Well, I'm glad to have your comments--they certainly have a different tone and perspective from others. I'm looking right at my capital gains, not leaving them out at all. information I'm giving you is coming from the FA himself, so errors aren't mine, they're his. Or "over-promising." AKA drumming up business. "There is no such thing as you getting a certain amount leaving the principal untouched..." This is precisely what my FA and countless other FAs promise, along with that 4% rule.gilgamesh wrote: ↑Fri Aug 24, 2018 2:44 pmTylerLearning wrote: ↑Fri Aug 24, 2018 11:12 amWell, thanks. Not sure about this: "You can't just do the math and figure out what interest rate you are going to get." This "the yield is 2.8" is a quote for the FA, not me. Are you saying he oversimplified?MotoTrojan wrote: ↑Fri Aug 24, 2018 10:50 am
It is not that simple. Stocks and bonds pay dividends but their price also goes up and down (stocks get most of their growth from price appreciation, not dividends). You can't just do the math and figure out what interest rate you are going to get.
Bond/stock funds will essentially always have a positive yield, but the annual return can be negative if the funds price goes down. This is especially shocking to many that think bonds can't lose value.
35/65 stocks/bonds is pretty low risk. I'd read up on the 3-fund portfolio and just manage it yourself at your desired AA, or use a Target/Balanced fund.
My own comment was trying to get at his "That number is not net of fees" sentence. Let me ask a different way: If his fees are close to $500/month, and he's suggesting that he can provide me with $1,676.91 "net of fees", it means he is suggesting I will have around $1100/month from investing my $700,000 with him. And he will have around $500/month from that same $700,000.
I do understand your point that the arrangement with him is a poor one one several different grounds.
Thanks very much.
Your principal (based on each situation) shoots out interests, dividends and capital gains. You are ignoring capital gains.
My portfolio has minimal dividends and interests, my returns are mostly capital gains. I’d be very Disappointed with returns if I ignore capital gains. Even worse, if I ignore capital gains, I will give unfair weight to only 2/3rd of returns and draw erroneous conclusions - like you are doing.
Also, your paragraph on you getting $1100 and him getting $500 is all wrong...investing is not that neat. There is no such thing as you getting a certain amount leaving the principal untouched, when it comes to stocks. They are unpredictable. All we have are guidelines based on past performance, such as the 4% rule you’ve been already informed.
All across this forum, people are complaining that they've overpaid an FA and gotten poor returns, using the same way of understanding that I'm using based on my FAs information. If FAs are getting a bad rap, they need to do better at explaining what they do instead of burying it in an avalanche of impenetrable jargon.
What do you recommend as a way of evaluating the returns on an investment account, if not costs and earnings? Certainly my FA has stressed again and again that investing is unpredictable and risk-laden.