This is bad right?? [my investment earnings]

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Topic Author
Girlmomlife
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Joined: Mon Jul 15, 2019 1:54 pm

This is bad right?? [my investment earnings]

Post by Girlmomlife » Thu Jul 18, 2019 4:51 pm

Try to make a long story short. I am a divorced woman. My ex-husband used to take care of our investments. I was a little overwhelmed at the time of the divorce and I needed some help. I trusted my friend who is a financial advisor to help. I didn’t really think that much about it until recently. I finally decided to educate myself. I am trying to leave my financial advisor without damaging the friendship.
I was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?

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Wiggums
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Re: This is bad right??

Post by Wiggums » Thu Jul 18, 2019 4:58 pm

The returns depends on what you were invested in, fees to the FA and expense ratios, etc.

scout1
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Re: This is bad right??

Post by scout1 » Thu Jul 18, 2019 4:59 pm

It’s not great but at least you didnt lose money.

A 50/50 stock bond portfolio would be up around 15% since then.
Last edited by scout1 on Thu Jul 18, 2019 5:00 pm, edited 1 time in total.

FoolMeOnce
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Re: This is bad right??

Post by FoolMeOnce » Thu Jul 18, 2019 4:59 pm

It seems low, but we need more information to make a conclusion. Have you taken any money out, including dividends, interest, capital gains distributions? Have you made any contributions? How aggressively are you invested: 100% equities or something more conservative? Any international?

The S&P 500 has gained more than 19.5% since September of 2017 with dividends reinvested, but that might not be the correct benchmark for your circumstance.

tibbitts
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Re: This is bad right??

Post by tibbitts » Thu Jul 18, 2019 5:10 pm

Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
Try to make a long story short. I am a divorced woman. My ex-husband used to take care of our investments. I was a little overwhelmed at the time of the divorce and I needed some help. I trusted my friend who is a financial advisor to help. I didn’t really think that much about it until recently. I finally decided to educate myself. I am trying to leave my financial advisor without damaging the friendship.
I was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
You may want to post your portfolio according the the forum guidelines for asking portfolio questions - you'll get more useful replies.

There was recent thread about the "without damaging the friendship" thing, but it was inconclusive, unless it's been updated very recently.

Ferdinand2014
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Re: This is bad right??

Post by Ferdinand2014 » Thu Jul 18, 2019 5:11 pm

It depends on what benchmark your comparing it to. If you compare it to say the S&P 500, then yes. It is possible he has you invested in more diversified investments such as bonds or cash in a conservative allocation which would mean a lower return, but less likely a big loss in a bad market. It might be more helpful if you posted your investments in the standard format we use on this site so a more accurate response and suggestion can be given. It would also be helpful to know what fees from the advisor and expense ratios the funds invested are.


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Stinky
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Re: This is bad right??

Post by Stinky » Thu Jul 18, 2019 5:21 pm

Wiggums wrote:
Thu Jul 18, 2019 4:58 pm
The returns depends on what you were invested in, fees to the FA and expense ratios, etc.
Yes, we would need to know the fees and the investments.

I’m betting that the fees will be shockingly high. I’m not sure that the “friendship” will survive once all the facts are known.
It's a GREAT day to be alive - Travis Tritt

retiredjg
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Re: This is bad right??

Post by retiredjg » Thu Jul 18, 2019 5:24 pm

I suspect your advisor is making money at your expense. But we can't make a blanket statement - for example, if he has you invested in only bonds, the performance might be pretty good.

Tell us about your agreement with him - do you pay a percentage to him every year? That could explain it. Or he might be putting you into very expensive funds and he might even be putting you into funds that have front end loads. None of that is illegal but it sure cuts into your profits. So also tell us about what he has you invested in.

NotWhoYouThink
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Re: This is bad right??

Post by NotWhoYouThink » Thu Jul 18, 2019 5:25 pm

What did you tell your friend about your goals and risk tolerance? Does your portfolio reflect that?

It's good that you are starting to look at it and take control. I second the recommendation to post in the format for asking investment questions, it will help you learn and people here will make some good (but not completely consistent) suggestions.

If moving your investments ends the friendship it isn't a friendship it is a business relationship. Might as well find out.

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Cycle
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Re: This is bad right??

Post by Cycle » Thu Jul 18, 2019 5:28 pm

He may have had a good chunk of your assets in cash, and had there been a 40% correction you'd have been commissioning a bust in the advisors image.

