Investing -- Actively Managed Portfolio vs. Vanguard Funds?

Cavalier · Aug 30, 2009

I've done a lot of reading, and it seems that I am much, much better off transferring my money out of UBS where I pay 1.15% annual commission to my adviser and am heavily invested in actively managed mutual funds to low cost Vanguard funds and indexes . These people, known as Bogleheads, have a great argument and tons of academic support.

Something is just entirely unappealing to me about investing in these manner where you invest and slowly build over 30 years. Truthfully though, it's pretty clear that I can't time the market, my adviser can't nor can those running the mutual funds I am invested in either. On the other hand, realigning myself with a new adviser and doing my own research, I think there is money to be made out there...

Is ditching the adviser and investing in these lost cost funds clearly the way to go?

yerfdog · Aug 30, 2009

Originally Posted by Cavalier

Something is just entirely unappealing to me about investing in these manner where you invest and slowly build over 30 years.

Well yeah, if you invest for entertainment purposes, I can see why you wouldn't want to use this particular technique.

On the other hand, if you plan to become a full-time or near-full-time investor (or you have a high net worth and therefore have access to more investment opportunities), you might be able to beat index fund style investing.

Cavalier · Aug 30, 2009

Originally Posted by yerfdog

Well yeah, if you invest for entertainment purposes, I can see why you wouldn't want to use this particular technique.

On the other hand, if you plan to become a full-time or near-full-time investor (or you have a high net worth and therefore have access to more investment opportunities), you might be able to beat index fund style investing.

It's unappealing because I see so much movement... Citigroup, BOA, etc. recently. Health care soon, etc. It would be great to make these kind of moves, or to be able to short the market leveraged, etc. Essentially making that free lunch..

I would still probably maintain a small account for investing for entertainment purposes, picking out stocks etc. equal to like 5% of my investment portfolio or less.

I will not be able to full time manage it, and am not a high net worth individual. Even if I was, could I really beat the index?

I am up 5% this year above the S&P500 with my portfolio at UBS, but this is probably dumb luck.

lawyerdad · Aug 30, 2009

Originally Posted by Cavalier

It's unappealing because I see so much movement... Citigroup, BOA, etc. recently. Health care soon, etc. It would be great to make these kind of moves, or to be able to short the market leveraged, etc. Essentially making that free lunch..

The lunch is free, except when it's really expensive. Of course the slow accumulation of wealth is unappealing. Shortcuts to mega-wealth are much more fun. That's why all the ponzi schemers and other fraudsters out there are so successful.

Pennglock · Aug 30, 2009

If youre halfway financially savvy, the main value of an adviser is going to be for complicated tax situations and estate planning. For purposes of portfolio allocation, I don't see why anyone would want/need an adviser.

Im not sure what you're getting at with your 'invest slow and build over 30 years' comment. Unless you're sitting on a pile of cash currently, what are your other options?

Cavalier · Aug 30, 2009

Originally Posted by Pennglock

If youre halfway financially savvy, the main value of an adviser is going to be for complicated tax situations and estate planning. For purposes of portfolio allocation, I don't see why anyone would want/need an adviser. Im not sure what you're getting at with your 'invest slow and build over 30 years' comment. Unless you're sitting on a pile of cash currently, what are your other options?
I don't get any help from my advisers on tax situations nor on estate planning. I would hire an accountant for tax help and a lawyer for estate planning. My advisers truthfully do little more then recommend me funds to buy... I have a Bene IRA with a decent amount in it, and the idea of speculating on stocks, shorting market with a leveraged position during the upcoming pull back, etc. etc. is appealing to make quick money. Even if my goals aren't that crazy (making those kinds of moves), by paying an adviser 1%+ a year and buying in to expensive mutual funds, I am clearly expecting for them to be able to time/beat the market... The thing is, I know better. I guess, I think I really need to come to the realization to run away from UBS, get out of these high expense mutual funds and go to Vanguard and invest carefully. Right?

Pennglock · Aug 30, 2009

Originally Posted by Cavalier

The thing is, I know better. I guess, I think I really need to come to the realization to run away from UBS, get out of these high expense mutual funds and go to Vanguard and invest carefully. Right?

I think so, man. The evidence is out there, and it sounds like youve already found it.

untilted · Aug 30, 2009

my recommendation for non-high-networth-individuals = save yourself the trouble and go indexing (s&p and some emerging market).

if you got serious $$$, there are talented hedge fund managers to help you beat the index on after fee basis.

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Investing -- Actively Managed Portfolio vs. Vanguard Funds?

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