Financial proposal from Adviser

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neveragain
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Financial proposal from Adviser

Post by neveragain » Fri Feb 23, 2018 10:53 am

I received a hypothetical proposal from a financial advisor with EJ, I moved all my accounts from them but still have a 529 plan with them.
It's a proposal to grow my funds from around 200K to almost 800K over a span of 20 years. It would be half in American funds (index funds, bond index funds) and other half would be in some stocks. Is this realistic? I know there are load fees, so I wonder if that was factored in as well. I am not necessarily going to do this but I wanted to get opinions on how realistic this type of plan is.

smitcat
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Re: Financial proposal from Adviser

Post by smitcat » Fri Feb 23, 2018 11:05 am

neveragain wrote:
Fri Feb 23, 2018 10:53 am
I received a hypothetical proposal from a financial advisor with EJ, I moved all my accounts from them but still have a 529 plan with them.
It's a proposal to grow my funds from around 200K to almost 800K over a span of 20 years. It would be half in American funds (index funds, bond index funds) and other half would be in some stocks. Is this realistic? I know there are load fees, so I wonder if that was factored in as well. I am not necessarily going to do this but I wanted to get opinions on how realistic this type of plan is.
"Is this realistic?" - No , not at all.

balbrec2
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Re: Financial proposal from Adviser

Post by balbrec2 » Fri Feb 23, 2018 11:07 am

That's a double every ten years which works out roughly to
about 7% yearly return. se , Rule of 72,https://en.wikipedia.org/wiki/Rule_of_72
nothing special about that.
You can accomplish the same thing on a no load low cost
balanced fund at Vanguard. Remember those advisors first loyalty is to their
own pocketbook.
Good Luck

Balbrec2
Last edited by balbrec2 on Fri Feb 23, 2018 11:11 am, edited 1 time in total.

bloom2708
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Re: Financial proposal from Adviser

Post by bloom2708 » Fri Feb 23, 2018 11:07 am

Pass. It doesn't matter what the plan is. The fees, expense ratios, sales loads, 12b-1 fees, etc are TOO high.

Search "Edward Jones" and read the numerous threads. Many of us are escapees. Fees opened our eyes.

http://www.dinkytown.net/java/CompareFees.html

Play around with scenarios in this tool. Use .1%, 1.0% and 1.5% as your 3 fee levels. Eye opening/shocking results over 20, 30, 40 years.

I can make a plan to get from $200k to $800k in 6 years. Just add $100k new money for 6 years in a row and hope you get 0% returns. :wink:

Steer clear of EJ and other high fee salesmen. They are salesmen.
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ThisTimeItsDifferent
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Re: Financial proposal from Adviser

Post by ThisTimeItsDifferent » Fri Feb 23, 2018 11:12 am

They just want to get commissions/loads/fees i.e. money from you. I'm sure that is a projected return not guaranteed. Will that advisor or office still be in business in 20 years?

Mathematically, that is a 7.2% average annual gain. Certainly you should do better by avoiding their fees.

A 4x gain after 20 years is:
x^20=4
20 ln x = ln 4
ln x = (ln 4)/20
x = exp ((ln 4)/20)
x = 1.071773

7.2% annual gain

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CyclingDuo
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Re: Financial proposal from Adviser

Post by CyclingDuo » Fri Feb 23, 2018 11:12 am

neveragain wrote:
Fri Feb 23, 2018 10:53 am
I received a hypothetical proposal from a financial advisor with EJ, I moved all my accounts from them but still have a 529 plan with them.
It's a proposal to grow my funds from around 200K to almost 800K over a span of 20 years. It would be half in American funds (index funds, bond index funds) and other half would be in some stocks. Is this realistic? I know there are load fees, so I wonder if that was factored in as well. I am not necessarily going to do this but I wanted to get opinions on how realistic this type of plan is.
How long does it take to double your money based on rate of return? The rule of 72 applies.

At 8%, it takes 9 years.
At 7%, it takes 10 years.
At 6%, it takes 12 years.

200K could double in 10 years at 7% to $400K. Then $400K could double to $800K in 20 years time. So, if you believe that your asset allocation realistically could average a 7% rate of return, it is not unreasonable to see $200K grow to $800K in 20 years.

You don't need higher expense fee funds to do this. Nor do you need an advisor who collects a management fee to do this.

