I'm 58 and working part time and I'm trying to protect my portfolio hence my 40/60 mix. For sake of argument let's say my current portfolio is worth $100,000.

In order to get better returns I'm thinking of switching to Fidelity and have them manage this IRA portfolio instead of Betterment. I'm not very knowledgable or interested in money management.

I realize that Fidelity will charge much more for the service than the very low Betterment fees of 0.15% /yr. But if they can bring me returns closer to 6-7%/yr then it's worth it correct?

To that end is there a calculator tool available online that allows me to compare my returns to the average/typical returns over the past 2.5 yrs for a 40/60 mix portfolio? Or is there a way to do it myself?

closed as off-topic by Chris W. Rea, Pete B., Nathan L, Brythan, JoeTaxpayer Apr 18 '18 at 14:48

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Nobody can give you a safe 6% return with that portfolio under current conditions. It looks like the current 10 year treasury is yielding about 2.2%. With 60% in bonds, the stocks would have to yield about 12%, which just isn't happening safely now.

  • Would you consider my current portfolio return of 3.5%/yr over the past 2.5 yrs normal? – MikeRin Nov 16 '16 at 19:16
  • 3
    Well the S&P two year return is about 5.36%. So, 40% that and 60% 2.2% is 3.46%, so you got somewhat better than would be expected for that asset allocation. – zeta-band Nov 16 '16 at 23:40

I realize this advice is late, but for others who may see it...

It may be worth while to investigate Warren Buffet's advice. "Invest in Index EFT's". He had a 10 year bet ($500k wager) against 5 managed funds to beat the VOO index and they could not come close. Index EFT's average 10% per year, but you have to be prepared to ride out market fluctuations with how close you are to retirement (have ~ 3 yrs in living expenses easily available and not subject to market conditions).

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