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>"Real" wealth management has a lot more legal work behind it This is just me, but if I had legal work and deep pockets, I'd hire a lawyer. >a majority of peo
by vba616 3y ago
>"Real" wealth management has a lot more legal work behind it
This is just me, but if I had legal work and deep pockets, I'd hire a lawyer.
>a majority of people think that when it comes to finance they can compete on an equal level with experts who do this every day
>But if your skilled you surely save a ton of fees.
If you are "focused on wealth preservation" rather than "generating high returns", what is the need for skill?
If I won the lottery, and I just sent, say, a $500M check to a regular discount broker and bought an index fund, is someone going to take it away from me? Are the wealth management divisions of every podunk bank and credit union there for a reason? Would I need to hire "protection"?
Warren Buffett famously said he "upon his passing, has directed the trustee for his wife’s benefit to “put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.”
And Barack Obama reportedly put all his assets in government bonds when he became President to avoid conflicts of interest.
Obviously not everyone takes this sort of simple approach, but some famous examples seem to prove it's possible.
- infinite8s 3y ago> If I won the lottery, and I just sent, say, a $500M check to a regular discount broker and bought an index fund, is someone going to take it away from me? Are the wealth management divisions of every podunk bank and credit union there for a reason? Would I need to hire "protection"? The market might take it away from you. Last year the S&P returned -20% - there goes $100M!
- throwaway2037 3y agoBy this dumb reasoning of unrealised losses, you should never invest in any security (bond or stock) else the exact same scenario may happy. You are destined for the poor house without taking equity index risk in this generation.
- infinite8s 3y agoI was explaining why capital preservation is important with this (albeit) dumb example. Obviously someone with $500M is going to be a bit more sophisticated about it (there are reasons hedge funds that return 15-20% annualized charge 2 & 20 - or some now do 3 and 30 with a 5yr lockup).
- vba616 3y ago>hedge funds that return 15-20% This is always a scam. Madoff died in prison, you know.
- throwaway2037 3y agoI agree. Most private money managers are not worth the cost: 75bps per year (or more) on managers balance. I recommend: Half your age in percent (30yrs old -> 15%) invested in 2yr US Treasury notes, plus remaining in low cost S&P 500 ETF. You will beat 99% of "wealth managers" after a decade, and 99.9% after two decades.
- bob_theslob646 3y agoDo you have any data to support this?
- red-iron-pine 3y agoVanguard returns, or Warren Buffet's ETF bet against hedge managers come to mind.
- RhysU 3y ago> If I won the lottery, and I just sent, say, a $500M check to a regular discount broker and bought an index fund, is someone going to take it away from me? Not from you, but the IRS will take 40% of everything when you die.* Only 60%, at best, goes to your heirs depending on state law. Unless you proactively plan. * Yes, yes the $13M federal exemption but that's a rounding error at the $500M+returns scale.
- olddustytrail 3y agoAw, the poor little workshy brats. If there's three of them they'll have to struggle by on $100 million each. By the safe withdrawal rule, that's just $4 million a year each indefinitely. Cry me a river.
- deleted 3y ago[deleted]
- red-iron-pine 3y agoGood. Should be more like 80%. No more aristocracies.