Andy wrote:

- quote -

I agree with you, but I think we may disagree on the amount of time
it takes, or how rare the ability to do it is. The main concepts are
not rocket science, and the most part of investing is spending *no time*,
doing *anything*. There is plenty evidence that most of the time you
should be simply leaving your portfolio alone, maybe rebalancing it
every six months or so. Again with the Buffett quote: "the market is a
mechanism for the transfer of wealth from the active to the patient".

- quote -

I agree that complex situations require expert attention, but there is
no reliable evidence that advisors 'squeeze out every last percent of
performance'. In fact the bulk of the evidence points the other way,
that active management costs more in overhead, and produces less. See
the article on managed funds vs. indexes.

- quote -

*If* you are getting adequate extra returns for the extra overhead
and fees you pay.

- quote -

I think we agree here, except I might include more people than you in
the group that can understand enough to do pretty well on their own. If
people knew how big a difference it would ultimately make to them to avoid
that initial huge up-front cost of broker fees by doing their own initial
investments, I think the majority of people have the brains and motivation
to find the spare hours to learn what it takes to do OK.

Joe

Joe Weinstein wrote:
- quote -

I think financial planners are appropriate for people who are not
comfortable researching things and making their own decisions, or who
don't have the time or ability to do it. Financial planners are also
appropriate for people with truly complex and substantial assets who
want to squeeze out every last percent of performance. There is
absolutely nothing wrong with using a financial planner, but a person
of above-average intelligence who is interested can easily educate
themselves to the point where they are going to do pretty well on their
own.

Andy


======================================= MODERATOR'S COMMENT:
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Andy wrote:

- quote -

Hi Andy! Thanks for joining. As you see above, I didn't say "master
financial planning". Let me be clear. I am saying that reading a few
such good books will provide enough of an education that a person
will not need *expensive management*. I claim that they will be in
a position to make the major basic choices in what they need to do.
They may well need/want occasional *cost-effective* financial advice
at times in the future, or at least *know* if they have complicated
management needs, but they can easily make an educated rough cut of
their asset allocation and implement it cheaply with ETFs, no-load
funds and a money market. The expensive initial 'management' might
have cost them an immediate 5% of their money to do approximately the
same.

- quote -

You are approximately making my point. There is ample evidence that
the putative masters of investing, the fund managers themselves, in
the majority, do less well than simple index funds with similar market
exposures. See my recent post "Report: Index Funds Beat Active Managers
again for '04"
Joe

Brent D. Gardner, ChFC wrote:
- quote -

You say that if financial planning could be mastered in 3 nights of
reading then everyone would be rich, which implies that wealth comes
from knowledge of financial planning. But that is obviously not true.

A person who has expert knowledge of financial planning will not be
rich if he spends all his income and saves nothing. Conversely, someone
with a big income who lives frugally and saves a lot will end up rich
even if he leaves his savings in a checking account. The number one
principle of successful financial planning is earning a lot of money,
spending significantly less than you earn, and saving the difference.
That one principle probably explains about 70% of the wealth of rich
people. You will not find many janitors who are rich because they used
a professional financial planner to manage their IRA.

The second most important principle of financial planning is don't
invest in anything that is highly risky.

The third most important principle is diversify your investments.

You can do an adequate, though not spectacular, job of avoiding undue
risk and diversifying by simply putting 30% in a market index fund, 30%
in a broadly based bond fund, and the rest in cash. Researching and
implementing this simple strategy would probably take no more than a
few nights. Although I don't have the time or computer tools to do an
analysis, I am willing to bet that if you compare this no-brainer
strategy with the results achieved by professional financial planners
over a number of 20 year periods in recent history you would find that
on average the professional would only have an edge of at most 5-10% in
the end result.

Andy

<BreadWithSpam[at]fractious.net> wrote in message
news:yobbrbcp5ay.fsf[at]panix2.panix.com...
- quote -

I've never heard one say anything remotely like that. I've heard urban
legend, but if this is a problem, its not near as common as you would
believe.

- quote -

There's not enough time in the day to read everything. This is why one
should do business with someone they trust.