You still may if Krakatoa erupts tomorrow.
Never look back unless you are planning to go that way

Jags4186
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Re: This is bad right??

Post by Jags4186 » Thu Jul 18, 2019 5:32 pm

Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
Try to make a long story short. I am a divorced woman. My ex-husband used to take care of our investments. I was a little overwhelmed at the time of the divorce and I needed some help. I trusted my friend who is a financial advisor to help. I didn’t really think that much about it until recently. I finally decided to educate myself. I am trying to leave my financial advisor without damaging the friendship.
I was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
It’s 6% higher or returned 6% annualized?

The following portfolio from 9/1/17 - 6/30/19 returned 6.13% annualized. $100,000 would have grown to $111,500.

50% Vanguard Total Bond Market Index Fund
35% Vanguard Total Stock Market Index Fund
15% Vanguard Total International Index Fund

This is a pretty basic 50/50 3-fund portfolio.

Depending on your age and the way you answered your friends questions on how risk adverse you are your returns could/should be higher or lower.

For example, following a divorce you may have been very conservative not wanting to risk losing any money. You could be invested very conservatively.

With regards to not damaging the friendship I think the best you could do is say to your friend that you really appreciate her helping you during your time of crisis but now you feel that you are ready to take the reigns back and are going to move your assets to Vanguard/Fidelity/TD Ameritrade/Schwab.

If it turns out your friend has you in load funds or has a high expense ratio I wouldn’t really get too upset. Presumably you went to her for help and she works for a company. She has to work you into her company’s system.
Last edited by Jags4186 on Thu Jul 18, 2019 5:39 pm, edited 1 time in total.

aristotelian
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Re: This is bad right?? [my investment earnings]

Post by aristotelian » Thu Jul 18, 2019 5:38 pm

6% isn't bad. The S&P hit 2900 in Feb and Sept 2018. It recently broke above 3000 after going way down. 6% over that time isn't bad at all, especially if you also held bonds (which have lower expected return) and international stocks (which have underperformed the U.S.). We would need more information about the portfolio and fees, but it doesn't sound too bad based on the information you have provided.

Shallowpockets
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Re: This is bad right?? [my investment earnings]

Post by Shallowpockets » Thu Jul 18, 2019 5:42 pm

Don't lament the past results.
Go forward by ditching your FA. Forget the friendship. He should know that 6% in the last two years is not good at all, especially since he did the advice.
Beware of friends who are FAs, realtors, or anything related to getting your money. This is business. On their end they see it that way, but you are stuck in the friend mentality.
With friends like that you don't need enemies.
Without knowing all the details as some have alluded to we cannot know exact problems.
but, we do know this. Your FA friend is supposed to be competent and he is not. Oooh , a rush to judgement there? No. It is explicit in the facts. 6% in two years.
There is your math.
6% divided by two years = incompetent.

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prudent
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Re: This is bad right?? [my investment earnings]

Post by prudent » Thu Jul 18, 2019 5:42 pm

OP, in your earlier topic you mentioned you have decided to leave your advisor. If that is true, and you know you can do this going forward, I wouldn't give another moment's thought to what happened up until now. You don't want to debate it with your advisor, you can't change it, so I strongly encourage you to let it go. Regardless of whether your results were horrible or terrific (which depends on what you were invested in), that's in the past. Even if your past results weren't great, it's possible they were still better than they would have been without the advisor if you had made rookie mistakes.

So look to the future, develop an asset allocation and rebalancing plan that fits your goals and risk tolerance, and feel good about taking charge.

Also... when people tell me they are leaving their advisor, I always ask if they are mentally prepared for a downturn in their investments. Some people cannot stay the course and end up selling low out of panic, sitting out of the recovery due to fear, then buying back in when things have already gone up and missed out. It's one benefit of having an advisor - they will try to keep you on the path. Some people just can't sit tight without an advisor. It's just something to think through before it occurs.

MotoTrojan
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Re: This is bad right?? [my investment earnings]

Post by MotoTrojan » Thu Jul 18, 2019 5:44 pm

aristotelian wrote:
Thu Jul 18, 2019 5:38 pm
6% isn't bad. The S&P hit 2900 in Feb and Sept 2018. It recently broke above 3000 after going way down. 6% over that time isn't bad at all, especially if you also held bonds (which have lower expected return) and international stocks (which have underperformed the U.S.). We would need more information about the portfolio and fees, but it doesn't sound too bad based on the information you have provided.
Where was the S&P500 in September 2017 when OP invested...?

