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Author: GWPotter Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76080  
Subject: Re: If I Were to Take Over from FA... Date: 3/14/2014 10:32 AM
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IP what works for some is not liked by others. So my approach may not be all that useful for you.

We went with a FA for reasons specific to us in May 2008. Choose a 60/40 split and later a 70/30 allocation. After 5 years, I was not overly excited, but we had weathered the Great Recession. What bothered me most was we had not hit the agreed on bench mark of 60% S&P500 plus 40% Lehmann (now some other name) all bond index.

That caused me to do, what I suggest you do. Spend some time at Morningstar.com -- There is a lot of information on the free version, but the Premium is well worth $195 for a year when you are looking and evaluating the rest of you lives financially.

If you have been with your FA for either 10, 5 or 3 years, compare your actual returns with Vanguard's Wellington Fund VWENX. It happens to be 65% equity and 35% cash, bonds, etc. today. It can be 60% equity in times like the last 90s -- i.e. when the market looks frothy.

What I found was this single fund, which had bee my benchmark before 2008, had beaten our FA by somewhat over 1% compounded.

So I asked myself if I was getting enough stuff to justify a 1% penalty over a very simple investment approach. Answer no. We now have a much less complex set of assets. A total of 10 funds (two of which are left from FA, have good results and large capital gains in a taxable account) vs over 20. Some people like indexes and ETFs and that can lead to even fewer holdings - but I have decided to go into actively managed Vanguard funds with long (over 10 year) track records.

I may keep the Premium Morningstar a second year - it is small compared to our fees. And it has a great deal of stuff if you poke into the corners - things like being able to pick the exact time period you want performance data on for comparisons and detail on holdings.
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