The best financial advice you've been given!

[burro_blasta]

Originally Posted by XutvJet

We have a large amount of Vanguard 500 Index Fund Admiral (VFIAX) spread amongst our brokerage, traditional, and Roth IRAs. I'd say in the neighborhood of 70% of our portfolio. We also have about 10% in Berkshire Class B (BRK B) and then the remaining 20% spread across Activision Blizzard (ATVI), a bond index fund, short-term treasury index fund, small-cap index fund, and money market fund. With all of this, we've been beating market performance about 3-4% each year since 2016. This year obviously hasn't been so hot and I'm expecting a pretty big market this year. Too much chaos in the world right now.

I can't say that any S&P 500 index fund is better than the other as they all operate generally the same and have the same funds in their portfolio. The key is you want investments with low fees/expense ratios. Something like 0.04-0.07%. Most S&P 500 index funds are around 0.04%.

If you're just starting out though, just do a well known S&P 500 index fund at 80-90% of your portfolio and the remainder is some sort of bond index fund.

Financial advisors want to make this stuff seem really difficult. It is not. They want you to believe it is difficult so that they can charge you high fees and sell you investment products with high expense ratios (i.e., 1%+). It doesn't seem like a lot, but when you consider that a financial advisor will be taking 1.3-1.7% of your portfolio's value each year to "manage it", it most definitely adds up. Most advisors say their annual management fee is ~1% for a typical sub-$2M portfolio, but when you do the math, it's closer to 1.3-1.7% with everything considered and tallied at the end of the year. It's a racket and many of those fees are somewhat hidden and it takes some digging to see where you're getting hit. On a $500K portfolio, they're taking $5,000 to $8,500 each year to do VERY little. Over the course of a few decades, that's hundreds of thousands of dollars spent in fees and money that could have been invested and grown your portfolio. Over the course of 20 years, you would have likely spent and lost out on well over $500k+ in portfolio growth.

If the S&P 500 is only ~60% of global market cap, why should it be 80-90% of your portfolio?

In other words, it seems like you're saying be passive and don't pick stocks differently than the S&P weights them by using an index fund, then why be "active" by overweighting US so much more than a passive global index fund?

[E93_Savage]

Don"t buy what you want buy what you need. And if you need it make sure you really want it.

[XutvJet]

Originally Posted by burro_blasta

If the S&P 500 is only ~60% of global market cap, why should it be 80-90% of your portfolio?

In other words, it seems like you're saying be passive and don't pick stocks differently than the S&P weights them by using an index fund, then why be "active" by overweighting US so much more than a passive global index fund?

That's a very good question. Ask me again later

I don't pretend to be a market expert at all. I do my research and do my due diligence best I can, but I only have so much time in a day. Most every investment guru that is in it for the common investor and not themselves (i.e., financial advisors), generally agree that Warren Buffett's retirement plan that is heavily weighted in the S&P 500 index funds is an excellent starting base for an investor and will very likely be the most lucrative investment plan for long term growth.

Buffett has had an on-going $1M charity bet since 2008 with any fund manager that passive fund investing (i.e., S&P 500 index funds) will beat active fund investing in the long-term (10 year window). No one has been able to beat passive investing.

As I noted to previously, I don't follow his plan to a "T". I've tweaked things here and there over the years, largely because my portfolio has grown substantially and I can take "play money" and buy other more risky investments. Some have been very lucrative and some haven't thus I dumped those.

[BMW F22]

Anyone think that Peloton could make a comeback a la AMC? Might be good to buy in now if yes?

[burro_blasta]

Originally Posted by XutvJet

That's a very good question. Ask me again later

I don't pretend to be a market expert at all. I do my research and do my due diligence best I can, but I only have so much time in a day. Most every investment guru that is in it for the common investor and not themselves (i.e., financial advisors), generally agree that Warren Buffett's retirement plan that is heavily weighted in the S&P 500 index funds is an excellent starting base for an investor and will very likely be the most lucrative investment plan for long term growth.

Buffett has had an on-going $1M charity bet since 2008 with any fund manager that passive fund investing (i.e., S&P 500 index funds) will beat active fund investing in the long-term (10 year window). No one has been able to beat passive investing.

As I noted to previously, I don't follow his plan to a "T". I've tweaked things here and there over the years, largely because my portfolio has grown substantially and I can take "play money" and buy other more risky investments. Some have been very lucrative and some haven't thus I dumped those.

I wonder if part of Warren's genius - in this example - is saying to stay mostly US knowing that it's technically not the ideal global stock mix but also knowing, more importantly, people are maybe more likely to stay the course when they are more familiar with what they own (ie, US stocks for US people).

I think that bet was about a passive US stock fund beating hedge funds (not beating an actively managed US stock fund) - hope he has his charity picked out!

[Darth One]

I think in our lifetimes (and most of our parents), staying US-only has been profitable with how dominant the US economy has been that whole time. If (when?) some other economic power like China comes to break our hegemony then we non-globally diversified investors will live to regret it

[XutvJet]

Originally Posted by Darth One

I think in our lifetimes (and most of our parents), staying US-only has been profitable with how dominant the US economy has been that whole time. If (when?) some other economic power like China comes to break our hegemony then we non-globally diversified investors will live to regret it

China will implode in the next 10 to 15 years if they don't have a regime change. I'm in mergers and acquisitions and work primarily with private equity and major industry clients. Manufacturering is bailing out and going elsewhere now, largely due to China's management of COVID and the fact that much of their wealth/value is tied up in real estate which is self destructing. China is quite westernized now and people's salaries increasing rapidly. The cost of doing business in China isn't nearly as sexy as it once was. Mismanagement by China's government (i.e. dictatorship) over the past few years as spooked investors and industry.

[BMW F22]

Apple is about to pop under $150. Buy buy buy?

[sb_12345]

Vanguard S&P 500, set it and forget it

[Tahoebrian5]

Don’t buy a sport car has got to be the number one best advise that we all have ignored.

[Koshkoval]

My most valuable lesson learned after 5 years of counseling from thefinitygroup.com is that you have to divide your monthly budget, and if you have a dept-repayment plan, it has to be strictly followed. It's important to establish your monthly budget and how you slice it up, especially if you have a debt to pay. A clear plan will help you not overspend and save a part of the budget for an emergency fund or even retirement. Before deciding that I had to be independent and responsible for all the money I spent, mom and dad were my go-to bank, and it was also damaging my financial education. Guys helped me understand that I have also to get rid of it.

[floridaorange]

^Debt free besides mortgage - bought our house at the bottom of the market in 2010. Glad you are getting the debt sorted, i've been in debt before, never again.

[540iSUP]

"The more you know, the less you work, the more money you get paid"

[chassis]

Originally Posted by Darth One

I think in our lifetimes (and most of our parents), staying US-only has been profitable with how dominant the US economy has been that whole time. If (when?) some other economic power like China comes to break our hegemony then we non-globally diversified investors will live to regret it

The U.S. has the most liquid capital market in the world. That alone is enough for me to buy only U.S. investments. So-called "international" investments make zero sense. The stated reason is diversification.

However if it is well known, as it is, that over time other capital markets underperform the U.S., why waste money on an inferior product - international investments? No thanks.

Common advice from the large institutions targeting retail investors is rubbish. The advice is designed to avoid account closure and fund redemptions, panicked phone calls to advisors during volatility events, and to prevent clients from "being scared".