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Old 04-11-2018, 07:09 PM
 
7 posts, read 6,182 times
Reputation: 15

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Hello! We have about some cash currently sitting in the saving account. My banker suggested me to use their wealth management service to invest $150k in the moderately aggressive portfolio (with annual management fee 1.5+%). He also suggests putting additional $50k in 2.5 years Securities (with a max return 18% at the end).

The bank currently manages my IRA account. In last year, the return is 9% (with a fee of 1.75%). Is it a decent return for 2017?

Shall we take our banker's advice or we should consider other investment options? Please share your experiences and advice! We are in our mid-40s.
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Old 04-11-2018, 07:14 PM
 
1,767 posts, read 1,734,799 times
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Bank advisor says it all.....run


Horrible return and high expense
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Old 04-11-2018, 07:17 PM
 
10,004 posts, read 11,098,192 times
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Quote:
Originally Posted by lifehappen View Post
Hello! We have about some cash currently sitting in the saving account. My banker suggested me to use their wealth management service to invest $150k in the moderately aggressive portfolio (with annual management fee 1.5+%). He also suggests putting additional $50k in 2.5 years Securities (with a max return 18% at the end).

The bank currently manages my IRA account. In last year, the return is 9% (with a fee of 1.75%). Is it a decent return for 2017?

Shall we take our banker's advice or we should consider other investment options? Please share your experiences and advice! We are in our mid-40s.
pick a target fund. .15 percent...easy.
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Old 04-11-2018, 07:19 PM
 
6,844 posts, read 3,928,083 times
Reputation: 15854
Why don't you put your IRA in Vanguard and manage it yourself? You do realize that investments in anything but savings is not guaranteed? 7.25% return is great, but why can't you invest in the same investments on your own? Aggressive investments are risky investments. Wonderful unless the market takes a nose dive as it has done in the past. The max return of 18% after two years less 3% two years fees is 7.5% a year, about what you are getting now. The maximum return is 18%. What's the minimum return?

Quote:
Originally Posted by lifehappen View Post
Hello! We have about some cash currently sitting in the saving account. My banker suggested me to use their wealth management service to invest $150k in the moderately aggressive portfolio (with annual management fee 1.5+%). He also suggests putting additional $50k in 2.5 years Securities (with a max return 18% at the end).

The bank currently manages my IRA account. In last year, the return is 9% (with a fee of 1.75%). Is it a decent return for 2017?

Shall we take our banker's advice or we should consider other investment options? Please share your experiences and advice! We are in our mid-40s.
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Old 04-11-2018, 10:21 PM
 
500 posts, read 569,034 times
Reputation: 691
Index funds returned about 17% last year and mine have a .17% expense ratio. So the fees are about one tenth while performing better.

Most managed funds underperform index funds while also charging higher expenses. I would just use an index fund at Vanguard or such.
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Old 04-12-2018, 06:11 AM
 
2,669 posts, read 2,603,165 times
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Index ETFs: SPY (S&P500), QQQ (NASDAQ)
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Old 04-12-2018, 07:03 AM
 
Location: Chattanooga, TN
57 posts, read 64,979 times
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Quote:
Originally Posted by lifehappen View Post
Hello! We have about some cash currently sitting in the saving account. My banker suggested me to use their wealth management service to invest $150k in the moderately aggressive portfolio (with annual management fee 1.5+%). He also suggests putting additional $50k in 2.5 years Securities (with a max return 18% at the end).

The bank currently manages my IRA account. In last year, the return is 9% (with a fee of 1.75%). Is it a decent return for 2017?

Shall we take our banker's advice or we should consider other investment options? Please share your experiences and advice! We are in our mid-40s.
Your bank is making a killing off of you with those fees. Those are exceptionally high and you are not getting returns commensurate with those fees. They are not being a good fiduciary to you and I would recommend you interview some new advisors. FWIW - I am a banker myself.

