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I keep hearing how 'the stock market' has been up a lot this year - 30% or so for the S&P 500?
Some of my money is with a 'financial advisor' that a friend recommended. When I look at 2 IRAs (a traditional one that was a rollover from company 401k? and a roth IRA) that's with that FA, I took the closing value on 12/31/12 and subtracted it from the amount I see on the investment company website today, then divide by the 12/31/12 amount... that's how you figure year to date performance, right?
1 account grew 10% and the other grew 18%. Should I be disappointed? the 10% one is in a REIT mutual fund. The other is a mix of bond and stock funds. I am 45 years old (don't need the money for a long time so I can take risks?)
Should I be disappointed? Sure the return will vary based on what I am invested in. But for a 45 year old, it'd be skewed more to stocks and they did well? If I was asking this and was 85, I would thing the rate I could expect would be lower cause I'd be less into stocks.
Can I accept a drop rather than growth? yes. How much? I could sit tight with 30 - 40% drop and if I was in the right thing, know that the account will grow before I need it.
Each FA will have their own thinking on how to invest money. But if they put you in even an crappy equity fund, you aren't going to get a good return (can they put you in a 'fund they like' because they will get more commission? Is that allowed these days?). How do you know that you need to change FA?
Understand how mutual fund 'beta' ratings work. If your funds are underperforming, they probably have a beta below 1.0. This means they have less volatility than the market. When the market goes up, your fund go up, but slightly less. On the other hand, when the market goes down, your funds go down slightly less.
A beta over 1.0 will be accelerated higher than the market. Over the past year, it has been nice to be in high-beta funds, but is also more risky.
Talk to your advisor about getting into a more aggressive portfolio with higher betas. BUT, be prepared to accept bigger losses when it goes down.
just because it has poorer performance doesn't mean it's got low beta, right? It could be just a bad group of funds.
And what to invest in isn't really my questions. Getting 10% in 1 account and 18 in another - as a 45 year old, should I expect better? For my age and risk tolerance, shouldn't I have gotten a higher return? and how do you know what that number is for a given year?
I keep hearing how 'the stock market' has been up a lot this year - 30% or so for the S&P 500?
Some of my money is with a 'financial advisor' that a friend recommended. When I look at 2 IRAs (a traditional one that was a rollover from company 401k? and a roth IRA) that's with that FA, I took the closing value on 12/31/12 and subtracted it from the amount I see on the investment company website today, then divide by the 12/31/12 amount... that's how you figure year to date performance, right?
1 account grew 10% and the other grew 18%. Should I be disappointed? the 10% one is in a REIT mutual fund. The other is a mix of bond and stock funds. I am 45 years old (don't need the money for a long time so I can take risks?)
Should I be disappointed? Sure the return will vary based on what I am invested in. But for a 45 year old, it'd be skewed more to stocks and they did well? If I was asking this and was 85, I would thing the rate I could expect would be lower cause I'd be less into stocks.
Can I accept a drop rather than growth? yes. How much? I could sit tight with 30 - 40% drop and if I was in the right thing, know that the account will grow before I need it.
Each FA will have their own thinking on how to invest money. But if they put you in even an crappy equity fund, you aren't going to get a good return (can they put you in a 'fund they like' because they will get more commission? Is that allowed these days?). How do you know that you need to change FA?
thoughts?
so are your funds tied to the S&P? Based of your answer they are not. Find out what indexes your funds are tied to and then you will get your answer. Don't complain about 10%...it's 10x better than a savings accounts...and 1,000,000 better than a kick in the nuts.
I look for anything over 7% a year. But that averaging out over 7% a year like over the last 20 years--good years and bad. 10% and 18% are good---but what about in down years? What's the expected return then?
