[rsmurano]

Originally Posted by golfing eagles

Unless you have a seat on the stock exchange, in one way or another you have to utilize a "broker", even if it is Charles Schwab. I think what is being discussed here falls into the category of "wealth management" or "financial advisors".

Which brings up another point. While these guys make money regardless of performance, how many individual investors have more knowledge than the professionals, not to mention the data and analysis of a large team? Unless you're just going to dump everything into a fixed asset, they are probably worth their 3/4%

I use a brokerage house to make trades, I don't use a broker.
I have more knowledge than the professionals that used to handle my friends accounts. Also, I would be a more knowledgeable professional investor than a professional working at a brokerage house. Why? Because I know what I'm looking for, I know my risk level, and I know what I want to invest in. I don't need somebody I don't know to tell me how to invest. For example, you mentioned a large team of professionals, I will never go with a large team, which means I will never go down the active fund route, mine are all index funds if not individual stocks.

Also, all my life I have ignored bonds and the last couple of decades, never been in a target or balanced fund. Why? They don't make you money. When I'm fully invested, I go for the index funds and stocks that I have been in for 1 or 2 decades that keep making me 30+% in good times or in stocks that make me more than that. Then the last few years, I get out when things don't look good and get back in when I think I can make good money, if its a sideways market, I'll be in money market funds until its time to invest.

I used to keep my portfolio intact during the 3 big downturns in the last 24 years and it worked out to stay in. Now, I don't want to wait years for my portfolio to recover.
Will a team of brokers direct me to do this? No way.

[spinner1001]

Originally Posted by rsmurano

For example: say I gave them a $2M to invest, and they did well and made me $100,000, I would pay them 1% of that $100,000 gain, not the $10,000-$20,000 fee that they would charge me for the $2M I gave them. Also, if they lost me money, then they would make no money, or better yet, they would give me 1% of my losses.

You know no broker will do this methodology, they want to make money whether they do good or not and on money they never did work for.

Your hypothetical business model doesn’t happen in the real world for good reason. Bankruptcy.

You are looking for someone to be your business partner where you keep 99% of any gross profit and they pay 100% of the overhead costs.

Any business with that model will be out of business soon.

[golfing eagles]

Originally Posted by rsmurano

I use a brokerage house to make trades, I don't use a broker.
I have more knowledge than the professionals that used to handle my friends accounts. Also, I would be a more knowledgeable professional investor than a professional working at a brokerage house. Why? Because I know what I'm looking for, I know my risk level, and I know what I want to invest in. I don't need somebody I don't know to tell me how to invest. For example, you mentioned a large team of professionals, I will never go with a large team, which means I will never go down the active fund route, mine are all index funds if not individual stocks.

Also, all my life I have ignored bonds and the last couple of decades, never been in a target or balanced fund. Why? They don't make you money. When I'm fully invested, I go for the index funds and stocks that I have been in for 1 or 2 decades that keep making me 30+% in good times or in stocks that make me more than that. Then the last few years, I get out when things don't look good and get back in when I think I can make good money, if its a sideways market, I'll be in money market funds until its time to invest.

I used to keep my portfolio intact during the 3 big downturns in the last 24 years and it worked out to stay in. Now, I don't want to wait years for my portfolio to recover.
Will a team of brokers direct me to do this? No way.

So, in other and fewer words, you do think you know more than the professionals. OK.

[Cuervo]

Investing is a gamble and if you are going to participate you have to understand that. If you do your homework the odds are better than Las Vagas, but there still are winners and losers. Before you even place your money on the table, there should be a few key decisions you should make. First are you skilled enough and have the time to invest on your own without an advisor. The second thing is how much money do you need to live in comfort. The second reason might determine if you need to get into the market at all. If you have a large enough nest egg you might earn enough on an FDIC, CD or some type of insured savings. CDs these days range from 4% to 5% depending on its life span. Just really study before you sign on the dotted line.

[Stu from NYC]

Originally Posted by golfing eagles

So, in other and fewer words, you do think you know more than the professionals. OK.

Some of these so called professionals are anything but.

[Girlcopper]

Originally Posted by rsmurano

Who makes money 100% of the time, you or your broker when using a broker to handle your investments? When the market goes down, do you get a break from your broker commissions? Worse, if you lose money because your broker isn't very good and the market is going gangbusters, do you get a rebate from the broker?
You know the answer to all of these questions.

1 brokerage firm that has tried many times to hook me into coming over to them, that also has the commercials with "we do better when our clients do better", I just laugh when I hear this. Why??
Say I have millions of dollars in my portfolio, if I would go over to this broker, or any broker, they will charge me a fee up front based on my portfolio value. Say I have $2M portfolio, any broker would want me to pay .5% to 1% ($10,000 to $20,000 depending on fee) up front. WHY? the broker didn't get me this money, I did. Plus, every year after this, I will be paying at least this much (give or take) depending on your portfolio gains and losses. Again, they didn't do anything for me on the initial $2M, but I will be paying on that amount forever. At the same time, no broker can guarantee me that they will make more money with their investing picks than what I can do. There is no way to know how a broker has done for their clients that I have found either, so you are relying on a salesman (never) or by a friend who has used them. Before listening to my friend, I would need to see proof of his gains/losses over the past 5-10 years, not just that they are a nice broker.

As for skin in the game, I would recommend (would never use 1) a broker that would charge a 1% fee on the gains they made me, not based on my initial portfolio value. The more money they have to work with, the easier it would be for an experienced broker to make me money so they can make money. If they don't make money, they don't make money.
For example: say I gave them a $2M to invest, and they did well and made me $100,000, I would pay them 1% of that $100,000 gain, not the $10,000-$20,000 fee that they would charge me for the $2M I gave them. Also, if they lost me money, then they would make no money, or better yet, they would give me 1% of my losses.

