It’s taking so long. I thought I could just up and change my banking institution quickly and easily. It doesn’t work like that. Forms need to be filled, signatures need to be sent, accounts need to be set up, deposits need to be made… it’s taking so much longer than I expected that I am losing my momentum.
I had it in my head that I was going to take my rolled over 401K and invest it myself in Vanguard index funds, just as I learned in the book, The Four Pillars of Investing: Lessons for Building a Winning Portfolio by William J. Bernstein. The thing is, I spoke to a financial planner at Charles Schwab and he told me about their Schwab Managed Portfolios. Basically, after a consultation to understand my goals*, they will select a portfolio full of no load mutual funds for me and then manage and rebalance it as needed. The annual service fee is 0.50% of the portfolio’s value. This is really attractive to me but that may be because I am such a schlub when it comes to money. I would prefer to have someone else manage it and if something happens to it, I can blame them rather than myself. My father keeps telling me I should be aiming for growth and index funds just aren’t going to offer me enough growth. The 401K that the money came from was all mutual funds and I got about a 9% return with it. My fear right now is that the economy is on verge of collapse and I am just going to watch everything go down the toilet- index funds and/or Schwabs managed portfolio. I could split the portfolio in half and do both rather than pick one but is that just a wishy washy coward’s approach? I realize that giving someone else free reign with my money is stupid and Schwab is out to make money for themselves and not me. I gotta make a decision. I just don’t know what to do.
*My goal? Hello? To not lose money! This seems like all those silly interviews with sports people, “What’s your keys to the game?” SCORE MORE POINTS THAN THE OTHER TEAM! DUH!
I have owned Fidelity Contra for over 20yrs and it’s 5 star morningstar rated. I bought it because it has a cool name go figure.
No one has ever proved that actively managed funds perform better than index funds.
I would look at Fidelity Freedom funds
because they adjust to your retirement date. They get more conservative as you get older and you don’t have to worry about your asset allocation. They charge about .08%. Schwab will charge .05% plus the underlying fund cost.
Good luck
My investment advice –
Grandpa Flash to win – 4th race at Pimlico 😉
You sound like me when it comes to investing. I’m great with numbers… until you put a dollar sign in front of them 😛
That’s so true about the “goals” question. What other goal could you possibly have than to become fabulously wealthy. So much so that when you retire you, can travel the world, dine at the finest restaurants, become a benefactor of all your favorite charities, all without a worry in the world.
Now hop to it Chucky – your commission’s riding on it!
Oh yeah, the new “bank” is now taking pocessinon of YOUR money. Michael C is right. Schwab will also collect fees from the funds they have you buy plus having somebody apply very little expertise to your money. 9% return? Are you sure? How is that calculated? You are doing quite well if you are getting a true 9% return. I always tell myself 10% return will aprox double my money in 7 years.” The key to accumulating wealth is SAVING. The most difficult investing of all.
Donna-
Don’t let your apathy/unwillingness to deal with money cost you a bundle. If you’re going to pay someone to manage your money, don’t hire “a big company”. Half a percent of your returns will compound to be a huge amount of $$$ over 20+ years.
This isn’t that hard. Setup the accounts/funds as described in Dr. Bernstein’s book. Put in your money accordingly. Rebalance.
It’s simple and will ultimately produce better results than an investment-house driven (managed) portfolio.
If you want to lazy way out:
80% in a Vanguard Target Fund (2045).
10% Small Cap Value
10% Total International
Rebalance every year. You’re done.
If you have q’s, post them, and I’ll reply.