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Sandtrap
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Re: This is bad right?? [my investment earnings]

Post by Sandtrap » Thu Jul 18, 2019 5:59 pm

Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
Try to make a long story short. I am a divorced woman. My ex-husband used to take care of our investments. I was a little overwhelmed at the time of the divorce and I needed some help. I trusted my friend who is a financial advisor to help. I didn’t really think that much about it until recently. I finally decided to educate myself. I am trying to leave my financial advisor without damaging the friendship.
I was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
Whether to leave your financial advisor "who is your trusted friend", is another matter altogether. Search the forum archives "google" "leaving financial advisor" and read the many many posts on this. Enough for you to post a thread of your own on just this.

But, there's no way to know if he's been helping or not.
Why?

Your 2 year return of 6% might be really great, or really bad.
Why?

Because.
There's no way of knowing except "guessing" unless you edit your original post to include this information.
Portfolio Review Request
https://www.bogleheads.org/forum/viewt ... =1&t=6212

You can use the "pencil icon" to edit your post to include it.

If you do part from your advisor.
Still . . post for a portfolio review in a brand new post for help in that direction, if you care to.

j
Last edited by Sandtrap on Thu Jul 18, 2019 6:19 pm, edited 1 time in total.
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Topic Author
Girlmomlife
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Re: This is bad right?? [my investment earnings]

Post by Girlmomlife » Thu Jul 18, 2019 6:00 pm

Thanks so much! I really appreciate all of the advice. I am ready to dump my advisor! If anything I am sure the returns would have been better without the fees!

Mr.BB
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Re: This is bad right?? [my investment earnings]

Post by Mr.BB » Thu Jul 18, 2019 6:04 pm

It all depends on your allocation. There is a big difference between a portfolio that is 90% stock funds and 10% bond funds versus if your allocation was 70% bond and 30% stocks.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

MotoTrojan
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Re: This is bad right?? [my investment earnings]

Post by MotoTrojan » Thu Jul 18, 2019 6:14 pm

Girlmomlife wrote:
Thu Jul 18, 2019 6:00 pm
Thanks so much! I really appreciate all of the advice. I am ready to dump my advisor! If anything I am sure the returns would have been better without the fees!
If you are uncomfortable managing things yourself you can use Vanguard PAS for 0.3%.

Are most of your holdings in a taxable account? If so there will be a tax liability for changing things but if you really have only gained 6% in portfolio value then your capitals gains is probably closer to 2-3% (rest of gains would be dividends) and it wouldn't be much tax to just cut your losses, move this to cash, and start fresh.

Very curious your exact portfolio though.

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GerryL
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Re: This is bad right??

Post by GerryL » Thu Jul 18, 2019 6:15 pm

retiredjg wrote:
Thu Jul 18, 2019 5:24 pm
I suspect your advisor is making money at your expense. But we can't make a blanket statement - for example, if he has you invested in only bonds, the performance might be pretty good.

Tell us about your agreement with him - do you pay a percentage to him every year? That could explain it. Or he might be putting you into very expensive funds and he might even be putting you into funds that have front end loads. None of that is illegal but it sure cuts into your profits. So also tell us about what he has you invested in.
ALL financial advisors make money at their client's expense. FA'ing is their profession and they need to make a living. But it is important that the client understands how much s/he is paying and agrees that the value of the service is worth it. Know what you're buying and know how much you're paying.

Most/many of us here on this forum have determined that we don't see the value of paying someone else to manage our money for us.

Trader Joe
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Re: This is bad right?? [my investment earnings]

Post by Trader Joe » Thu Jul 18, 2019 6:25 pm

Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
Try to make a long story short. I am a divorced woman. My ex-husband used to take care of our investments. I was a little overwhelmed at the time of the divorce and I needed some help. I trusted my friend who is a financial advisor to help. I didn’t really think that much about it until recently. I finally decided to educate myself. I am trying to leave my financial advisor without damaging the friendship.
I was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
Yes, I agree with you that your return is very low. Best of luck.

tibbitts
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Re: This is bad right?? [my investment earnings]

Post by tibbitts » Thu Jul 18, 2019 6:41 pm

Girlmomlife wrote:
Thu Jul 18, 2019 6:00 pm
Thanks so much! I really appreciate all of the advice. I am ready to dump my advisor! If anything I am sure the returns would have been better without the fees!
Well, maybe, but you haven't addressed the issue of how to dump your adviser without losing the friendship.

retiredjg
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Re: This is bad right?? [my investment earnings]

Post by retiredjg » Thu Jul 18, 2019 7:09 pm

Girlmomlife wrote:
Thu Jul 18, 2019 6:00 pm
I am ready to dump my advisor! If anything I am sure the returns would have been better without the fees!
So, why don't you post what you have in the format we use to help people with their portfolio questions?