A typical 60/40 (stocks/bonds) average return is 6.99% which would just about do it for you. If you add monthly investments/contributions for those twenty years, obviously the amount will grow faster and reach a larger amount in the same time frame. There are no guarantees, but we all know that already.
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oldcomputerguy
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Re: Financial proposal from Adviser

Post by oldcomputerguy » Fri Feb 23, 2018 11:16 am

neveragain wrote:
Fri Feb 23, 2018 10:53 am
I received a hypothetical proposal from a financial advisor with EJ, I moved all my accounts from them but still have a 529 plan with them.
It's a proposal to grow my funds from around 200K to almost 800K over a span of 20 years.
Moneychimp calculates that this would require an annualized return of 7 to 7-1/2 percent over the twenty years. I don't think that's impossible, but I wouldn't do it.

Do this: ask him if he'll guarantee that return in writing, with language that says they'll pay you the shortfall if your returns lack. Let's see how sure he is of his math.
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

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randomizer
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Re: Financial proposal from Adviser

Post by randomizer » Fri Feb 23, 2018 11:23 am

neveragain wrote:
Fri Feb 23, 2018 10:53 am
I received a hypothetical proposal from a financial advisor with EJ, I moved all my accounts from them but still have a 529 plan with them.
It's a proposal to grow my funds from around 200K to almost 800K over a span of 20 years. It would be half in American funds (index funds, bond index funds) and other half would be in some stocks. Is this realistic? I know there are load fees, so I wonder if that was factored in as well. I am not necessarily going to do this but I wanted to get opinions on how realistic this type of plan is.
Seems unrealistic after fees given currently low expected returns. Better off doing it on your own and applying the BH wisdom: keep costs low, keep it simple, stay the course etc.
87.5:12.5, EM tilt — HODL the course!

dbr
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Re: Financial proposal from Adviser

Post by dbr » Fri Feb 23, 2018 11:28 am

This is a realistic estimate of the midpoint of a range of possible outcomes, some of which could be less, even much less, as well as otheres that could be greater. There is no estimate of how uncertain this is.

But the point is not whether or not this is realistic. The point is that whatever happens EJ will end up with a lot of your money while you could implement a similar plan yourself and keep all the money.

FoolMeOnce
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Re: Financial proposal from Adviser

Post by FoolMeOnce » Fri Feb 23, 2018 11:30 am

Quadrupling in twenty years with no added contributions is historically normal without excessive fee drag.

So they are giving a reasonable projection of what might occur...if you don't use them!

Standard caveats about predicting future results from past performance apply.

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Sandtrap
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Re: Financial proposal from Adviser

Post by Sandtrap » Fri Feb 23, 2018 11:34 am

neveragain wrote:
Fri Feb 23, 2018 10:53 am
I received a hypothetical proposal from a financial advisor with EJ, I moved all my accounts from them but still have a 529 plan with them.
It's a proposal to grow my funds from around 200K to almost 800K over a span of 20 years. It would be half in American funds (index funds, bond index funds) and other half would be in some stocks. Is this realistic? I know there are load fees, so I wonder if that was factored in as well. I am not necessarily going to do this but I wanted to get opinions on how realistic this type of plan is.
Perhaps you can do better without lining the pockets of others.
Walk away from it.
As fast as you would walk away from a great deal on a 1971 Ford Maverick with "new paint".Image
Why not manage your own funds?
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ThisTimeItsDifferent
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Re: Financial proposal from Adviser

Post by ThisTimeItsDifferent » Fri Feb 23, 2018 11:36 am

He's not an advisor. He's a salesperson. There's nothing wrong with salespeople, but don't think he's an advisor. The guy at the car dealer is a salesperson too. There's nothing wrong with that but I wouldn't think him acting in your best interest either.

Dottie57
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Re: Financial proposal from Adviser

Post by Dottie57 » Fri Feb 23, 2018 11:52 am

bloom2708 wrote:
Fri Feb 23, 2018 11:07 am
Pass. It doesn't matter what the plan is. The fees, expense ratios, sales loads, 12b-1 fees, etc are TOO high.

Search "Edward Jones" and read the numerous threads. Many of us are escapees. Fees opened our eyes.

http://www.dinkytown.net/java/CompareFees.html

Play around with scenarios in this tool. Use .1%, 1.0% and 1.5% as your 3 fee levels. Eye opening/shocking results over 20, 30, 40 years.

I can make a plan to get from $200k to $800k in 6 years. Just add $100k new money for 6 years in a row and hope you get 0% returns. :wink:

Steer clear of EJ and other high fee salesmen. They are salesmen.
+1 Listen to this.