If you are not comfortable/knowledgeable with investing and still want some kind of strategy designed to preserve capital at all times - I'd agree with the choosing a Target Date Fund.

If you are not comfortabale/knowledgeable with investing but are comfortable with the fluctuations in the market AND are confident that you wont need to access/withdraw your money for the forseeable future - you could choose 1-2 ETFs or mutual funds with low fees and just enter into those funds all at once or on a dollar-cost averaging basis over the next 3-12 months.
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Old 04-12-2018, 11:10 AM
 
7 posts, read 6,182 times
Reputation: 15
Quote:
Originally Posted by bobspez View Post
Why don't you put your IRA in Vanguard and manage it yourself? You do realize that investments in anything but savings is not guaranteed? 7.25% return is great, but why can't you invest in the same investments on your own? Aggressive investments are risky investments. Wonderful unless the market takes a nose dive as it has done in the past. The max return of 18% after two years less 3% two years fees is 7.5% a year, about what you are getting now. The maximum return is 18%. What's the minimum return?
No minimum for the securities. They have a buffer rate -10%. We will get the principle with no return if the relevant Reference Return is less than or equal to zero but greater than or equal to the Buffer Value.
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Old 04-12-2018, 11:23 AM
 
7 posts, read 6,182 times
Reputation: 15
Thank you all for your replies! I am brand new in investment but am very eager to learn. Can you kindly advise me how to get started? What are the best resources to learn to invest?

As for now, since I have very little knowledge, shall I just get started with my banker's suggestions or it is quite simple to manage the fund by ourselves? We currently have about $300k in cash. Considering putting aside $100k as the emergency fund, we have $200k to invest. Which is a better way: buying real estate? or invest in the financial market? Any input is highly appreciated.

Last edited by lifehappen; 04-12-2018 at 11:32 AM..
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Old 04-12-2018, 02:06 PM
 
Location: Omaha, Nebraska
10,335 posts, read 7,916,036 times
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Quote:
Originally Posted by lifehappen View Post
Thank you all for your replies! I am brand new in investment but am very eager to learn. Can you kindly advise me how to get started? What are the best resources to learn to invest?
My suggestion is to start here: https://www.bogleheads.org/wiki/Main_Page

Quote:
Originally Posted by lifehappen View Post
As for now, since I have very little knowledge, shall I just get started with my banker's suggestions or it is quite simple to manage the fund by ourselves
It can be as simple or as complicated as you like. If you want simplicity (as I expect you do), you could invest in a balanced indexed mutual fund that holds a fixed stock:bond ratio (such as 60% stocks, 40% bonds) and call it a day. Or you can invest in a target-date fund; designed to make retirement savings easier, these start out with a very high stock allocation, and shift away from stocks and into bonds and fixed income investments as the target retirement date gets closer. (Personally, I'd favor a balanced fund over a target-date fund, but either can get the job done.)

Or if you're willing to put up with more complexity, you can buy many different funds and construct a more elaborate portfolio. It's all up to you. Personally, I think there's a lot to be said for simplicity (especially when you're just starting out).

Quote:
Originally Posted by lifehappen View Post
We currently have about $300k in cash. Considering putting aside $100k as the emergency fund, we have $200k to invest. Which is a better way: buying real estate? or invest in the financial market? Any input is highly appreciated.
Which is better: apples or floor polish? You're comparing two completely different things. Investing in the financial market can be done via indexed mutual funds or ETFs, and requires no significant work on your part apart from regularly adding to your initial investment and staying the course when the market drops. Owning real estate (outside of an REIT fund, that is) is the complete opposite of passive investing. Buying properties and flipping them or renting them out is active work. And the potential for profit in real estate markets varies hugely based on location. How much is real estate in your area appreciating, how much active attention do you want to pay to your investments, and how handy are you? Answering those questions honestly will help you decide between those two choices. Either can be profitable if you know what you're doing.
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