Author Topic: IRA Fees  (Read 537 times)

Giantsfan2010

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IRA Fees
« on: August 04, 2018, 12:40:46 PM »
Hi everyone., 2nd post here.  I've had Fidelity manage my rollover IRA and 401k for awhile now.  I'm paying about 1.3% and 0.4% respectively.  Apparently Fidelity told me I've been grandfathered into a lower fee as the new IRA fees are about 1.5 to 1.6%.  I'm wondering if you guys manage your funds all on your own (low cost index funds) or do you think that the company's management will lead to greater gains over time even considering the fees involved? 

Or, are there other companies that will manage my portfolio for a lower cost?  Lot of debate online about all the companies and which one overtime will produce the greatest results.  Please excuse me if I'm not being clear enough with my info, my stache is still trying to grow and I'm pretty new to all this investing shiz. 

Frankies Girl

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Re: IRA Fees
« Reply #1 on: August 04, 2018, 01:06:41 PM »
There is no good reason for a healthy, reasonably intelligent adult to pay for professional management. Reps are not any more able to predict the future than you are, they just got lots of schooling/training to understand things that could happen, or explain how things work that you yourself could figure out easily if you spent a little time educating yourself. And they are always going to take that fee, even when they're wrong... and they will absolutely be wrong more often than they guess right. So why pay for them to maybe get it right a year or two, then get it wrong a year or two? Index investing isn't glamorous or exciting; it is simple and boring. That's what investing should be like.

They tout managed funds as being better than index funds due to the chance of higher gains... but they also have a good chance of lower gains/higher losses and that management fee still gets pulled out like clockwork no matter how good or bad they perform. There are zero guarantees they could do better, and in fact there was a recent challenge that index funds kicked ass over the best/brightest hedge fund managers picks (you know, the guys that claim they are better than everyone as far as investing). Pure, boring, cheap AF index funds FTW.   
https://www.whitecoatinvestor.com/forums/topic/warren-buffett-declares-victory-in-10-year-bet-of-index-fund-against-hedge-fund/



https://www.bogleheads.org/wiki/Fidelity

I have all my portfolio with Fido, and I have it in 3 funds (a "lazy" 3 fund index portfolio). I do have a tiny bit in a 4th fund, but it is a silly holdover from the before times for me, and is a fraction of one percentage point of my entire portfolio so I don't really count it. Irrational attachment I'm slowly getting around to letting go. ;)

I do not pay a manager for anything. I pay their index fund's expense ratios and as I'm using their ridiculously low priced index funds.

http://jlcollinsnh.com/stock-series/
^get the book or read his online series

https://www.bogleheads.org/wiki/Investment_policy_statement
Then figure out your IPS

https://www.bogleheads.org/wiki/Asset_allocation
Then figure out your AA

You can be a Boglehead at Fido, especially since you're already invested there.

The only good reason I could think of to pay a manager is if the person under management is very sick/elderly and had too much other stuff on their plate to deal with their investments (my dad did this as he really never understood how it all worked and it scared him to be in charge of his own portfolio). Even then, if they had gotten started index investing before all the bad stuff, I'd still likely avoid doing professional management since again... index investing is dead easy and simple to DIY, so it's still the best route IMO.

Giantsfan2010

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Re: IRA Fees
« Reply #2 on: August 05, 2018, 06:32:11 PM »
Wow, thank you for all the information.  I have to admit it is a lot of information and I'm slightly limited on time, so it may be awhile before I finish reading through all of that.  Overall, I am now confident that I won't be needing Fidelity to manage my accounts.  Much appreciated!