The Money Mustache Community
Around the Internet => Antimustachian Wall of Shame and Comedy => Topic started by: HeadedWest2029 on January 30, 2018, 04:53:39 PM
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Shared by an financial advisor for Eddie Jones on FB...
"You might be tempted to compare your annual returns to a broad index, such as the S&P 500, and then question why they might be different. Though indexes can provide insight into the general performance of stocks and bonds overall, they are usually not a relevant comparison to your own personal performance."
https://www.edwardjones.com/market-news-guidance/guidance/returns-and-market.html?utm_source=Voices&utm_campaign=Returns&utm_term=Marketing
Classic
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2 thoughts.
1. I could see Vanguard saying the same thing. No, your overall portfolio performance shouldn't match the SP 500. You should be more diversified and balanced portfolio. Your portfolio will likely include bonds and international stocks.
2. Comparing apples to apples, large cap stock fund to the SP 500, then your returns should be close. Bond fund to bond index, your returns should be close. If your returns are lower it's probably because you are at Edward Jones.
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I smell an excuse for under-performing the market and excusing whatever mutual funds they've put together. Do they mention any where about their ability to do better than the S&P500?
"Your portfolio we manage won't match the S&P500, and after fees it definitely won't!"
Fixed it for them.
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I actually agree with the first and 3rd point they made. Number 3 is the whole reason mutual funds, including index funds, use time weighted returns where personal performance is usually based on an internal rate of return calculation.
Ignoring the source for a moment, an alltruistic financial advisor with only your interests in mind should educate clients about those differences.
However, the 2nd bullet point is less relevant since you can find an index for the worldwide market.
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They all mix truth with propaganda / "education". Yes, a balanced portfolio will historically lag VTSAX. I just get amused by their wordplay between indexes and risk, and underperformance with strategy and goals. Maybe there are some weirdos with a 50/50 portfolio who are pissed they lag the S&P 500. More likely people are asking why their active funds continually suck