Fees Better Predictor Than Past Performance

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
Topic Author
tennisplyr
Posts: 3703
Joined: Tue Jan 28, 2014 12:53 pm
Location: Sarasota, FL

Fees Better Predictor Than Past Performance

Post by tennisplyr »

Interesting article in Saturdays NY Times showing that you are better off looking at a funds fees than it's past performance in fund selection.

http://www.nytimes.com/2014/06/01/your- ... -back.html
“Those who move forward with a happy spirit will find that things always work out.” -Retired 13 years 😀
steve_14
Posts: 1507
Joined: Wed Jun 20, 2012 12:05 am

Re: Fees Better Predictor Than Past Performance

Post by steve_14 »

Thanks for the link. These days we should all be shooting for total investment costs in the .1% range.
afan
Posts: 8195
Joined: Sun Jul 25, 2010 4:01 pm

Re: Fees Better Predictor Than Past Performance

Post by afan »

Steve,

I agree, but that pretty much rules out using an investment advisor, doesn't it?
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
ASUGrad
Posts: 259
Joined: Sun Oct 20, 2013 8:09 pm

Re: Fees Better Predictor Than Past Performance

Post by ASUGrad »

It does. If you really want an investment advisor. Shoot for all in costs of <0.5%. It should be possible with that new thing VG is rolling out, and it might even be possible with some independent advisors with fees in the 0.3-0.4% range.

I know most people don't need one, but some do. (Complex situation w/ very complex rebalancing, loss of or fear of loss of mental capacity, etc.)
SGM
Posts: 3341
Joined: Wed Mar 23, 2011 4:46 am

Re: Fees Better Predictor Than Past Performance

Post by SGM »

More people are becoming aware that costs matter. Yet newbies and busy professionals continue to line the pockets of the financial industry. The financial industry has a stake in making it sound difficult. Keep it simple and keep your costs low. Jack has done a real service to investors.
shawcroft
Posts: 929
Joined: Sun Feb 24, 2008 3:18 pm
Location: Connecticut

Re: Fees Better Predictor Than Past Performance

Post by shawcroft »

SGM wrote: Jack has done a real service to investors.
SGM:
+ 2 on your thought. His work over the past 50 years has simply been outstanding.
It was a delight for me to meet him ( as well as Taylor Larimore) at recent Boglehead Conferences. Our younger son met him at BH-12 and is really in awe of him.
Shawcroft
steve_14
Posts: 1507
Joined: Wed Jun 20, 2012 12:05 am

Re: Fees Better Predictor Than Past Performance

Post by steve_14 »

afan wrote:Steve,

I agree, but that pretty much rules out using an investment advisor, doesn't it?
I believe you could pay an hourly adviser or Vanguard for a few hours of advice now and then and stay below my threshold. If you require anything more than that, the best course of action is probably to simplify. Vanguard can automate so many things - rebalancing (via balanced funds), RMDs, regular transfers to your bank account, etc.
steve_14
Posts: 1507
Joined: Wed Jun 20, 2012 12:05 am

Re: Fees Better Predictor Than Past Performance

Post by steve_14 »

SGM wrote:More people are becoming aware that costs matter. Yet newbies and busy professionals continue to line the pockets of the financial industry. The financial industry has a stake in making it sound difficult. Keep it simple and keep your costs low. Jack has done a real service to investors.
Good post. I might call the victims of the financial industry mainly "oldbies" though - it seems to be the older folks that are most taken advantage of.
User avatar
Topic Author
tennisplyr
Posts: 3703
Joined: Tue Jan 28, 2014 12:53 pm
Location: Sarasota, FL

Re: Fees Better Predictor Than Past Performance

Post by tennisplyr »

steve_14 wrote:
SGM wrote:More people are becoming aware that costs matter. Yet newbies and busy professionals continue to line the pockets of the financial industry. The financial industry has a stake in making it sound difficult. Keep it simple and keep your costs low. Jack has done a real service to investors.
Good post. I might call the victims of the financial industry mainly "oldbies" though - it seems to be the older folks that are most taken advantage of.
Also the financial industry has done a good job of selling the "fear of running out of money"
“Those who move forward with a happy spirit will find that things always work out.” -Retired 13 years 😀
Post Reply