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87

Precious metals have primarily been useful as a stable store of value, not a way to make a profit The best argument in favor of precious metals has generally been that they hold their value against inflation while being hard to manipulate by governments/central banks/currency traders/etc. But that's not an investment - that's just a store of value. There's ...


60

Typical Human Advisor: Advantages: They can recommend funds and allocations that fit to your portfolio. Disadvantages: Those who are just fund salespeople in disguise will usually recommend poor-performing funds for higher commission pay. Their advice will not be much different from random person internet advice. When your portfolio drops, they still get ...


52

If you have $1 million, it makes no sense to pay a 1% of the $1 million annually for asset management on only $500k (the brokerage account). That is basically paying 2%. I agree with the other answers here, but they seem to assume a 1% fee based on the assets under management, which is not the situation you describe. I would refuse the asset management. ...


51

What occurred in 2000 and 2008 is "why this is true". If one were to have retired in 2007, with a major portion of their retirement invested in stocks, their portfolio value dropped significantly, possibly by 50% or more - if one is continuing to invest this is not a problem, you get to take advantage of the average dollar cost over your future investments. ...


35

After doing it myself for 35+ years, I considered turning it all over to an asset management company last year. After meeting with a number of them, I found a knowledgeable financial adviser that I really liked and came close to doing it. The 1.00 to 1.25 pct annual fee troubled me because in this era of deep discount commissions, that's a nice chunk of ...


31

Presume that you are using the safe withdrawal rate of 4%. So if your retirement account is $1,000,000, you are withdrawing $40,000 a year. If there is a market correction, and your retirement account loses 33% of it's value, your options are: Continue drawing $40,000 a year, which is now 6% of your savings Reduce your draw by a third to $26,800 Neither ...


23

At 50 years old, and a dozen years or so from retirement, I am close to 100% in equities in my retirement accounts. Most financial planners would say this is way too risky, which sort of addresses your question. I seek high return rather than protection of principal. If I was you at 22, I would mainly look at high returns rather than protection of ...


20

A "Fund" is generally speaking a collection of similar financial products, which are bundled into a single investment, so that you as an individual can buy a portion of the Fund rather than buying 50 portions of various products. e.g. a "Bond Fund" may be a collection of various corporate bonds that are bundled together. The performance of the Fund would be ...


18

This is a very opinion based question, but it has a lot of merit. IMHO, you do not need a FA. You guys have done really well up until this point and you are probably astute at picking mutual funds and riding out the inevitable lows. The thing you have to be careful with FAs is that the fees do not stop at 1%. Lets say your FA recommends MDLHX, which ...


17

Is it POSSIBLE? Of course. I don't even need to do any research to prove that. Just some mathematical reasoning: Take the S&P 500. Find the performance of each stock in that list over whatever time period you want to use for your experiment. Now select some number of the best-performing stocks from the list -- any number less than 500. By definition, ...


17

Which would you be more happy with: less money or no money? The interpretation of the word "risk" in this context is "potential to lose it all", enough reason for anyone to think twice about highly risky investments. Of course greater risk often brings higher returns, so it's quite literally a game of risk vs. reward. The deciding factor here is time. ...


15

This is not the answer you were hoping for. I recommend that you stay out of it and let your parents do what they want with their money. They are obviously very good savers and very thrifty with their money. At this point, they likely have more money than they need for the rest of their lives, even if it doesn't grow. It sounds like your parents are ...


14

Okay, I'm seeing a lot of answers/comments that hinge on sharp downswings and avoiding them (aka, '2008'). That's not the danger of using S&P or similar for your post-retirement holdings. The danger is a long protracted stall of the fund - such as what happened from 2000-2012. When that happens, you're withdrawing $X each year, for 10+ years, but the ...


14

Beware: two-handed financial advisor Nobody seems to have picked up on this. But the "financial advice fee-based advisor and the "asset management" commission-based advisor are the same guy. This doesn't work. Believe me, I've tried. The interaction went like "I'm looking for a fee-based advisor". "Okay, give me $2000.” Heh, literally. Over the ...