See the link at the bottom of this message for how to do that. The closer you follow the link, the easier it is to help you and that means you will get more and better advice than if you shortcut your way through the format.

owenmia
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Re: This is bad right?? [my investment earnings]

Post by owenmia » Fri Jul 19, 2019 7:25 am

Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
Try to make a long story short. I am a divorced woman. My ex-husband used to take care of our investments. I was a little overwhelmed at the time of the divorce and I needed some help. I trusted my friend who is a financial advisor to help. I didn’t really think that much about it until recently. I finally decided to educate myself. I am trying to leave my financial advisor without damaging the friendship.
I& was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
I would be happy to get 6% over 15 years. Initially, I was expecting 10% based on what the s&p earned in the past. Now, I am expecting my earnings will be less than the 6%-7% that the s& p earned over the past decade.

tibbitts
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Re: This is bad right?? [my investment earnings]

Post by tibbitts » Fri Jul 19, 2019 7:35 am

owenmia wrote:
Fri Jul 19, 2019 7:25 am
Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
Try to make a long story short. I am a divorced woman. My ex-husband used to take care of our investments. I was a little overwhelmed at the time of the divorce and I needed some help. I trusted my friend who is a financial advisor to help. I didn’t really think that much about it until recently. I finally decided to educate myself. I am trying to leave my financial advisor without damaging the friendship.
I& was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
I would be happy to get 6% over 15 years. Initially, I was expecting 10% based on what the s&p earned in the past. Now, I am under the impression my earnings will be less than the 6-7 performance of the last decade.
I think most Bogleheads would gladly buy into a 6% guaranteed 15-year investment. Admittedly there would be inflation risk but most people would take it.

elnegativo
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Re: This is bad right?? [my investment earnings]

Post by elnegativo » Fri Jul 19, 2019 7:47 am

owenmia wrote:
Fri Jul 19, 2019 7:25 am
Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
Try to make a long story short. I am a divorced woman. My ex-husband used to take care of our investments. I was a little overwhelmed at the time of the divorce and I needed some help. I trusted my friend who is a financial advisor to help. I didn’t really think that much about it until recently. I finally decided to educate myself. I am trying to leave my financial advisor without damaging the friendship.
I& was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
I would be happy to get 6% over 15 years. Initially, I was expecting 10% based on what the s&p earned in the past. Now, I am expecting my earnings will be less than the 6%-7% that the s& p earned over the past decade.
Not sure what you mean by “past decade”’ but going back ten years from now, the S&P has returned around 14% annualized, not 6-7%.

HomeStretch
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Re: This is bad right?? [my investment earnings]

Post by HomeStretch » Fri Jul 19, 2019 8:10 am

+1 on posting using the “Asking Portfolio Questions”.

You will learn a lot preparing your post, get great advice and can develop a game plan before you leave your advisor. This should give you confidence in your plan going forward especially if the advisor tries to instill any doubt about leaving.

Don’t let the friendship with your advisor delay your move. A simple “thanks for your help, I am now ready to do this myself” is an easy way to end the business relationship. A true friend will wish you well.

owenmia
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Re: This is bad right?? [my investment earnings]

Post by owenmia » Fri Jul 19, 2019 8:25 am

elnegativo wrote:
Fri Jul 19, 2019 7:47 am
owenmia wrote:
Fri Jul 19, 2019 7:25 am
Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
Try to make a long story short. I am a divorced woman. My ex-husband used to take care of our investments. I was a little overwhelmed at the time of the divorce and I needed some help. I trusted my friend who is a financial advisor to help. I didn’t really think that much about it until recently. I finally decided to educate myself. I am trying to leave my financial advisor without damaging the friendship.
I& was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
I would be happy to get 6% over 15 years. Initially, I was expecting 10% based on what the s&p earned in the past. Now, I am expecting my earnings will be less than the 6%-7% that the s& p earned over the past decade.
Not sure what you mean by “past decade”’ but going back ten years from now, the S&P has returned around 14% annualized, not 6-7%.
Regardless, I am expecting 4-5% from VOO. I am expecting 2% from bonds and 3% from vxus.

evilityb
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Re: This is bad right?? [my investment earnings]

Post by evilityb » Fri Jul 19, 2019 8:41 am

This is how you preserve the friendship and move on to manage your portfolio yourself:

"Thanks for managing my finances for me after the divorce. I'm glad I had you to help me through that. Things have gotten back on track and I'm ready to manage my finances myself now. Could you please send me all of the forms I need to close out these accounts and move them over to Vanguard?"

