vanguard bond index fund or lord abbot funds

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Herreschoff
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vanguard bond index fund or lord abbot funds

Post by Herreschoff » Mon Jan 13, 2020 3:41 pm

I am very new to bogleheads and personal investing having recently become a widow. I have spent the last 5 months researching investing theories and my head is spinning. I understand the rationale behind the boglehead index fund investing style but I am very unsure of my desire to spend hours upon hours managing my finances. So possibly a compromise? I am considering hiring a financial manager who will charge .4 of AUM, he will invest the equity portion of my taxable account in only ETF index funds and the fixed income portion in IRA. Here is where I am hesitant. He would like to use Lord Abbot mutual funds to manage my bond portion. His rationale is that Bond Index funds are not as nimble. Are the fees worth it? I am aware that he will receive a commission.

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tre3sori
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Re: vanguard bond index fund or lord abbot funds

Post by tre3sori » Mon Jan 13, 2020 3:46 pm

I understand the rationale behind the boglehead index fund investing style but I am very unsure of my desire to spend hours upon hours managing my finances.
Where do all these wasted hours come from? Once decided on the proper asset allocation and the right investment vehicles it should be a matter of an hour per year to manage personal finances the boglehead way.
Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep by him in reserve. Talmud.

financeperchance
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Re: vanguard bond index fund or lord abbot funds

Post by financeperchance » Mon Jan 13, 2020 3:47 pm

Sorry for your loss. This advisor is ripping you off. Just have the IRA bonds in one of the Vanguard funds.

retired@50
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Re: vanguard bond index fund or lord abbot funds

Post by retired@50 » Mon Jan 13, 2020 3:54 pm

Herreschoff wrote:
Mon Jan 13, 2020 3:41 pm
He would like to use Lord Abbot mutual funds to manage my bond portion. His rationale is that Bond Index funds are not as nimble. Are the fees worth it? I am aware that he will receive a commission.
If he is implying that a Lord Abbett bond fund is "nimble" then he thinks someone (like the bond fund manager) is clairvoyant or somehow has the ability to get into and out of the proper parts of the bond market at the proper times. This is hogwash. Long term investors should simply hold a total bond market index fund and leave the expensive bond funds for those who believe in this sort of magical thinking.

Regards,
Last edited by retired@50 on Mon Jan 13, 2020 3:58 pm, edited 2 times in total.
Boggle - a game from Parker Brothers. Bogle - investor, founder of Vanguard.

Jack FFR1846
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Re: vanguard bond index fund or lord abbot funds

Post by Jack FFR1846 » Mon Jan 13, 2020 3:55 pm

Who spends hours upon hours managing their investments?

Year #1

Go online to your favorite low cost broker....Vanguard, Fidelity, Schwab. Create an online account. (15 minutes max)

If you have accounts elsewhere that you want to transfer in, either call or use online to set up. (half hour max)

Once funded (or set up with an ACH from your checking (5 minutes max)), choose funds. If you can't figure that out, choose a target index fund with the year you plan to retire. (15 minutes).

So max, that's what.....1 hour.

If you stick with a target date fund, each year, spend 0 minutes. If you choose a 3 fund portfolio from separate funds and need to rebalance, go in on your birthday. 15 minutes.
Bogle: Smart Beta is stupid

jpelder
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Re: vanguard bond index fund or lord abbot funds

Post by jpelder » Mon Jan 13, 2020 3:59 pm

Vanguard will manage your investments for 0.3% of AUM, and they will invest you in inexpensive funds with no sales fees. The Lord Abbett funds will charge a 2-5% fee every time you invest more money, which is money coming straight out of your pocket into the salesman's. There's no reason to pay a mutual fund load ever.

There may be some fund managers that can beat the market (Bill Gross comes to mind), but you never know who they are until after the fact. It looks like their core bond fund has had similar (slightly lower) performance to Vanguard's Total Bond Market fund if you ignore sales fees. If you don't ignore fees, the Abbett fund would only have 92% of the value of the Vanguard fund over the past 10 years. The sales fee and higher ongoing operating expenses make a lot of the difference.

