3 ms·

I am Canadian and do not have a social security number, therefore I am not in your target audience. So, I encourage you to be extra skeptical about my critique.

by hluska 12y ago

I am Canadian and do not have a social security number, therefore I am not in your target audience. So, I encourage you to be extra skeptical about my critique. However, when it comes to investing with someone, my biggest concern is trust. I am a long term investor, so I am not terribly concerned with management fees. Rather, I am looking for trust. Not only trust that you won't steal from me, but trust that you will do a relatively good job of managing my investments. Unfortunately, this website and the signup process both severely eroded my trust. First, other people have mentioned this, but it has not been fixed so I will reiterate. This entire website needs to be https! Since it isn't https (and you still haven't fixed the link to the signup page), I have concerns over how you store and secure the data that you collect. Second, I notice that you use Google Analytics and you collect some very personal information that you will no doubt use for marketing purposes. For example, in your risk assessment, you ask what I would do if my portfolio lost ~ 30% of its value over three months. Are you using this information to determine how much risk I can stomach, or are you using it to know when to market to me? Despite this level of information and the questions it creates, I cannot find a privacy policy. Your site has a terms of service, but it is a .pdf and, call me paranoid, but I am extra careful with .pdf documents. Technically, since your site doesn't have a privacy policy, you're violating Google Analytics' terms of service. Your privacy policy may be included in your terms of service, so I could be completely wrong. Third, call me paranoid, but in light of these issues, I have some concerns investing with a company that is seemingly run by an MBA student, especially one with an interest in starting 'disruptive companies'. My current advisor and I have been friends for 14 years, he has been in the business for 10 years, and he has no plans to retire until around the time that I will (hopefully) retire myself. I am a long term investor, so I am looking for an advisor who is just as interested in a long term relationship. You might be, but nothing on your website makes me feel confident that you will be doing this in ten years. Finally, when I read your FAQ page, I noticed that if I want to see my portfolio, I have to log into Motif. Since I could use Motif myself, control my own portfolio, and not have to worry that I'll stop managing my own portfolio, it seems like I might be better served by signing up with Motif. You have an excellent idea and I like how much work you have already done to execute on it. I think that if you added some more polish, you would have a force to be reckoned with. I especially like your FAQ page and, with the exception of the last sentence (Cerberus is a hell-hound), I found your blog worth a read.

saryant 12y ago
> I am a long term investor, so I am not terribly concerned with management fees. This is what you should be most concerned with as a long-term investor. Investment fees can easily chew away at a significant portion of your gains over the long-term. The difference between a mutual fund with an expense ratio of 1% and a fund that costs 0.05% is $6661 over 20 years on a $10,000 investment (assuming both return 7% annually). In the end, it's the difference between $31,650 and $38,311. Obviously the difference grows with the size of your investment.
- VLM 12y ago
  "(assuming both return 7% annually)" LOL the median never gets returns above the median, which sounds like a tautology and nobody gets the same return every year except for long term .gov bonds and those aren't indexed for (real) inflation anyway. The point is you can't get blood from a stone and the median of active mgmt will always return somewhat less than the median of passive mgmt (aka the permanent portfolio theory or related funds). After all that active manager needs to adsorb income to eat whereas the passive manager might merely be a line of source code. However, what active management can provide is a smaller std deviation of returns, at least on average. So in the real world you won't get 7% every year unless you somehow obtained a .gov bond at that yield (good luck) or something like that. But it'll average 7%. And the std deviation of that will more or less decrease with increasing activity of mgmt aka increasing costs. There are guys who just waste money or go in parasite mode and there are cheap guys who do a great job, I'm talking about on average. So you're right for the wrong reasons, in that when you're young you want the highest return for compounding reasons so you get the most passive guy possible (possibly just a permanent portfolio psuedoindex fund) and don't sweat fluctuations, but half a decade outta retirement you want the most expensive guy out there so maybe you only get around 6% but its almost certain it'll be between 5.5 and 6.5 not all over the map. There's more to think about like diversification and selecting less risky (aka lower yield) as you get older etc, but this is a good gross summary.
  - saryant 12y ago
    Rather than moving towards active management as you become more conservative, why not just rebalance towards safer investments like bonds, reducing your equity holdings without increasing costs?

by hluska 12y ago

saryant 12y ago

> I am a long term investor, so I am not terribly concerned with management fees. This is what you should be most concerned with as a long-term investor. Investment fees can easily chew away at a significant portion of your gains over the long-term. The difference between a mutual fund with an expense ratio of 1% and a fund that costs 0.05% is $6661 over 20 years on a $10,000 investment (assuming both return 7% annually). In the end, it's the difference between $31,650 and $38,311. Obviously the difference grows with the size of your investment.

VLM 12y ago
"(assuming both return 7% annually)" LOL the median never gets returns above the median, which sounds like a tautology and nobody gets the same return every year except for long term .gov bonds and those aren't indexed for (real) inflation anyway. The point is you can't get blood from a stone and the median of active mgmt will always return somewhat less than the median of passive mgmt (aka the permanent portfolio theory or related funds). After all that active manager needs to adsorb income to eat whereas the passive manager might merely be a line of source code. However, what active management can provide is a smaller std deviation of returns, at least on average. So in the real world you won't get 7% every year unless you somehow obtained a .gov bond at that yield (good luck) or something like that. But it'll average 7%. And the std deviation of that will more or less decrease with increasing activity of mgmt aka increasing costs. There are guys who just waste money or go in parasite mode and there are cheap guys who do a great job, I'm talking about on average. So you're right for the wrong reasons, in that when you're young you want the highest return for compounding reasons so you get the most passive guy possible (possibly just a permanent portfolio psuedoindex fund) and don't sweat fluctuations, but half a decade outta retirement you want the most expensive guy out there so maybe you only get around 6% but its almost certain it'll be between 5.5 and 6.5 not all over the map. There's more to think about like diversification and selecting less risky (aka lower yield) as you get older etc, but this is a good gross summary.
- saryant 12y ago
  Rather than moving towards active management as you become more conservative, why not just rebalance towards safer investments like bonds, reducing your equity holdings without increasing costs?