While these last 2 years didn't bring you the returns of the market, your friend may have put you in something conservative based on a) your stated preferences, b) your risk tolerance at the time, c) unknown risk tolerance and a perception that one needs little volatility when going through a divorce, d) a superior's direction, or e) some other, non-nefarious reason. I know that if a friend came to me in the midst of a divorce and said, "help me manage my money," I would not be putting them in anything volatile or risky because I care about them and their emotional well-being, as well as financial well-being.

Your friend helped you in a time of need, kept you safe, and now you're ready to move on and take charge yourself. Keep up the good work learning and cheers to having friends who step up when life goes to hell.
:sharebeer
Make sure the fortune that you seek is the fortune that you need - Ben Harper

Topic Author
Girlmomlife
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Re: This is bad right?? [my investment earnings]

Post by Girlmomlife » Fri Jul 19, 2019 9:43 am

So I think I need to provide more specifics here
In Sept 17 (I use this date because I just rolled over some additional funds from a 401k to the IRA I already had with my friend) my total portfolio was
$440,745.63

As of today it is worth $469,009.39

I’m Dec of 18 my portfolio dropped to $405,842.63

Roth IRA $14,161.83
IRA $445,963.77
Brokerage $8910.79


I am paying about $1200 every 3 months in advisor fees.
I never said I wanted to be too conservative for investments. I would actually say I am the more aggressive side. She had me in a ton of investments. There were a few ETFs but mainly actively managed mutual funds. It seems like there were a lot of trades of these funds as well. I recently asked her to put my money into a target date index fund. (I just wanted it there until I decide what to do).
If you add the fees back in, it doesn’t look like it would be much different if I had the money in a HYSA. I guess I am just trying to give myself more reasons to leave her.
Also just trying to decide what to do. I want to transfer the IRA to my current employers 401k but there aren’t that many low cost funds available. I want to transfer to the 401k so I can start doing Backdoor Roth contributions.
I posted the options my employer gives for the 401k I’m another thread. Any advise is greatly appreciated. I have learned so much over the past month or so. I have been listening to audiobooks and podcasts everyday. I am just kicking myself that I didn’t learn things earlier.

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Stinky
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Re: This is bad right?? [my investment earnings]

Post by Stinky » Fri Jul 19, 2019 9:56 am

Girlmomlife wrote:
Fri Jul 19, 2019 9:43 am
So I think I need to provide more specifics here
In Sept 17 (I use this date because I just rolled over some additional funds from a 401k to the IRA I already had with my friend) my total portfolio was
$440,745.63

As of today it is worth $469,009.39

I’m Dec of 18 my portfolio dropped to $405,842.63

Roth IRA $14,161.83
IRA $445,963.77
Brokerage $8910.79


I am paying about $1200 every 3 months in advisor fees.
I never said I wanted to be too conservative for investments. I would actually say I am the more aggressive side. She had me in a ton of investments. There were a few ETFs but mainly actively managed mutual funds. It seems like there were a lot of trades of these funds as well. I recently asked her to put my money into a target date index fund. (I just wanted it there until I decide what to do).
If you add the fees back in, it doesn’t look like it would be much different if I had the money in a HYSA. I guess I am just trying to give myself more reasons to leave her.
Also just trying to decide what to do. I want to transfer the IRA to my current employers 401k but there aren’t that many low cost funds available. I want to transfer to the 401k so I can start doing Backdoor Roth contributions.
I posted the options my employer gives for the 401k I’m another thread. Any advise is greatly appreciated. I have learned so much over the past month or so. I have been listening to audiobooks and podcasts everyday. I am just kicking myself that I didn’t learn things earlier.
S&P 500 at end of Sept 2017 was 2,519. Today about 3,000. Percentage gain 19.1%. Adding in roughly 2% annual dividends, that’s about a 23% return.

You made 6.5%. You quote an advisor fee of about 1% per year, so the return on your funds was 8.5% since 2017.

