1.5% portfolio fee for MFA IRA from Merrill Lynch (bonds, brokerage, value fund)
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Yes, 1.5% annually is WAAAAAAY too high. Just think, if you invest a lump sum today, in 30 years you will have lost about half of it to fees.
If you don't want to choose your own investments, then choose a good all-in-one fund, designed to be your only investment vehicle. The Target Retirement and LifeStrategy funds at Vanguard are excellent. Fidelity offers the Fidelity Freedom Index funds, which are also excellent. (That "Index" in the name is very important). They also offer the Fidelity Freedom funds, which I would not touch with a ten-foot pole.
You really can't be the judge on the value someone else perceives in their advisor and the fee they pay them. It's beyond rediculous just to spot off "you're getting robbed" and then tell someone to move all their funds to vanguard and manage their own money.
You've got a lot to learn. Read The Boglehead's Guide to Investing, and The Boglehead's Guide to Retirement Planning. From the looks of things, you have vastly overcomplicated your investment strategy and left everything in the hands of a very expensive outfit. That 1.5% fee you are paying will likely end up costing you tens, if not hundreds of thousands in returns.
It isn't vastly overcomplicated. It's actually very simple. The MFA at ML buys and sells based on their research department mutual funds. I don't pay commissions for the trades and I don't get a phone call to discuss at length what is being bought or sold. I've been through that before with a FA and it's exhausting plus it eats up my time discussing and reading about investments. I pay 1.5% of the portfolio value. They invest based on an extensive survey I filled out which assesses risk tolerances and many other things. There isn't anything special about my retirement than anyone else's retirement so ML figured out that the majority of people have the same goals, so why not have them follow the same program instead of customizing it for each customer. They also have another option instead of the MFA, where the FA picks the investments but overall he doesn't do any better than the MFA. That makes sense because he would be acting alone instead of using the entire research department at ML which guides the MFA. This is very simple for me, I don't bother looking at the trades every day and only review the monthly statements.
Why do you trust the information that's on that specific website?
People trust that website because it is based on Modern Portfolio Theory, hard facts, and common sense. The information has been compiled by many contributors, and has been scoured for accuracy. It is not brought to you by any company looking to profit by selling you anything.
Vanguard is a unique company. It is owned entirely by its funds, which are in turn owned by its shareholders. Vanguard is to Merrill Lynch as a credit union is to a for-profit bank.
That's your personal opinion and not actually an indicator of the value someone personally gets out of the money they spend for services. While the 1.5% is relevant it's somewhat irrelevant. If that number was 1% or even 0.5% people would still object based on cost and what you "could" do on your own cheaper. The mantra for cheaper do it yourselfer is fine until you don't do it right, don't stick to the plan, don't stick to the asset allocation, rebalancing or don't plan properly for tax situation. The good folks over at vanguard, the home of lost cost investing say an advisor can be worth a lot
It isn't vastly overcomplicated. It's actually very simple. The MFA at ML buys and sells based on their research department mutual funds. I don't pay commissions for the trades and I don't get a phone call to discuss at length what is being bought or sold. I've been through that before with a FA and it's exhausting plus it eats up my time discussing and reading about investments. I pay 1.5% of the portfolio value. They invest based on an extensive survey I filled out which assesses risk tolerances and many other things. There isn't anything special about my retirement than anyone else's retirement so ML figured out that the majority of people have the same goals, so why not have them follow the same program instead of customizing it for each customer. They also have another option instead of the MFA, where the FA picks the investments but overall he doesn't do any better than the MFA. That makes sense because he would be acting alone instead of using the entire research department at ML which guides the MFA. This is very simple for me, I don't bother looking at the trades every day and only review the monthly statements.
A well-chosen all-in-one fund will do all of the trading and re-balancing for you. No phone calls.
For comparison purposes, an all-in-one fund at Vanguard will cost you about one-tenth of what ML is charging.
Yes, 1.5% annually is WAAAAAAY too high. Just think, if you invest a lump sum today, in 30 years you will have lost about half of it to fees.
If you don't want to choose your own investments, then choose a good all-in-one fund, designed to be your only investment vehicle. The Target Retirement and LifeStrategy funds at Vanguard are excellent. Fidelity offers the Fidelity Freedom Index funds, which are also excellent. (That "Index" in the name is very important). They also offer the Fidelity Freedom funds, which I would not touch with a ten-foot pole.
You are saying there are no fees in those funds? Are you sure isn't hidden internally and you just aren't aware of them?
My take away from your posting, is that anything with the word Index in the fund is a good solid investment. I know you are trying to be helpful, but I have to ask. If it were that simple than why does ML and others have huge research departments. Why not they all invest in some Index fund, fire the research department and not bother at all? What would be the point if it were that simple? Who is to say what a good all-in-one fund is going to perform as well or better in the future? If there is something that guarantees 8% a year or better return, I think given the current situation the world would sign up for that, wouldn't it?
Would you have made this recommendation for these exact funds 10 years ago? Will you make them 10 years from now? That's the thing, I work in IT, so I know what the better solution is because I have specialized knowledge the clients don't have. Let's say you are 100% correct, but how do I obtain your skills to guide my own investments? That has to come at a time investment of mine to do so.
I think many of you who do your own investing don't realize your time involvement over the years for you to get where you are now, assuming you are very successful at it. It would take me a long time to do this on my own. These minor tweaks, such as saying stay away from Fidelity Freedom funds, it would take a significant time investment on my part to get to that place.
That's your personal opinion and not actually an indicator of the value someone personally gets out of the money they spend for services. While the 1.5% is relevant it's somewhat irrelevant. If that number was 1% or even 0.5% people would still object based on cost and what you "could" do on your own cheaper. The mantra for cheaper do it yourselfer is fine until you don't do it right, don't stick to the plan, don't stick to the asset allocation, rebalancing or don't plan properly for tax situation. The good folks over at vanguard, the home of lost cost investing say an advisor can be worth a lot
What's my personal opinion? That's not even a real response. It's not my opinion that going cheap doityourselfer works until you don't cover all the bases. That's not opinion, niether is the fact you can't accurately value what someone else's perception of value is
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