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Author: nelkem Two stars, 250 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76101  
Subject: 20 Years to go.............. Date: 2/27/2012 10:20 AM
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I was curious - I have about 20 years to go until retirement or so and was curious what to do with my IRA's.

That is - I put in the max $17K in my 401K in my current job. In one of my earlier jobs - my company matched $1 for $1 for 1st 6% so I did decently well in the 1990's.

I presently have my 401K - in various small cap and large cap growth/value along with a bond, mutual funds.

My wife and my IRA's are about $320K.

I have $65K that I manage a wide array of stocks - such as AAPL, ATVI, NFLX, etc. - a mix of Fool picks and my own - doing decently well.

$17K of my wife's IRA is in my similar model (yet different) array of stocks - e.g. DLTR, DIS, HPQ, TTMI, etc.

The majority of the IRA is with one of the well known shops but managed - so they charge about .99% a year and match my assets based on a model (e.g. Aggressive Growth) which consist of Mutual Funds - their own and 3rd parties.

So my question is - should I give the bulk of the assets to an individual asset manager, stick with the current or try to do well on my own? I'd rather not manage the bulk - I prefer to pay a fee (what ever is considered reasonable) and have some (less than $100K) that I can manage as I always seem to want to try my hand at increasing profits.

What so most people do?

Thanks!
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Author: ltangel Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70232 of 76101
Subject: Re: 20 Years to go.............. Date: 2/27/2012 2:38 PM
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Manage as best you can on your own - that way -at least any plusses or minusses you have control over !

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70236 of 76101
Subject: Re: 20 Years to go.............. Date: 2/28/2012 11:55 AM
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>> What so most people do? <<

Other than kick myself for not taking a government job with a pension and retiree health insurance out of college 25 years ago, I just try to maintain an appropriate asset allocation and save for retirement until it almost hurts...

#29

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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70237 of 76101
Subject: Re: 20 Years to go.............. Date: 2/28/2012 11:22 PM
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...The majority of the IRA is with one of the well known shops but managed - so they charge about .99% a year and match my assets based on a model (e.g. Aggressive Growth) which consist of Mutual Funds - their own and 3rd parties.....

Their mutual fund fees(including hidden costs) are likely much higher than similar index fund at Vanguard or an ETF would be. That likely adds at least another 1% in expenses each year for a total that might be 2% or more a year.

The math gets a bit funky but 1% of your money each year for the next 20 years is something like 20% of your current nest egg. 2% a year is nearly 40% over 20 years !

When you retire you will be able to have a safe withdrawal rate of somewhere around 4% so 1 and 2 percent in expenses each year will eat up 25 or 50 percent of your retirement income each year.

They would have to help you beat the market by a lot to justify those fees. (Hint: if they were that good they wouldn't be wokring for you or me.)

As of today the Dow has doubles over the last three years. If you are going to buy individual stocks you need to be brutal about comparing your performance to a comparable index.


..What so most people do?...

I don't know about most people but my plan was to put around 80% of my stock portfolio in index funds and then pick stocks with the rest. I found out that I was not a superior stock picker (which could earn me an eight figure salary in Wall Street) so now about 99% of my stocks in index funds and Berkshire Hathaway with about 1% in individual stocks left over from my stock picking days.

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Author: akck Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70245 of 76101
Subject: Re: 20 Years to go.............. Date: 2/29/2012 12:36 PM
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Their mutual fund fees(including hidden costs) are likely much higher than similar index fund at Vanguard or an ETF would be. That likely adds at least another 1% in expenses each year for a total that might be 2% or more a year.

My SIL had a small IRA managed by a brokerage firm. The broker had bought mutual funds with expense fees >1% and high front-end loads (gee, I wonder why?). I had her transfer the funds to an online discount broker, sold all of them, and re-invested in various Vanguard index ETFs. The result was a 6.5% gain in value versus a 3.1% gain on a tracking portfolio of the old funds. I think the expense fees and other hidden costs account for the gain differential between the two portfolios. Makes me think the manager expertise wasn't worth it.

I suggest the OP check out this book:

http://www.amazon.com/Investment-Answer-Protect-Financial-eb...

It gives the basics of investing and various asset allocations. You end up creating a buy and forget portfolio, maybe re-allocating once a year.

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