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Re: Financial proposal from Adviser

Post by Grt2bOutdoors » Fri Feb 23, 2018 12:05 pm

neveragain wrote:
Fri Feb 23, 2018 10:53 am
I received a hypothetical proposal from a financial advisor with EJ, I moved all my accounts from them but still have a 529 plan with them.
It's a proposal to grow my funds from around 200K to almost 800K over a span of 20 years. It would be half in American funds (index funds, bond index funds) and other half would be in some stocks. Is this realistic? I know there are load fees, so I wonder if that was factored in as well. I am not necessarily going to do this but I wanted to get opinions on how realistic this type of plan is.
The only thing that is going to grow is the financial advisor's wallet, while your's is going to get considerably smaller.
Stop talking to this fool, move the 529 plan if you can and if you can't stop sending money to it. Open a 529 plan with Utah, etc.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Financial proposal from Adviser

Post by itstoomuch » Fri Feb 23, 2018 12:15 pm

smitcat wrote:
Fri Feb 23, 2018 11:05 am

"Is this realistic?" - No , not at all.
+1
Nothing is real, until it becomes real.
YMMV :confused
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Re: Financial proposal from Adviser

Post by Toons » Fri Feb 23, 2018 12:17 pm

Do what is right for you.
I am not going to knock American Funds.
I own a couple myself.
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Investment Company Of America.






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smitcat
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Re: Financial proposal from Adviser

Post by smitcat » Fri Feb 23, 2018 3:33 pm

Please note - I am not knocking American funds.
The OP had a prety simple question:
If he puts his money with Edward Jones in those funds, including bond funds and stocks will it quadruple in 20 years.

IMHO I believed that answer to be quite easy - no it would not.
Of course he can use this site and find much better alternatives which might have a very good chance.

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Re: Financial proposal from Adviser

Post by Jack FFR1846 » Fri Feb 23, 2018 3:39 pm

I believe the best answer to the adviser's question would be "Well thank you for this interesting offer. You'll be hearing from Vanguard soon as I've instructed them to transfer the 529 plan out of your control and into a (pick a state) plan managed by Vanguard".
Bogle: Smart Beta is stupid

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greg24
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Re: Financial proposal from Adviser

Post by greg24 » Fri Feb 23, 2018 4:06 pm

You're more likely to reach 800k without an adviser than you are with an adviser.

Dinosaur Dad
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Re: Financial proposal from Adviser

Post by Dinosaur Dad » Fri Feb 23, 2018 4:09 pm

Dottie57 wrote:
Fri Feb 23, 2018 11:52 am
bloom2708 wrote:
Fri Feb 23, 2018 11:07 am
Pass. It doesn't matter what the plan is. The fees, expense ratios, sales loads, 12b-1 fees, etc are TOO high.

Search "Edward Jones" and read the numerous threads. Many of us are escapees. Fees opened our eyes.

http://www.dinkytown.net/java/CompareFees.html

Play around with scenarios in this tool. Use .1%, 1.0% and 1.5% as your 3 fee levels. Eye opening/shocking results over 20, 30, 40 years.

I can make a plan to get from $200k to $800k in 6 years. Just add $100k new money for 6 years in a row and hope you get 0% returns. :wink:

Steer clear of EJ and other high fee salesmen. They are salesmen.
+1 Listen to this.
+1 oh my, agree with Dottie57
"Take calculated risks - that is quite different from being rash." | General George S. Patton

deltaneutral83
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Re: Financial proposal from Adviser

Post by deltaneutral83 » Fri Feb 23, 2018 4:14 pm

I think the EJ adviser is about par for the course math wise assuming this portfolio is 100/0. Equities are probably assumed to grow the historical 9% and he's scraping 1.2% off in AUM and then another 0.5% in various other fees. Probably get's close to CAGR 7.2%/7.3% which doubles every 10 years, or quadruples every 20 in this example. Of course you'll do better keeping the 1.5%-1.7% instead of giving it to EJ.

John Laurens
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Re: Financial proposal from Adviser

Post by John Laurens » Fri Feb 23, 2018 5:20 pm

If I could get a guaranteed quadrupling of my principle in 2038 I would jump on it. Of course he won’t guarantee anything. Which begs the question, why stop at quadrupling? Could of at least offered you a couple thousand percent. Weak salesman.

Regards,
John

NMBob
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Re: Financial proposal from Adviser

Post by NMBob » Fri Feb 23, 2018 7:29 pm

here you type in things like years for timelines, goals, and risk tolerance, and it will lay out a portfolio. For FREE.


Ten See if it matchs up with things from other articles or tools you can find about portfolio allocations and goal and risk.

https://www.schwab.com/public/schwab/in ... portfolios.

