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Unless your principal is in the seven figures your best bet is likely an index fund. More and more people are waking up to high fees and lackluster results of t
by pg_bot 9y ago
Unless your principal is in the seven figures your best bet is likely an index fund. More and more people are waking up to high fees and lackluster results of these advisors. If I were to offer advice, go with vanguard. They have the lowest fees in the industry and have an ownership structure that benefits the shareholders of its funds.
- readams 9y agoWhat changes when your principal is in the 7 figures?
- BadassFractal 9y agoI second that question.
- powera 9y agoAt a certain point, you have to run the company. Mark Zuckerberg couldn't sell $40 billion of Facebook stock and put it all in a Vanguard mutual fund.
- dkural 9y agoActually he could. Vanguard would easily absorb it. Vanguard has about 4 trillion dollars of assets under management. $40B corresponds to about 1% of it, about a single day's stock market wiggle.
- pmiller2 9y agoSelling that much FB stock would put a pretty big dent in the stock price.
- loeg 9y agoSure, but that's an extreme example. Zuckerberg's at 10 figures, not 7.
- aetherson 9y ago11
- kobeya 9y agoOnly if you round up.
- aetherson 9y agoWhat are you talking about? Mark Zuckerburg's net worth is around $60,000,000,000. Count the figures: there are 11. Are you getting confused because the scientific notation would be 6 x 10^10? But that's not how people count "figures." If you have a 6 figure salary, your salary is $100,000 to $999,999, not $1,000,000 to $9,999,999.
- DanielDent 9y agoDark pools & other approaches which avoid sucking liquidity out of public order books are available. These allow larger trades to be done without affecting the market price.
- pgwhalen 9y agoDark pools aren't some magic bullet that prevents price movement on big orders. They're a tool, but not the obvious answer.
- jmcgough 9y agoyou start hiding money in shell companies overseas
- mynameishere 9y agohttps://en.wikipedia.org/wiki/Accredited_investor#United_States https://en.wikipedia.org/wiki/Accredited_investor#United_Sta... You're just a fatter whale.
- JumpCrisscross 9y ago> What changes when your principal is in the 7 figures? Tax, liability and estate planning become more complicated. Also, at those scales, you can start taking risks someone with less capital would be imprudent to.
- pyoung 9y agoI am nowhere near those levels, but if you are in the low 7's you are probably still fine investing in index funds. However, there are probably a few investment options that would start making sense: 1. Real estate investments can be very attractive due to access to cheap financing and tax benefits. Obviously there is risk (avoid those bubbles), but if you play it smart and find cash flow positive rental properties, you will probably net much better returns than the stock market. 2. As you get higher on the wealth ladder, finding tax savings starts to show good ROI. So you might want to hire an advisor or an accountant to help with that. 3. The standard advice for us normal folk is to have ~6 months of rainy day funds in a savings account. If you are in the 7 figures, you might want to map out some worst case scenarios to get a sense of how much risk tolerance you have and what you would need to 'survive' those bad scenarios. If I had moderate wealth, I would probably make sure I had a few years worth of living expenses stashed away somewhere. Also, I would probably have a nice mix of bonds, gold and other safe(ish) assets. This leads into #4 4. While I might keep a higher % in safer assets than I do now, I would probably try and balance that with some more riskier assets. At higher levels of wealth you have access to a much wider array of investment opportunities (lookup 'accredited investor'). For the most part, these investment classes suffer the same issues as actively managed funds (generally perform worse than the market, after fees. Look up 'average VC, PE, and hedge fund returns'). But the one advantage here is that, unlike index funds, you also have a (small) chance of hitting astronomical returns (ex: angel investor in a unicorn). So it could make sense to allocate a small portion of your portfolio to these types of investments. As mentioned, the average expected outcome is probably worse than just investing in index funds, but an index fund will never return 1000x where as there is a small chance that an angel investment might. So the tldr is that there is nothing wrong with index funds, especially at the low 7's (and probably even into the 8's). But most people at those levels have much more complicated financial lives (own a business, have a bunch of real estate investments, need to worry about inheritances, etc..) that the standard advice about index funds becomes less suitable. For example, Warren Buffet, the champion of index funds, probably has the vast majority of his wealth locked up in BRK.
- pmiller2 9y agoI totally agree with the tldr here. I think the tipping point is probably somewhere around $10-12M in assets, where you should start looking further than what Vanguard has to offer. At that point, following the 4% safe withdrawal rule, you can have an income from returns that puts you at or near the top 1% of Americans. Beyond that is when you should start looking into things that the truly rich consider, like hedging for capital preservation.
- obstinate 9y agoSo far, nothing, at least for me. Still plonking that money directly into index funds. Some of my friends swear by rental properties but it seems like an awful lot of work.
- walshemj 9y agoThe main problem with tracker ETF's is that you have to buy the index, some of my active UK funds thought banks where over priced and got out in time a uk tracker ETF can not do this so it can never recover that loss when compared to an active strategy.
- UK-AL 9y agoSome make good calls, then sometimes they make bad calls. Very few over a long period actually beat the index.
- walshemj 9y agoWell these are well respected uk investment trusts in the 50 year club ie increase dividends for 50 years. And these trust have very good 40 / 50 year records.
- walshemj 9y agoBut trackers must buy dogs eg they would have to hold stocks like Enron
- UK-AL 9y agoI have no idea what your trying to say. At the time Enron looked big and stable. You have no idea which companies might become enron.
- kobeya 9y agoWorth pointing out that Schwab actually has lower fees than Vanguard for many of their index funds. Who knows if it will stay that way with the different ownership structure, however.