Location: Chapel Hill, NC, formerly NoVA and Phila
9,779 posts, read 15,793,171 times
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OP,
I can give you a comparison of how my retirement did. I am 46 years old and consider myself a somewhat conservative investor (i.e balanced mutual funds are my friends). I just went through the exercise of comparing the net worth on Nov. 30, 2013 to that on Dec. 31, 2012. The only amount I added during those 11 months were $10,500 (2012 IRA contribution and 2013 IRA contribution) so I subtracted that (plus its earnings) out of my current value.
My overall retirement portfolio returned 17.6%. That is with 10% of my portfolio in CDs earning 4.5% and another 12% of my portfolio in a Guaranteed Interest Account earning 4%. The remaining 78% is made up of a mix of stock funds and balanced funds of various levels of risk (such as Fidelity Contra, Vanguard Wellington, American Century Ultra, T. Rowe Price Growth and Income fund, a stock index fund, and a variety of others that are similar).
Pulling the CDs and the Guaranteed Interest Account out of the mix, my portfolio of mutual funds gained 22%.
What kind of fees are you paying this financial advisor?
thanks for the info. She makes her money selling load funds - A and C type. are you doing that account management on your own? I could pick some no load funds myself. are financial advisers worth the money they get paid? We just spoke to several advisors over the last few weeks. It seems nebulous how to choose one. Certainly not quantitatively. He earned x% for people the same age as me. and that other person earned y%? how much risk the different clients were willing to take makes the difference.
I keep hearing how 'the stock market' has been up a lot this year - 30% or so for the S&P 500?
Some of my money is with a 'financial advisor' that a friend recommended. When I look at 2 IRAs (a traditional one that was a rollover from company 401k? and a roth IRA) that's with that FA, I took the closing value on 12/31/12 and subtracted it from the amount I see on the investment company website today, then divide by the 12/31/12 amount... that's how you figure year to date performance, right?
1 account grew 10% and the other grew 18%. Should I be disappointed? the 10% one is in a REIT mutual fund. The other is a mix of bond and stock funds. I am 45 years old (don't need the money for a long time so I can take risks?)
Should I be disappointed? Sure the return will vary based on what I am invested in. But for a 45 year old, it'd be skewed more to stocks and they did well? If I was asking this and was 85, I would thing the rate I could expect would be lower cause I'd be less into stocks.
Can I accept a drop rather than growth? yes. How much? I could sit tight with 30 - 40% drop and if I was in the right thing, know that the account will grow before I need it.
Each FA will have their own thinking on how to invest money. But if they put you in even an crappy equity fund, you aren't going to get a good return (can they put you in a 'fund they like' because they will get more commission? Is that allowed these days?). How do you know that you need to change FA?
thoughts?
You need to stop worrying about short-term fluctuations. It will go up and down as time passes, but over the long run, you want to make an annualized 6% after inflation (Nominal returns are totally irrelevant, what matters is purchasing power)
You want to look at periods of time at least 20 years, preferably longer, 30 is much better. Find the return and then adjust it for inflation. Again, nominal returns are meaningless bs, what good is money when you can't buy anything with it after all?
Don't look at what happens in one year or the next - you'll get yourself into trouble by selling when it drops, and hurt yourself in the long run.
thanks for the info. She makes her money selling load funds - A and C type. are you doing that account management on your own? I could pick some no load funds myself. are financial advisers worth the money they get paid? We just spoke to several advisors over the last few weeks. It seems nebulous how to choose one. Certainly not quantitatively. He earned x% for people the same age as me. and that other person earned y%? how much risk the different clients were willing to take makes the difference.
what are the funds you have in there? im curious to see the fees. i dont use a financial advisor and i dont own any funds with loads. i wouldnt be thrilled with your returns if i was you. but i dont know what you have said to your financial advisor which may have impacted how they determined the right mix for you. it sounds like you want to be more aggressive than your portfolio.
being 61 i have about 40% in a growth and income mix that is up 20% and 60% in an income and capital preservation model which is alot of bonds and that is up 3%.
that mix is the right amount of volatility and income for our retirement.
the growth model i used to use is up 25% ytd but it has gotten quite protective .
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