Ben Stein will simply tell you to buy VTI, (broad market index). And you are done.

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Taylor Larimore
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Re: Financial proposal from Adviser

Post by Taylor Larimore » Fri Feb 23, 2018 8:19 pm

neveragain wrote:
Fri Feb 23, 2018 10:53 am
It's a proposal to grow my funds from around 200K to almost 800K over a span of 20 years.
neveragain:

No one can forecast what the stock and bond markets will do in 20 years. This is a red flag that the "advisor" is misleading you.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

venkman
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Re: Financial proposal from Adviser

Post by venkman » Fri Feb 23, 2018 11:27 pm

If you're going to go with American Funds, use the ones recommended by Dave Ramsey. They return 12% a year.

Over the course of two decades, your $200k would grow to almost $2 MILLION! :happy

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nedsaid
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Re: Financial proposal from Adviser

Post by nedsaid » Sat Feb 24, 2018 12:38 am

neveragain wrote:
Fri Feb 23, 2018 10:53 am
I received a hypothetical proposal from a financial advisor with EJ, I moved all my accounts from them but still have a 529 plan with them.
It's a proposal to grow my funds from around 200K to almost 800K over a span of 20 years. It would be half in American funds (index funds, bond index funds) and other half would be in some stocks. Is this realistic? I know there are load fees, so I wonder if that was factored in as well. I am not necessarily going to do this but I wanted to get opinions on how realistic this type of plan is.
Well, I personally own Actively managed mutual funds, individual stocks, and passive index funds. I suppose a cynic could say that I am hedging my own stock picking vs. somebody else's stock picking vs. buying the index and not stock picking at all. What I am actually doing is factor tilting. I use active funds primarily for earnings/price momentum and value strategies. I also tilt towards smaller stocks. My individual stocks are mainly Large Value stocks. My index funds and EFTs also employ factor tilting. One of my biggest holding is Vanguard Small Cap Value Index ETF.

So your Edward Jones advisor is not off the wall. The problem is he buys individual stocks so that he has something to trade and to generate commissions. The perspective with those stocks will be too short term in my view. My individual stocks are long term investments and my average holding period is in excess of 5 years. Even with my Value orientation and patience, I still have about tracked the market index with those stocks. May as well have just bought the index and forgot about it.

The thing is, factor tilting sometimes trails the market. You have to be committed long term. I understand why lots of people say to heck with it all and just go with a simple Taylor Larimore three fund portfolio. Simple but very cheap and very effective. Odds are pretty good that Taylor's simple portfolio will beat the Edward Jones portfolio over time, a big factor being costs.
A fool and his money are good for business.

Shikoku
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Re: Financial proposal from Adviser

Post by Shikoku » Sat Feb 24, 2018 12:55 am

I would run away from the adviser. :wink:
"I don't worry too much about pointing fingers at the past. I operate on the theory that every saint has a past, every sinner has a future." -- Warren Buffett

student
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Re: Financial proposal from Adviser

Post by student » Sat Feb 24, 2018 3:51 am

I know this sounds snobbish. When I hear EJ, I think there is no need to proceed. If the advisor is good, he/she will not be able to continue working with EJ without comprising his/her integrity.

Topic Author
neveragain
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Re: Financial proposal from Adviser

Post by neveragain » Sat Feb 24, 2018 4:10 pm

nedsaid wrote:
Sat Feb 24, 2018 12:38 am

The thing is, factor tilting sometimes trails the market. You have to be committed long term. I understand why lots of people say to heck with it all and just go with a simple Taylor Larimore three fund portfolio. Simple but very cheap and very effective. Odds are pretty good that Taylor's simple portfolio will beat the Edward Jones portfolio over time, a big factor being costs.

I haven't heard of Taylor Larrimore 3 fund portfolio. I'll have to look it up.

Topic Author
neveragain
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Re: Financial proposal from Adviser

Post by neveragain » Sat Feb 24, 2018 4:10 pm

NMBob wrote:
Fri Feb 23, 2018 7:29 pm
here you type in things like years for timelines, goals, and risk tolerance, and it will lay out a portfolio. For FREE.


Ten See if it matchs up with things from other articles or tools you can find about portfolio allocations and goal and risk.

https://www.schwab.com/public/schwab/in ... portfolios.

Ben Stein will simply tell you to buy VTI, (broad market index). And you are done.

Thanks!