You know no broker will do this methodology, they want to make money whether they do good or not and on money they never did work for.

. I have a financial advisor within my investment company and they charge me Pennies. It depends on the company. Not all are the same at all. And if someone isn’t familiar with buying and selling stocks then a financial advisor is definitely the way to go.

[Justputt]

At one time I did it myself. I invested in mutual funds that had solid track records and a couple solid stocks. I worked around a group of friends that were all about investing, funds, stocks, etc. and were on top of it. In 1987 (Black Monday), my solid stock (IBM) took a beating, and it took many years to recover to breakeven. In the decades that followed I let my "safe" mutual funds churn along doing reasonably well. I didn't see the tech bubble was about to burst nor how badly it was going to take a hit, so I lost about 50% in several funds. I was working somewhere else where people weren't focused on their investments, and I just "let it ride". That was a major lesson for me; if I don't have the time or knowledge to stay on top of it, let someone (company) that does it 24/7 manage it. Sure, I pay a fee, no one works for free! I don't want my retirement years even modestly consumed with my investments vs turmoil in the world, markets, elections, etc. IMO, if staying on top of investments is something you want to do, great; me, I'm content to know my money will outlive me as I enjoy the coming years worrying about nothing.

[Barryb46]

The most important factor when choosing someone to help manage your investments is to find someone you TRUST. Spend some time getting to know them on a personal basis to better understand their investing philosophy, talk with some of their clients and set up a managed agency account with joint management (you and your advisor). This is often in a bank's trust department or a brokerage firm with trust powers. I prefer an organization that is a fiduciary who can administer the trusts we have established in our wills.

[Rainger99]

Originally Posted by Justputt

At one time I did it myself. I invested in mutual funds that had solid track records and a couple solid stocks. I worked around a group of friends that were all about investing, funds, stocks, etc. and were on top of it. In 1987 (Black Monday), my solid stock (IBM) took a beating, and it took many years to recover to breakeven. In the decades that followed I let my "safe" mutual funds churn along doing reasonably well. I didn't see the tech bubble was about to burst nor how badly it was going to take a hit, so I lost about 50% in several funds. I was working somewhere else where people weren't focused on their investments, and I just "let it ride". That was a major lesson for me; if I don't have the time or knowledge to stay on top of it, let someone (company) that does it 24/7 manage it. Sure, I pay a fee, no one works for free! I don't want my retirement years even modestly consumed with my investments vs turmoil in the world, markets, elections, etc. IMO, if staying on top of investments is something you want to do, great; me, I'm content to know my money will outlive me as I enjoy the coming years worrying about nothing.

Aren’t mutual funds professionally managed?

[Rainger99]

Did anyone’s financial advisor tell them to get into cash just before the 1987 crash or the 2007/2008 crash?

A lot of my professionally managed mutual funds and my 401(k) lost a lot of money in 2007/2008!

[retiredguy123]

Originally Posted by Barryb46

The most important factor when choosing someone to help manage your investments is to find someone you TRUST. Spend some time getting to know them on a personal basis to better understand their investing philosophy, talk with some of their clients and set up a managed agency account with joint management (you and your advisor). This is often in a bank's trust department or a brokerage firm with trust powers. I prefer an organization that is a fiduciary who can administer the trusts we have established in our wills.

In my opinion, a bank's trust department is not an organization you can trust. It is one of the worst places to invest your money. I use a bank for a checking account only. I never invest any money with a bank.

I have always used Fidelity Investments and Vanguard Investments for mutual funds, and I have never paid a penny to a broker.

[Stu from NYC]

Originally Posted by Rainger99

Did anyone’s financial advisor tell them to get into cash just before the 1987 crash or the 2007/2008 crash?

A lot of my professionally managed mutual funds and my 401(k) lost a lot of money in 2007/2008!

Nobody can time the market on a regular basis. Many people panic when the market suddenly tanks and pulls all their money back leaving them no chance to get it back.

[Stu from NYC]

Originally Posted by retiredguy123

In my opinion, a bank's trust department is not an organization you can trust. It is one of the worst places to invest your money. I use a bank for a checking account only. I never invest any money with a bank.

I have always used Fidelity Investments and Vanguard Investments for mutual funds, and I have never paid a penny to a broker.

Banks trust depts known for being very conservative and first priority is never to lose money.

That leads to not making much either.

[retiredguy123]

Originally Posted by Stu from NYC

Banks trust depts known for being very conservative and first priority is never to lose money.

That leads to not making much either.

They make a lot of money on fees, especially if they manage a trust or an estate after someone dies.

[rsmurano]

The huge difference between the crashes of black Monday, the tech bubble, and the financial crash 17 years ago to me was this: I was still working, didn’t need any money anytime soon, and the biggest thing, I was dollar cost averaging, so sure it was nice seeing my portfolio at its best but I wanted it to go down so I can buy more shares while its down and then when I need it, I hope it would be at its highest.
Now, I don’t need the money so when I invest I’m in it for a month, 6 months, or until I see issues coming up and then I’m out.
I timed getting out at the peak at the end of 2021, stayed out until I started to get back in in 2023 and got back out 5 months ago.
No broker could have done better, except for maybe a hedge fund mgr but then the fees are huge. Nobody can time the market, but I’m not timing the market either. I got out of some of the stocks that went up over 100%, but some of them kept going up. So I missed out, so what, I made a small fortune during those 6-9 month months.
I have learned, pigs get slaughtered. It’s better to get out if I think the future looks bad and keep my wins, than stay in the market and watch my earnings tank when I knew the future looked bad