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Old 04-30-2013, 02:03 PM
 
22,769 posts, read 26,201,775 times
Reputation: 14558

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Quote:
Originally Posted by hnsq View Post
And who would pay for the nothing short of insane cost it would take to run something like that?
state banks , like i said.


Quote:
http://www.forbes.com/2009/02/05/mut...tual_fund.html
Gates: There are complex costs to establish a fund, but they're not as daunting as one might expect. It basically boils down to a lot of legal/administration (initial board meetings, prospectus prep, etc.). I think we paid about $25,000.
Yes, the "Insane" startup sum of $25,000 would certainly swamp state governments.

Good thing we have private banks on Wall Street looking out for our retirement interests instead. I'm sure they're doing it purely out of altruism.
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Old 04-30-2013, 02:24 PM
 
9,856 posts, read 13,419,463 times
Reputation: 5453
Quote:
Originally Posted by le roi View Post
state banks , like i said.
Quote:

Right...and where would state banks get the money to offer an almost unprofitable product?
Yes, the "Insane" startup sum of $25,000 would certainly swamp state governments.

Good thing we have private banks on Wall Street looking out for our retirement interests instead. I'm sure they're doing it purely out of altruism.
They didn't just pay $25k. Did you even read the article?

They said:

legal/admin: $25k
transfer fees/printing/postage: $250k
salaries: $500k

Those are absolute best-case scenarios. Additionally, that assumes per-account minimum investments which means the middle class will not be able to use them.

You are just advocating for more passive index funds that are now state-run? Your entire article about economies of scale. If you actually believe in economies of scale, why the hell would you ever want a tiny ($50 million, as was given in your article) fund that could be wiped out at the smallest hiccup in the market as opposed to a larger (multi-billion) wall street firm that is prepared to weather the storm?

Would you seriously risk your retirement on a $50 million fund? Most of those don't exist five years after they start? I wouldn't be stupid enough to trust my retirement to something like that.
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Old 04-30-2013, 02:34 PM
 
977 posts, read 1,553,769 times
Reputation: 1906
Quote:
Originally Posted by hnsq View Post
This really couldn't be farther from the truth. Comprehensive, diversified managed plans allocated across the various risk sectors always outperform indices. You would have to be fairly stupid to pick a single fund and hope it beats the market just because it is 'managed'. Funds have a set goal, and only beat the market under those conditions.
Always? Surely you're joking. Show the evidence that the majority of active funds beat their benchmark indices? You can't. You know, you can easily put together "comprehseinve, diversifed" allocations of index funds too and they'll beat your managed allocation most of the time.

It's a situation where you are too biased to see the truth or you know the truth, but since you get your money working in the investment world, you too want to keep the con game going. It's like what Upton Sinclair said: "It is difficult to get a man to understand something, when his salary depends on his not understanding it."
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Old 04-30-2013, 02:38 PM
 
9,856 posts, read 13,419,463 times
Reputation: 5453
Quote:
Originally Posted by Broncos Quarterback View Post
Always? Surely you're joking. Show the evidence that the majority of active funds beat their benchmark indices? You can't. You know, you can easily put together "comprehseinve, diversifed" allocations of index funds too and they'll beat your managed allocation most of the time.

It's a situation where you are too biased to see the truth or you know the truth, but since you get your money working in the investment world, you too want to keep the con game going. It's like what Upton Sinclair said: "It is difficult to get a man to understand something, when his salary depends on his not understanding it."
Did you simply not read what I wrote? Obviously a single fund almost never outperforms benchmarks. 95% of funds don't beat benchmarks on their own. That isn't their goal. They seek to dramatically beat benchmarks under certain economic and political conditions. You DIVERSIFY THE FUNDS YOU HOLD so that your net portfolio (not active fund, but NET PORTFOLIO) beats benchmarks year over year.

Good god, at least try to read what I write this time, or will you blindly reply against anything that has anything to do with wall street without even bothering to read the post first?

It is difficult for me to listen to someone who has no experience in an industry beyond a few articles he read online (but now suddenly thinks he is an expert). How arrogant can you be?
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Old 04-30-2013, 02:56 PM
 
22,769 posts, read 26,201,775 times
Reputation: 14558
Quote:
Originally Posted by hnsq View Post
They didn't just pay $25k. Did you even read the article?

They said:

legal/admin: $25k
transfer fees/printing/postage: $250k
salaries: $500k
Right, the $250k and $500k are would be paid for through the fees generated by the fund over time, like every other mutual fund out there.

Quote:
Those are absolute best-case scenarios. Additionally, that assumes per-account minimum investments which means the middle class will not be able to use them.
What makes you think those are the best-case-scenarios that assume a per-account minimum?

Quote:
You are just advocating for more passive index funds that are now state-run?