I encourage you to make use of either the Three Fund Portfolio (https://www.bogleheads.org/wiki/Three-fund_portfolio), which can be managed in an hour per year, or make use of Vanguard's Personal Advisory Services, which will cost you 0.3% and whose advisors are paid salary, avoiding the conflict of interest inherent in commission-based fund salespeople

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bertilak
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Re: vanguard bond index fund or lord abbot funds

Post by bertilak » Mon Jan 13, 2020 4:09 pm

Herreschoff wrote:
Mon Jan 13, 2020 3:41 pm
I am very unsure of my desire to spend hours upon hours managing my finances.
Managing finances is quite different from managing investments.

If managing investments is what you really meant, and in the context of index funds that is likely the case, then I think you are under some kind of misapprehension. Boglehead-style index investing takes almost no managing. The philosophy is buy and hold -- don't mess with things. The expression is "stay the course," not change the course with every new (perhaps only new to you) fad you come across.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet

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ruralavalon
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Re: vanguard bond index fund or lord abbot funds

Post by ruralavalon » Mon Jan 13, 2020 8:03 pm

Herreschoff wrote:
Mon Jan 13, 2020 3:41 pm
I am very new to bogleheads and personal investing having recently become a widow. I have spent the last 5 months researching investing theories and my head is spinning. I understand the rationale behind the boglehead index fund investing style but I am very unsure of my desire to spend hours upon hours managing my finances. So possibly a compromise? I am considering hiring a financial manager who will charge .4 of AUM, he will invest the equity portion of my taxable account in only ETF index funds and the fixed income portion in IRA. Here is where I am hesitant. He would like to use Lord Abbot mutual funds to manage my bond portion. His rationale is that Bond Index funds are not as nimble. Are the fees worth it? I am aware that he will receive a commission.
Once a reasonable index portfolio has been set up it requires almost no time or effort to manage. It does not require "hours upon hours managing".

In my opinion it is not worth it to to pay someone an AUM fee to manage. Do it yourself.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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1789
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Re: vanguard bond index fund or lord abbot funds

Post by 1789 » Mon Jan 13, 2020 8:09 pm

You can do this yourself. 2 hours a year would be enough once you decide the right asset allocation for yourself. If you really want you can use PAS from vanguard.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

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Wiggums
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Re: vanguard bond index fund or lord abbot funds

Post by Wiggums » Mon Jan 13, 2020 8:27 pm

bertilak wrote:
Mon Jan 13, 2020 4:09 pm
Herreschoff wrote:
Mon Jan 13, 2020 3:41 pm
I am very unsure of my desire to spend hours upon hours managing my finances.
Managing finances is quite different from managing investments.

If managing investments is what you really meant, and in the context of index funds that is likely the case, then I think you are under some kind of misapprehension. Boglehead-style index investing takes almost no managing. The philosophy is buy and hold -- don't mess with things. The expression is "stay the course," not change the course with every new (perhaps only new to you) fad you come across.
+1000

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Wiggums
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Re: vanguard bond index fund or lord abbot funds

Post by Wiggums » Mon Jan 13, 2020 8:34 pm

Herreschoff wrote:
Mon Jan 13, 2020 3:41 pm
I am very new to bogleheads and personal investing having recently become a widow. I have spent the last 5 months researching investing theories and my head is spinning. I understand the rationale behind the boglehead index fund investing style but I am very unsure of my desire to spend hours upon hours managing my finances. So possibly a compromise? I am considering hiring a financial manager who will charge .4 of AUM, he will invest the equity portion of my taxable account in only ETF index funds and the fixed income portion in IRA. Here is where I am hesitant. He would like to use Lord Abbot mutual funds to manage my bond portion. His rationale is that Bond Index funds are not as nimble. Are the fees worth it? I am aware that he will receive a commission.
Sorry for your loss.

No, the fees are not worth it. His explanation of bonds is pure nonsense, but he can’t say they push lord abbot because the commission is higher and they get a kickback from the company.

There is no reason to pay an AUM fee and use expensive funds. People today want free and/or very low cost funds. you are leaning towards adding costs to your investments.

I’d rather see you use a vanguard all-in-one fund, before you throw away money on commissions and high fees. My mom is almost 91 and she manages two funds herself. She doesn’t spend hours on two funds. Most people only rebalance once a year.

Good luck to you.

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