You don’t mention if you have any bonds in your portfolio. If you don’t, then your funds underperformed the S&P by about 15%, and you paid a 2% fee to boot. (If you had bonds, then your underperformance was less).

Your instincts are right - you have underperformed.
It's a GREAT day to be alive - Travis Tritt

fposte
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Re: This is bad right?? [my investment earnings]

Post by fposte » Fri Jul 19, 2019 9:56 am

Girlmomlife wrote:
Fri Jul 19, 2019 9:43 am

Also just trying to decide what to do. I want to transfer the IRA to my current employers 401k but there aren’t that many low cost funds available.
As people in your other thread have noted, the 401k has some perfectly fine offerings (selected from the standard Fidelity lineup with what looks like some discounting, even) and your choices there are reasonable. If there are no other fees, that seems like a good option.

MotoTrojan
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Re: This is bad right?? [my investment earnings]

Post by MotoTrojan » Fri Jul 19, 2019 10:31 am

owenmia wrote:
Fri Jul 19, 2019 8:25 am
elnegativo wrote:
Fri Jul 19, 2019 7:47 am
owenmia wrote:
Fri Jul 19, 2019 7:25 am
Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
Try to make a long story short. I am a divorced woman. My ex-husband used to take care of our investments. I was a little overwhelmed at the time of the divorce and I needed some help. I trusted my friend who is a financial advisor to help. I didn’t really think that much about it until recently. I finally decided to educate myself. I am trying to leave my financial advisor without damaging the friendship.
I& was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
I would be happy to get 6% over 15 years. Initially, I was expecting 10% based on what the s&p earned in the past. Now, I am expecting my earnings will be less than the 6%-7% that the s& p earned over the past decade.
Not sure what you mean by “past decade”’ but going back ten years from now, the S&P has returned around 14% annualized, not 6-7%.
Regardless, I am expecting 4-5% from VOO. I am expecting 2% from bonds and 3% from vxus.
All the fancy analysis stating 4-5% from US equities would also suggest higher returns for International (better valuation). Don’t let past results bias you.

Topic Author
Girlmomlife
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Joined: Mon Jul 15, 2019 1:54 pm

Re: This is bad right?? [my investment earnings]

Post by Girlmomlife » Fri Jul 19, 2019 11:15 am

Looking back at an old statement
The mixture was
52% equity funds
21% bond funds
24% ETF
And
2% cash.

Thanks again. Just needed the last push!!

chevca
Posts: 2701
Joined: Wed Jul 26, 2017 11:22 am

Re: This is bad right?? [my investment earnings]

Post by chevca » Fri Jul 19, 2019 11:30 am

Girlmomlife wrote:
Fri Jul 19, 2019 9:43 am
So I think I need to provide more specifics here
In Sept 17 (I use this date because I just rolled over some additional funds from a 401k to the IRA I already had with my friend) my total portfolio was
$440,745.63

As of today it is worth $469,009.39

I’m Dec of 18 my portfolio dropped to $405,842.63

Roth IRA $14,161.83
IRA $445,963.77
Brokerage $8910.79


I am paying about $1200 every 3 months in advisor fees.
I never said I wanted to be too conservative for investments. I would actually say I am the more aggressive side. She had me in a ton of investments. There were a few ETFs but mainly actively managed mutual funds. It seems like there were a lot of trades of these funds as well. I recently asked her to put my money into a target date index fund. (I just wanted it there until I decide what to do).
If you add the fees back in, it doesn’t look like it would be much different if I had the money in a HYSA. I guess I am just trying to give myself more reasons to leave her.
Also just trying to decide what to do. I want to transfer the IRA to my current employers 401k but there aren’t that many low cost funds available. I want to transfer to the 401k so I can start doing Backdoor Roth contributions.
I posted the options my employer gives for the 401k I’m another thread. Any advise is greatly appreciated. I have learned so much over the past month or so. I have been listening to audiobooks and podcasts everyday. I am just kicking myself that I didn’t learn things earlier.
Will your current 401k plan allow that type of transfer? If so, that would be good.

If you're at an income level to be thinking of backdoor Roth stuff, you are most likely doing just fine. Don't worry about the last couple years. Unless you have a time machine, they're done and gone. Take control now and set yourself up for the future. Tell the friend you have learned enough about saving and investing now that you're comfortable taking over by yourself. Say you simply want to be an index investor and keep things simple... something you can do on your own. If that damages the friendship, well, that's not on you, IMO. Or, it might say what kind of friend this is/was.