I don't have time to go to medical school, law school, and get a masters in
accounting, so I place my trust in the experts I know. That's the way it is,
and that's the way it should be.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://www.brentdgardner.com/
http://www.gardnerfinancialgroup.com/
http://www.topgunproducers.com/
http://www.creditfixinc.com/

Si vis pacem para bellum!

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry. The ISP source of this post is not
monitored. If you want to email me, click on a link.

----snip-----

- quote -


- quote -

Not just the fees from back-end loaded funds, but also the higher expenses
with B-shares. I've had many employees of two huge national firms tell me
that B-shares are better because thay cost less if you hold them for the 4
or 5 year time. These shills never noted that their yearly expenses were 1
to 1.5% higher.
LT

"Brent D. Gardner, ChFC" <bgardner20[at]cox.net> writes:
- quote -

Sure. 'cause brokers *never* claim that B or C shares
are 'no load'.

The onus is, of course, still on the investor to actually
read prospectus and figure out when these things are being
misrepresented, but nevertheless, folks - especially folks
who are paying for full service help - don't do all that
reading and verifying.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

Brent D. Gardner, ChFC wrote:

- quote -

Oh poo. You make logical errors. If something is true, but the majority
simply don't do it, those who *do* do it can gain. And the goal is to avoid
costly mistakes. No one promised getting them rich. Are you?

- quote -

Hidden by less-than-candid advisors, or those that seem to resist the
idea of educating investors.... Hidden unless the buyer reads and understands
enough prospectus fine print to exceed the books I recommended.... Unless
you've never heard of people who were sold backend-loaded funds without
realizing or being told they would be charged X% for getting their money out.
Unless you've never heard of customers being sold bonds, and being told there
was no sales commission (and none showed on the statement) but in fact the
broker enacted a 'principal trade' and pocketed an immediate 2,3,4,5%
which didn't have to show up on the advice.
Unless an advisor openly clearly explains *every way* and *how much*
they get paid from their customer's money, preferably as a consideration
before each transaction, the advisor has a hidden conflict of interest. And
when/if they do explain it, it remains a conflict of interest.
In order to align the interests of the customer and advisor, we would
need a system that paid the advisor (only) a portion of the *gain*.

Joe Weinstein

"Joe Weinstein" <joeNOSPAM[at]bea.com> wrote in message
news:41F67EF1.1040601[at]bea.com...
- quote -

If this were true, everyone would be rich. Since everone is not rich, and
money mistakes are as common as the number of raindrops in an Alabama
rainstorm, reading for three days is not the cure, not even close.

- quote -

There's NEVER anything hidden when one invests in registered products like
mutual funds, so the above paragraph can be dismissed as completely and
utterly false.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://www.brentdgardner.com/
http://www.gardnerfinancialgroup.com/
http://www.topgunproducers.com/
http://www.creditfixinc.com/

Si vis pacem para bellum!

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry. The ISP source of this post is not
monitored. If you want to email me, click on a link.

Hi, and congratulations for starting out so early in life. That is one
of the main components to successful investing.
You are correct to be suspicious. These advisors do want to make
money, and the will sell you stuff that pays them, whether or not there
is an identical or better investment option that has no load and has less
a yearly expense. The good news is that with 3 nights of reading you can
learn enough to not need expensive management.
Your next simple step to keeping more of your investment money is to
read a book or two, so you can make the bulk of your own simple decisions
yourself and avoid losing 5% of your money to fees up front (or hidden till
you try to get it back!), and more on a yearly basis. The two main areas you
need to plan are:

1 - How you will allocate your investment: What percentage in the stock
market, how much in bonds, how much in cash etc.
2 - Within each of those categories, what to buy.

I recommend you read these books first:

Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor
by John C. Bogle

Asset Allocation: Balancing Financial Risk
by Roger C. Gibson

Earn More (Sleep Better): The Index Fund Solution
by Richard E. Evans, Burton Gordon Malkei (Introduction)

Please see my recent post about simple unmanaged, ultra-low-fee index funds.
They typically beat the majority of managed funds, and they cost next to
nothing.

Joe Weinstein

carolinawahoo wrote:
- quote -




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