Topic Author
neveragain
Posts: 298
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Re: Financial proposal from Adviser

Post by neveragain » Sat Feb 24, 2018 4:11 pm

Grt2bOutdoors wrote:
Fri Feb 23, 2018 12:05 pm
neveragain wrote:
Fri Feb 23, 2018 10:53 am
I received a hypothetical proposal from a financial advisor with EJ, I moved all my accounts from them but still have a 529 plan with them.
It's a proposal to grow my funds from around 200K to almost 800K over a span of 20 years. It would be half in American funds (index funds, bond index funds) and other half would be in some stocks. Is this realistic? I know there are load fees, so I wonder if that was factored in as well. I am not necessarily going to do this but I wanted to get opinions on how realistic this type of plan is.
The only thing that is going to grow is the financial advisor's wallet, while your's is going to get considerably smaller.
Stop talking to this fool, move the 529 plan if you can and if you can't stop sending money to it. Open a 529 plan with Utah, etc.
I do plan to move the 529 this year from EJ. I moved two other 529 plans to Utah.

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Taylor Larimore
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The Three-Fund Portfolio

Post by Taylor Larimore » Sat Feb 24, 2018 4:20 pm

neveragain wrote:
Sat Feb 24, 2018 4:10 pm

I haven't heard of Taylor Larrimore 3 fund portfolio. I'll have to look it up.
neveragain:

This is the link: The Three-Fund Portfolio

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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nedsaid
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Re: Financial proposal from Adviser

Post by nedsaid » Sat Feb 24, 2018 6:05 pm

neveragain wrote:
Sat Feb 24, 2018 4:10 pm
nedsaid wrote:
Sat Feb 24, 2018 12:38 am

The thing is, factor tilting sometimes trails the market. You have to be committed long term. I understand why lots of people say to heck with it all and just go with a simple Taylor Larimore three fund portfolio. Simple but very cheap and very effective. Odds are pretty good that Taylor's simple portfolio will beat the Edward Jones portfolio over time, a big factor being costs.

I haven't heard of Taylor Larrimore 3 fund portfolio. I'll have to look it up.
Around here, it is like the Father, The Son, and the Holy Ghost. :wink: Taylor Larimore is the "King" of the Bogleheads and at age 93 still posts here frequently. The portfolio is US Total Stock Market Index, Total International Stock Index, and US Total Bond Market Index.
A fool and his money are good for business.

Mr.BB
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Re: Financial proposal from Adviser

Post by Mr.BB » Sat Feb 24, 2018 6:45 pm

Did his original computations INCLUDE all the loads and fees from the their funds as well as his costs? Ask him what the number would be with those expenses included. I bet his original numbers did not include them.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

Topic Author
neveragain
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Re: Financial proposal from Adviser

Post by neveragain » Sat Feb 24, 2018 8:00 pm

Mr.BB wrote:
Sat Feb 24, 2018 6:45 pm
Did his original computations INCLUDE all the loads and fees from the their funds as well as his costs? Ask him what the number would be with those expenses included. I bet his original numbers did not include them.
It says "Charges and Fees" on an initial 200K investment is $3,500. But it doesn't state if that's for load fees or not.

There might be transaction fees when the account gets churned.

Topic Author
neveragain
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Re: The Three-Fund Portfolio

Post by neveragain » Sat Feb 24, 2018 8:01 pm

Taylor Larimore wrote:
Sat Feb 24, 2018 4:20 pm
neveragain wrote:
Sat Feb 24, 2018 4:10 pm

I haven't heard of Taylor Larrimore 3 fund portfolio. I'll have to look it up.
neveragain:

This is the link: The Three-Fund Portfolio

Best wishes.
Taylor
Thanks so much!

sco
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Re: Financial proposal from Adviser

Post by sco » Sun Feb 25, 2018 12:44 am

neveragain wrote:
Sat Feb 24, 2018 8:00 pm
Mr.BB wrote:
Sat Feb 24, 2018 6:45 pm
Did his original computations INCLUDE all the loads and fees from the their funds as well as his costs? Ask him what the number would be with those expenses included. I bet his original numbers did not include them.
It says "Charges and Fees" on an initial 200K investment is $3,500. But it doesn't state if that's for load fees or not.

There might be transaction fees when the account gets churned.
1.75% is very likely yearly, meaning every year, whether you make money or not, for the rest of the time you leave your money there... That will kill you..

drk
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Re: Financial proposal from Adviser

Post by drk » Sun Feb 25, 2018 3:05 am

Did something change since your original post on the forum to make you trust EJ's salespeople again? If not, why is this even a question for you? You've been burned once, so stop touching the stove.

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