If one is trying to avoid expenses, simply invest in a Vanguard index fund. And certinally avoid an outside advisor that charges a % and use a fixed fee CFP in you need help.

This guy probably knows what he is talking about.

 

Completely agree about index funds, and target date retirement funds are especially hands off. The closer in the fund's date, the more conservative it's managed. If you want more risk you can just pick a date decades away. I used a couple of these for most of my 401k/B Fund. I recently went to mostly cash, but wanted to see what a broker might do with some (10%) of my savings. A bit of an experiment.

 

I was surprised to see that the managed funds on average are being out performed by index funds. The target retirement or life cycle funds don't have the lengthy track record of the index funds so I'm curious in 20 years how they will compare.

 

Yea, even the far out target date funds are a mix of stocks and bonds so are going to be more conservative than a straight index fund of an all stock group. We've had a bull market overall since 2009 or so, so stock index funds will likely have outperformed target date funds.

 

No one has ever been able to out perform the market on a consistent basis, and actively managed funds carry more costs. Those two things alone make index funds more advantageous. Some of the index funds in the PRAP have expense ratios as low as 6 basis points.

 

A good advisor will pay for his services with what you get in return. It's not just about annual returns- there are tax consequences, estate planning issues, multiple retirment sources to mesh, and structure for best tax treatment as well as medical costs/insurance considerations and finally cash flow. These become most important as you near retirement and you would want to have an established relationship for a few years before you hang up the hat.

I said "good advisor". Unfortunately they are few and far between, hidden amongst a lot of so- so mediocre guys that just use some computer program and follow a few axioms to handle your account. There are also some crooks and incompetents.

Remember the advisor ( Schrenker) that faked his own death when he bailed out of his Malibu over southern Alabama? His first victims were Delta pilots.

 

Less than 2 for Total Stock Market, managed by Vanguard