No, that's not JUST what I'm advocating. Jesus christ, learn to read. I said you'd have to change the 401k structure. What I described was a handful of tax-preferenced equity index funds and bond index funds that citizens can invest in, bypassing the crooks on Wall Street as well as their employers' control.

Quote:
Your entire article about economies of scale.
That article is about starting a mutual fund. You wanted to know how much it costs, and the article provides that information.

Quote:
If you actually believe in economies of scale, why the hell would you ever want a tiny ($50 million, as was given in your article) fund that could be wiped out at the smallest hiccup in the market as opposed to a larger (multi-billion) wall street firm that is prepared to weather the storm?
Who said state funds would be $50 million? You're inferring something from that article that I never said.

Quote:
Would you seriously risk your retirement on a $50 million fund?
Again, who said state funds would be $50 million? I certainly didn't. You're just pulling more sh*t out of thin air as usual.
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Old 04-30-2013, 02:58 PM
 
16,753 posts, read 9,103,803 times
Reputation: 6781
Quote:
Originally Posted by fibonacci View Post
Wrong.

Use any compound interest calculator online and start with an easy example---say $100,000 earning 7% interest over 50 years.

Now change the interest earned to 5% (which amounts to a 2% annual fee) and you'll see your earnings drop by near 2/3rds.


What financial advisers should really talk about are the powers of compounded fees rather than the power of compounded returns. Let's be real here, even though many 401ks have less than 2% fees, many have higher fees. Also, even if you have lower fees, many people earn less than 7% returns and in reality earn only 3-5%.
Good math points over the long term --- AND if you have an extremely high fee average of your funds and get below historical average in returns.

Why are we okay with these same management fees for the Public Pension systems and Social Security - but up in arms over them in a 401K - which probably has options for funds with extremely lower management fees like an S&P 500 index fund with a management fee of 0.1%?
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Old 04-30-2013, 03:10 PM
 
Location: Central Texas
13,720 posts, read 25,525,017 times
Reputation: 9216
Quote:
Originally Posted by Iamme73 View Post
Please read for comprehension, I did not use the word most. The company stock as the only option in the 401k plan existed for a huge percentage of workers, not counting the huge percentage of workers whose employers don't offer the 401k and that begins to explain why the 401k plan fails as a retirement vehicle which is how it is being sold to the American public.
I don't believe the company stock choice was the only option for a "huge percentage or workers."

The early leaders of 401K plans were tech companies such as HP and Microsoft. I studied many of these plans to understand how to tailor my company's recruiting. Enron employees were fried during the meltdown because they had most of the 401K money in their 401Ks, although they had many choices. Dell for some years offered their matching contribution in Dell stock, but the employee contribution could be steered to any of their many fund choices. A vesting schedule was applied to the Dell matching - when those shares could be sold and replaced with other investments.
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Old 04-30-2013, 06:26 PM
 
Location: Ohio
19,875 posts, read 14,221,081 times
Reputation: 16075
Quote:
Originally Posted by fibonacci View Post
PBS Frontline: Wall Street eats 2/3rd of your 401(k)
What percentage of Americans manage their own 401(k) plans, and thus do not lose 2/3rds to Wall Street™?

What percentage of Americans use a financial entity that operates on a fixed fee, and thus do not lose 2/3rds to Wall Street™?

What percentage of Americans can manage their 401(k) plan to equal the gains that might be made using a Wall Street™ broker?

Critically questioning...


Mircea
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Old 04-30-2013, 06:39 PM
 
1,521 posts, read 1,610,817 times
Reputation: 538
Quote:
Originally Posted by fibonacci View Post
Just another example of the facade of social mobility in the US. All the laws on the books are written to protect the uber rich and Wall Street banks due to the fact the government is impregnated from top to bottom with friends of Wall Street. How are the regulators supposed to regulate when there's a revolving door of employees between government regulators and Wall Street? Then when Wall Street's gambling blows up, tax payers have to bail them out so our entire way of life doesn't collapse due to financial armegeddon. Yeah, America is "the land of the free" alright. NOT.

PBS Drops Another Bombshell: Wall Street Is Gobbling Up Two-Thirds of Your 401(k)
That is why we must protect Social Security. In the end, it may be all we have left.
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Old 04-30-2013, 08:25 PM
 
1,922 posts, read 1,496,146 times
Reputation: 796
Quote:
Originally Posted by GregW View Post
We could do a lot to reduce the income gap by eliminating the cap on taxable income to support social security insurance. We could also install an income tax the eliminated any payments by people below the 95th percentile. The rich own the country so let them pay for running it.

Why not soak the rich? After all they do have all the real money.
You want to bring income equity by having th government take more than it does?

You would be happier with nothing changing in your income, by just knowing that the government is taking more from someone who makes more than you?
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