You can control what the market is going to do. But, you can control the fees you pay. So, you're on the right track to want to pay as low as you can that way.

chevca
Posts: 2701
Joined: Wed Jul 26, 2017 11:22 am

Re: This is bad right?? [my investment earnings]

Post by chevca » Fri Jul 19, 2019 11:33 am

Girlmomlife wrote:
Fri Jul 19, 2019 11:15 am
Looking back at an old statement
The mixture was
52% equity funds
21% bond funds
24% ETF
And
2% cash.

Thanks again. Just needed the last push!!
Roughly a 75/25 AA. Sounds like a pretty good AA was chosen for a fairly aggressive person. But, also seems like there was a lot of active fund choosing and tinkering going on. That likely wasn't good for returns. Along with the fees for all that tinkering. Doesn't seem like any ill will by the friend/FA. That's just how they work.

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Stinky
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Location: Sweet Home Alabama

Re: This is bad right?? [my investment earnings]

Post by Stinky » Fri Jul 19, 2019 11:34 am

Girlmomlife wrote:
Fri Jul 19, 2019 11:15 am
Looking back at an old statement
The mixture was
52% equity funds
21% bond funds
24% ETF
And
2% cash.

Thanks again. Just needed the last push!!
Assuming that the ETFs were all stocks, you had 76% stocks and 24% fixed income.

If the stocks earned 23% (see above) and the fixed income earned 4% in the last two years, the weighted average was about 18.5%.

You reported that you made about 6.5%. In round numbers, you underperformed about 12% over the two years.
It's a GREAT day to be alive - Travis Tritt

owenmia
Posts: 120
Joined: Mon Jun 24, 2019 10:19 am

Re: This is bad right?? [my investment earnings]

Post by owenmia » Fri Jul 19, 2019 11:45 am

MotoTrojan wrote:
Fri Jul 19, 2019 10:31 am
owenmia wrote:
Fri Jul 19, 2019 8:25 am
elnegativo wrote:
Fri Jul 19, 2019 7:47 am
owenmia wrote:
Fri Jul 19, 2019 7:25 am
Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
Try to make a long story short. I am a divorced woman. My ex-husband used to take care of our investments. I was a little overwhelmed at the time of the divorce and I needed some help. I trusted my friend who is a financial advisor to help. I didn’t really think that much about it until recently. I finally decided to educate myself. I am trying to leave my financial advisor without damaging the friendship.
I& was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
I would be happy to get 6% over 15 years. Initially, I was expecting 10% based on what the s&p earned in the past. Now, I am expecting my earnings will be less than the 6%-7% that the s& p earned over the past decade.
Not sure what you mean by “past decade”’ but going back ten years from now, the S&P has returned around 14% annualized, not 6-7%.
Regardless, I am expecting 4-5% from VOO. I am expecting 2% from bonds and 3% from vxus.
All the fancy analysis stating 4-5% from US equities would also suggest higher returns for International (better valuation). Don’t let past results bias you.
Ok. I am just trying to temper my expectations based on what I am told. Better to expect 4% and get 7% than expect 10% and get 4%.

stocknoob4111
Posts: 691
Joined: Sun Jan 07, 2018 12:52 pm

Re: This is bad right?? [my investment earnings]

Post by stocknoob4111 » Fri Jul 19, 2019 11:49 am

Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
no, it's nothing out of normal.. for instance FFFFX Fidelity Freedom 2040 which is a target all in one fund that a huge number of people in their 40s use had a return of 5.6% since October 2017 to June 2019. It is low but many asset classes have not performed well for example International, Small Caps and even Bonds did very poorly last year.

This year has had strong performance but aggregated with last years huge drops is not that good.

stocknoob4111
Posts: 691
Joined: Sun Jan 07, 2018 12:52 pm

Re: This is bad right?? [my investment earnings]

Post by stocknoob4111 » Fri Jul 19, 2019 11:58 am

Girlmomlife wrote:
Fri Jul 19, 2019 11:15 am
Looking back at an old statement
The mixture was
52% equity funds
21% bond funds
24% ETF
And
2% cash.

Thanks again. Just needed the last push!!
That tells us nothing, you need to specify the asset classes more specifically as they had fairly big variations... is equity domestic or international? small, large or blend? active or passive? etc. etc. Too little info and Sep. 2017 to date is a miniscule time period to blame your advisor on anything, if you have hugely subpar returns last 5 years it may be enough of a time period to reach some consensus. 12 months in the grand scheme of things is totally irrelevant.