12

Decades ago I read a brochure put out by Vanguard titled "The Triumph of Indexing". It focused on the returns of managed funds vs a low cost S&P index. The concept to grasp is that if the index return is 10% (for example), and fees are 1%, the average return to investors is 9%. 1% to the 'house'. I took that to heart and stuck with the index. VIIIX ...


11

Generally speaking, when rebalancing portfolios, what should be done here? Should I sell off the 1080 USD as profit, to take my speculative investment back to 10% of my current portfolio value? Just selling 1080 is not "rebalancing". Rebalancing is an operation that involves the whole portfolio, not any single investment. Let's do the math: 10% of the ...


10

Let the man be. If you've tried again and again to convince him, and haven't, maybe he doesn't want to be convinced. It's his money, and he has every right to manage it as he sees fit. You can advise him, but its his call whether he accepts your advice or not, and for what reasons. And suppose you push and push and it gets through? Now either he has more ...


10

(Leaving aside the question of why should you try and convince him...) I don't know about a very convincing "tl;dr" online resource, but two books in particular convinced me that active management is generally foolish, but staying out of the markets is also foolish. They are: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns ...


10

Do mutual funds edit/censor underperforming investments to make their returns look better, and if so, is there any way one can figure out if they are doing it? No, that's not what the quote says. What the quote says is that the funds routinely drop investments that do not bring the expected return, which is true. That's their job, that is what is ...


10

A strategy of rebalancing assumes that the business cycle will continue, that all bull and bear markets end eventually. Imagine that you maintained a 50% split between a US Treasury bond mutual fund (VUSTX) and an S&P 500 stock mutual fund (VFINX) beginning with a $10,000 investment in each on January 1, 2008, then on the first of each year you ...


10

At 22 years old, you can afford to be invested 100% in the stock market. Like many others, I recommend that you consider low cost index funds if those are available in your 401(k) plan. Since your 401(k) contributions are usually made with each paycheck this gives you the added benefit of dollar cost averaging throughout your career. There used to be a ...


9

The question is asking for a European equivalent of the so-called "Couch Potato" portfolio. "Couch Potato" portfolio is defined by the two URLs provided in question as, A 50:50 allocation of assets between a long position in an stock fund; and a long position in a fixed-income index fund. Holding these two long positions for five years at a minimum, and ...


8

Don't set mental anchor points. I am saying this as a total hypocrite, mind you, it isn't easy to follow that advice. My suggestion would be to look at each investment and ask yourself, "Would I buy that at today's price?", because if you wouldn't you need to sell regardless of whether you are cashing out. Effectively by staying in an investment you no ...


8

Stocks, Bonds, Bills, and Lottery Tickets notes the work of Fama and French who researched the idea of a small-cap premium along with a value premium that may be useful to note in terms of what has outperformed if one looks from 1926 to present. Slice and dice would also be another article about an approach that over weights the small-cap and value sides of ...


8

If 2 different people both retired at age 60 at the start of 2008 with $1,000,000 in capital, and one took all their capital out of the stock market and placed the funds in savings earning 2%p.a., whilst the other kept the entire $1M invested in an S&P500 index fund. So who would be better off today and whose funds are likely to last longer? Have a look ...


8

Actually, finance theory doesn't suggest a general relationship between one's age or proximity to retirement and the riskiness of one's portfolio. According to modern portfolio theory, the riskiness of your portfolio should be related (only) to your risk aversion/apetite. The "common knowledge" you mention comes from the fact that many people become more ...


8

This isn't named because it doesn't represent any actual thing. Let's call it X though. For example, let's say all investments return 10%. If you put $20 into one investment and it returned 10%, then X is 10%. If you put $1 each into 20 different investments, then X is 20 * 10% = 200%, even though the outcome is indistinguishable from the other scenario. ...


7

Mostly you nailed it. It's a good question, and the points you raise are excellent and comprise good analysis. Probably the biggest drawback is if you don't agree with the asset allocation strategy. It may be too much/too little into stocks/bonds/international/cash. I am kind of in this boat. My 401K offers very little choices in funds, but offers ...


7

You may want to hold onto the $5000 and keep it in savings. Interest rates are for crap, even in "high yield" accounts, so you can rightly not consider it investing. You should be graduating college soon. It would suck if an emergency crops up to prevent you from graduating. I assume that you are going into a high paying career given your nice income ...


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