Counting the cost of PRPFX.....

[notsheigetz]

.....as opposed to a DIY PP....

If you are considering using PRPFX as your PP investment vehicle because you are a lazy investor like me (and which I once did when I first started out), have you considered what this is going to cost you in the long run?

If I told you that the cost you will pay for the ease of using a mutual fund will be that you will have to work 2 to 4 years longer before you retire would you think that was worth it?

Well, that might actually be true.... This article is about 401k's but it really applies to all mutual funds.

http://money.usnews.com/money/blogs/my- ... -you-blind

[LifestyleFreedom]

I agree that a DIY PP is considerably cheaper than PRPFX or PERM.  The benefit of a DIY approach is faster compounding of wealth over time and retiring sooner.  But there is another cost that does not show up in the fees -- one has to have the knowledge and discipline to follow through on the rules of the PP (which include investing in the four asset classes no matter what and rebalancing without hesitation when the time comes).  Investment mistakes can result in the permanent loss of capital when people do not know what they are doing.

When I started investing two decades ago, for example, I was confused about what to do.  I then read an article in the financial pages of the local Sunday paper titled Mutual Funds: The Eighth Wonder of the World.  That article was enough to get me started with an investment adviser (who was associated with a major Wall Street firm at the time) and is still my investment adviser today.  Because I did not have much money to invest back then, my adviser started me out with mutual funds that were offered by his Wall Street firm.

Once I got my feet wet, I learned a lot about the markets and how to invest (in other words, nothing focuses attention better than having money at risk).  Today, I could save a lot of money by doing all of my investing myself.  Yet I still invest about half of my money with this same adviser and pay his considerably higher fees than what it would cost me to do everything myself.

The way I look at it, I know how to change my own oil and could save a lot of money doing so.  But I choose to pay someone else to change my oil for me.  I could also make my own laundry detergent for pennies on the dollar, but I choose instead to buy pre-made laundry detergent at the supermarket.  It is a cost-versus-time tradeoff for me.

[notsheigetz]

I also started out investing with a financial adviser for Smith Barney who put me into some Putnam mutual funds. At the time I didn't know a "load" from a load of crap but I eventually found out they were front-loaded funds which meant I had to pay a fee just to get into them. And then when I realized how awful they were and wanted to take back control I had to pay an exit fee to get out.  The adviser was no longer around to ask about it but I suspect a percentage of those fees found their way into her pocket somehow.

I was still going the mutual fund route before I started with the PP so PRPFX was the logical choice. With the help of the good folks on this forum I discovered how easy DIY is and I'm never going back.

I still have to use mutual funds in my 401k but I got a letter from Wells Fargo just the other day saying they were reducing the fees on most of the funds. Why do you suppose that is? I think it's because a law takes affect starting in 2013 that requires them to show the true cost of the fund and they were worried about people catching on.

[Gofish]

I agree with reply #1 above. Not many of us are professional investors with up to the minute Bloomberg terminals. I use PRPFX as my sock-it-away-and-forget-about-it investment. I have a bad habit of tinkering and so I have a tinker fund, which today is more like a tinker-toy fund, but if nothing else it makes me stay current.

[Albert2011]

Hi - I am new to the forum but am a long time investor.  One of the best ETF web sites (in my opinion) is Ulli the ETF Bully.  (www.theetfbully.com) He posts several ETF based portfolios weekly including one that is the "equivalent" of PRPFX but has done much better (just under 9% for 2012.) He previously recommended PRFFX as a core holding but bailed when it did poorly in mid 2012.  Here is the link to his model portfolio page which includes the ETF mix which mimics PRPFX but which has done better.  He uses a mix of 8 ETFs which may be too complex for some:

http://www.theetfbully.com/2013/01/7-et ... eview=true

[Albert2011]

Yes - I tend to agree - what Ulli (the EFT Bully) is trying to do is to emulate the PRPFX mutual fund using a mix of 8 ETFS - his result at least in 2012 was significantly better than the fund.  Some of that was the costs associated with the fund and also most likely its implementation.  Unless one blindly followed his model and its updates one would likely have better results with a 4 ETF mix.