Winnipesaukee Forum - View Single Post

granitebox · 11-08-2021, 05:48 PM

FlyingScot has it right - keep it simple. Warren Buffett advised to invest in a low cost index fund (specifically mentions Vanguard by name) - 90% of your cash and let it ride, don't play, don't try to time, just let time be your friend. The historical averages of the SP500 are pretty remarkable and any investment manager that says he can beat them you should ask to see his tax return, its a high bar. Index funds (whether its Vanguard, Fidelity or others) should have minimal fees as there is little to no management, just follow the index, rebalance periodically and don't get fancy.

One step up might be a Weathfront or Betterment account which charge about .25% to provide a few additional services than a standard fund. Both are effectively managed by computers and can do some additional work with rebalancing and tax loss harvesting. Again, only .25% but that's in addition to the fees charged by the funds themselves.

Both Wealthfront and Betterment guide you through a simple risk analysis to help build your portfolio.

In the end, I would argue that controlling fees is the biggest benefit you can provide yourself - if you are aiming for a 7% return but have a 1% fee - the fee is a significant portion of your return (you can do the math) - Warren Buffett goes on to provide examples of the real cost of excess manager fees on your savings.

Keep it simple.

11-08-2021, 05:48 PM	#10
granitebox Senior Member Join Date: Aug 2008 Location: Steamboat Springs - Bear Island Posts: 152 Thanks: 134 Thanked 80 Times in 35 Posts	FlyingScot has it right - keep it simple. Warren Buffett advised to invest in a low cost index fund (specifically mentions Vanguard by name) - 90% of your cash and let it ride, don't play, don't try to time, just let time be your friend. The historical averages of the SP500 are pretty remarkable and any investment manager that says he can beat them you should ask to see his tax return, its a high bar. Index funds (whether its Vanguard, Fidelity or others) should have minimal fees as there is little to no management, just follow the index, rebalance periodically and don't get fancy. One step up might be a Weathfront or Betterment account which charge about .25% to provide a few additional services than a standard fund. Both are effectively managed by computers and can do some additional work with rebalancing and tax loss harvesting. Again, only .25% but that's in addition to the fees charged by the funds themselves. Both Wealthfront and Betterment guide you through a simple risk analysis to help build your portfolio. In the end, I would argue that controlling fees is the biggest benefit you can provide yourself - if you are aiming for a 7% return but have a 1% fee - the fee is a significant portion of your return (you can do the math) - Warren Buffett goes on to provide examples of the real cost of excess manager fees on your savings. Keep it simple.