Hi All. My 1st post, but have thoroughly enjoyed learning from here and the books, and now true 'believer'. What I have is sizeable portfolio with 'expensive' Advisers, and I want to the 'permanent portfolio' away from them, and perform the management of this myself.
My questions might sound simple, so please be 'gentle' with me !
* If I buy funds directly from an online broker (e.g. Internaxx) or directly from providers themselves, what paperwork, hassle, etc should I expect actualy owning ad then re-balancing periodically ?
For example, I have 8 funds (ETFs, Index Trackers, passive, etc) that will be used initially to cover the Asset Classes.....and then I will re-balance quarterly within defined thresholds. It sounds easy (subject to discipline of doing it)...but am I missing something ? Or, in other words, what have my Advisers been doing for 1% of a 4m portfolio ?
Many thanks, Big Ant
Help taking over from Advisers
Moderator: Global Moderator
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Big Ant
Re: Help taking over from Advisers
The hassle is pretty minor.
Every time you check on your portfolio you will need to calculate your current allocation to each asset class to see whether you need to rebalance. You could set up a spreadsheet for this, or add everything up by hand. Someone (I forget who, sorry) observed that Vanguard displays a pie chart where, conveniently, each of the assets is its own slice. However you do this, I don't think it'd take more than 10 minutes.
Buying and selling shares through an online broker, or mutual fund company such as Vanguard, takes about 3 minutes of mouse clicking.
At the end of the year each brokerage and fund sponsor will send you tax documents. You need to collect these and save them for tax time.
If you do tax loss harvesting you'll need to keep a log of all shares and their cost basis. It looks like the recent financial reform bill involves something about brokerage doing this for you. Right now it's unclear to me whether their required reporting is sufficient to take this off our shoulders completely.
Every time you check on your portfolio you will need to calculate your current allocation to each asset class to see whether you need to rebalance. You could set up a spreadsheet for this, or add everything up by hand. Someone (I forget who, sorry) observed that Vanguard displays a pie chart where, conveniently, each of the assets is its own slice. However you do this, I don't think it'd take more than 10 minutes.
Buying and selling shares through an online broker, or mutual fund company such as Vanguard, takes about 3 minutes of mouse clicking.
At the end of the year each brokerage and fund sponsor will send you tax documents. You need to collect these and save them for tax time.
If you do tax loss harvesting you'll need to keep a log of all shares and their cost basis. It looks like the recent financial reform bill involves something about brokerage doing this for you. Right now it's unclear to me whether their required reporting is sufficient to take this off our shoulders completely.
Re: Help taking over from Advisers
I do it through Vanguard and yes, they have a pie chart breakdown of allocations. With a $4M portfolio you will get free brokerage trades. Also it is true that in 2011 Vanguard and other brokerages are supposed to handle the cost-basis accounting to the level needed for tax purposes.
I took over my portfolio in 2006 and Vanguard was extremely helpful every step of the way. I am sure other firms are good but my experience was with Vanguard.
Once you manage your own account and find out what those advisers were doing for their 1% per year (and how, quite possibly, they were actually making more than 1%), you're going to be angry. At least I was. I got over it. Though I still flip a bird in their direction every time I rebalance. And I hope their boat is in need of some expensive repairs.
I took over my portfolio in 2006 and Vanguard was extremely helpful every step of the way. I am sure other firms are good but my experience was with Vanguard.
Once you manage your own account and find out what those advisers were doing for their 1% per year (and how, quite possibly, they were actually making more than 1%), you're going to be angry. At least I was. I got over it. Though I still flip a bird in their direction every time I rebalance. And I hope their boat is in need of some expensive repairs.
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Big Ant
Re: Help taking over from Advisers
Thank you for early replies.
You lucky guys are US based, with Vanguard offering a great services and product range. Being in Europe, I will need to utilise iShares and 'low TER' index funds, but should be able to secure a 0.45% cost base.
I also think about using 2 brokerages, simply to remove 'counterparty risk'....maybe a little unnecessary, but I was thinking that if the maintenance is not too hard, then this might provide some advantage for me.
Thanks again.
Big Ant
You lucky guys are US based, with Vanguard offering a great services and product range. Being in Europe, I will need to utilise iShares and 'low TER' index funds, but should be able to secure a 0.45% cost base.
I also think about using 2 brokerages, simply to remove 'counterparty risk'....maybe a little unnecessary, but I was thinking that if the maintenance is not too hard, then this might provide some advantage for me.
Thanks again.
Big Ant
Re: Help taking over from Advisers
There should be no need to rebalance quarterly if you don't have to. It will generate a lot more in expenses if you are a taxable investor and complicated bookkeeping. Annually is fine, or just use rebalance bands which may mean you don't rebalance parts for a few years at a stretch.Big Ant wrote:* If I buy funds directly from an online broker (e.g. Internaxx) or directly from providers themselves, what paperwork, hassle, etc should I expect actualy owning ad then re-balancing periodically ?
For example, I have 8 funds (ETFs, Index Trackers, passive, etc) that will be used initially to cover the Asset Classes.....and then I will re-balance quarterly within defined thresholds. It sounds easy (subject to discipline of doing it)...but am I missing something ? Or, in other words, what have my Advisers been doing for 1% of a 4m portfolio ?
I am unfamiliar with Inernaxx so have no opinions to offer. If you buy the funds there is usually not a problem from most brokers save for a small fee. You could also consider just using the ETF versions and this will be very simple for brokers which just charge a straight commission.