I would say 6% is totally decent for that time period.

JoeRetire
Posts: 2807
Joined: Tue Jan 16, 2018 2:44 pm

Re: This is bad right?? [my investment earnings]

Post by JoeRetire » Fri Jul 19, 2019 1:58 pm

Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
I am trying to leave my financial advisor without damaging the friendship.
Good luck with that.
I was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
If it seems horrible to you, then what does it matter what others think? There are lots of investment vehicles that would have returned less than 6% over that same time period, and lots that would have returned more.

If you happen to be extremely conservative and far more worried about conservation of your assets than growth, then 6% may be wonderful.

You need to either get a better adviser who can help you understand risk versus reward, help you plan an appropriate asset allocation, and get you on a realistic path toward achieving your goals, or you need to learn how to do it all on your own.

wolf359
Posts: 1712
Joined: Sun Mar 15, 2015 8:47 am

Re: This is bad right?? [my investment earnings]

Post by wolf359 » Mon Jul 22, 2019 8:24 am

Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
Try to make a long story short. I am a divorced woman. My ex-husband used to take care of our investments. I was a little overwhelmed at the time of the divorce and I needed some help. I trusted my friend who is a financial advisor to help. I didn’t really think that much about it until recently. I finally decided to educate myself. I am trying to leave my financial advisor without damaging the friendship.
I was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
It depends. What did you engage your friend to do? When you're first getting divorced and you're not used to handling the finances, it is a stressful and dangerous time. If she also helped establish your budget, get your finances under control, put together a plan, and stay invested as the markets went up and down in the last two years, then she may have done her job.

Many people think that a financial advisor's job is only to run the investments, and outperform the stock market. FA's can't outperform the market. Did she tell you that she would? I think their job is to provide financial advice and get your financial life in order. With respect to the investments, their job is to preserve your assets and to meet your goals. If you had hired a fiduciary, then she would have been required to make all decisions in your best interests. It sounds like she wasn't, so was only legally required to keep you in "suitable" investments. It sounds like she did that, and didn't completely take advantage of your trust. (Did she put you into privately traded REITs, annuities, life insurance products, or products with large sales fees and back end fees if you try to exit?). The fact that she put you into actively traded mutual funds may be because that is what is available to her for her clients. The fact that she could have put you into something better to get market returns doesn't automatically make her evil. If you had been trying to do it yourself all along, you may have panicked during the last two market declines and lost more money than she did.

If it sounds like I'm trying to be kind is because you want to preserve the friendship. She may have been there for you when you were going through an emotional period, and she may have done more than just manage the investments. Thank her for her assistance, and tell her that you're ready to take the reins as you've learned more. You're ready to do it yourself.

There is a general negative view of financial advisors here. Don't let that poison your friendship. FA's actually have a time and place, and should be engaged when their expertise is required. Running your investments with the expectation that they will outperform the market is not one of them. If that was your expectation, then realize she wasn't going to be able to do that, and move on.

Vanguard Fan 1367
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Re: This is bad right?? [my investment earnings]

Post by Vanguard Fan 1367 » Tue Jul 23, 2019 2:44 pm

Girlmomlife wrote:
Thu Jul 18, 2019 4:51 pm
Try to make a long story short. I am a divorced woman. My ex-husband used to take care of our investments. I was a little overwhelmed at the time of the divorce and I needed some help. I trusted my friend who is a financial advisor to help. I didn’t really think that much about it until recently. I finally decided to educate myself. I am trying to leave my financial advisor without damaging the friendship.
I was just looking through the performance of my assets. From Sept of 17 until now there has only been a little over a 6% increase in my portfolio. This seems horrible to me, I know there was a drop in 2018 but 6% in almost 2 years seems really low. Am I correct on this?
I am glad you are here. Hopefully you can leave the financial advisor. If you lose the friendship then I would question how much that friendship meant to your friend.

I am enjoying my investing life with low fee index funds and no assets under management fees and no load charges. I hope that you can filter through the advice here and find a mix of low fee index funds that make you comfortable.

Topic Author
Girlmomlife
Posts: 7
Joined: Mon Jul 15, 2019 1:54 pm

Re: This is bad right?? [my investment earnings]

Post by Girlmomlife » Thu Jul 25, 2019 4:26 pm

:happy

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