The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: MelodysMustache on September 26, 2013, 09:34:46 AM
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I stumbled over https://www.futureadvisor.com/ a couple of weeks ago. It seems to give decent fund picks based on index investing and having a good mix of asset classes. I recently rebalanced my portfolio based on the info provided because I felt that I was too heavy in large domestic stocks. I would not use it to change funds automatically and I would not use it exclusively, but I think it is an interesting input to the investing process.
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I've used it a bit too. I only started investing a few months ago, so I don't have much to analyze, but it said I had close to 100% fee and tax efficiency, but that I too was too heavy on Domestic stock. I make automatic investments into a couple of Vanguard mutual funds but it seemed like they really favored ETFs, which seem to take a bit more work.
Curious- did you go with their ETF recommendations, or just use it to choose different funds?
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For the most part I went with the ETF recommendations. However I plan on rebalancing only every six months because of the transaction fees on the ETF trades.
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I just checked it out. WOW! They want me to change pretty much EVERYTHING! Interesting things to think about, but I doubt I will make the moves they recommend (although there are some in there that are intriguing!).
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I have used it but did not take their advice. The site seems to favor a very large allocation to Reits. Also, it does not like my small cap value tilt or my TIPs. I prefer my portfolio just the way it is. :)
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I love FutureAdvisor! I keep meaning to write a post extolling their virtues, but you seem to have beaten me to it. They're awesome!
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Some of FutureAdvisor's recommendations are a little arbitrary, but their Awesome Portfolio Checklist (https://www.futureadvisor.com/images/comics/The%20Awesome%20Portfolio%20Checklist.pdf) does a great job of summing up what everyone should be doing.
ETFs are great for those who wanted to start investing immediately and can't make the $1000 Vanguard mutual fund minimums (http://www.andhigherstill.com/2013/04/investing-with-100.html), but are willing to do the extra manual work that trading ETFs requires. ETFs don't support automatic investment (http://www.andhigherstill.com/2013/10/index-investing-maintenance.html), which is unacceptable in my book—the added manual interaction is just begging you to make emotionally-based poor decisions.
If you're also getting hit with transaction fees to trade ETFs, absolutely look elsewhere. At Vanguard (http://www.andhigherstill.com/2013/10/index-investing-vanguard.html), all customers can trade ETFs for free (https://personal.vanguard.com/us/whatweoffer/stocksbondscds/feescommissions).
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Some of FutureAdvisor's recommendations are a little arbitrary, but their Awesome Portfolio Checklist (https://www.futureadvisor.com/images/comics/The%20Awesome%20Portfolio%20Checklist.pdf) does a great job of summing up what everyone should be doing.
ETFs are great for those who wanted to start investing immediately and can't make the $1000 Vanguard mutual fund minimums (http://www.andhigherstill.com/2013/04/investing-with-100.html), but are willing to do the extra manual work that trading ETFs requires. ETFs don't support automatic investment (http://www.andhigherstill.com/2013/10/index-investing-maintenance.html), which is unacceptable in my book—the added manual interaction is just begging you to make emotionally-based poor decisions.
If you're also getting hit with transaction fees to trade ETFs, absolutely look elsewhere. At Vanguard (http://www.andhigherstill.com/2013/10/index-investing-vanguard.html), all customers can trade ETFs for free (https://personal.vanguard.com/us/whatweoffer/stocksbondscds/feescommissions).
Thank you for the Checklist link, brandoncurtis. Do you know how they dice and tilt with small cap and value? The bond side seems a little thin on ideas, but maybe there is more.
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The FutureAdvisor website (https://www.futureadvisor.com/methodology) says explicitly:
A note should be made that we prefer a “small cap and value lean” to a portfolio. Research has shown that small cap stocks and value stocks tend to significantly outperform the market as a whole over the long run, both in the U.S. and abroad.
This forum post (http://www.bogleheads.org/forum/viewtopic.php?f=1&t=124157&p=1820170) lists some details of what FutureAdvisor recommended for one person:
High level portfolio
Domestic Equity: 40%
International equity: 35%
REITs: 15%
Fixed income: 10%
Tilt within the high level portfolio
Domestic equity: 40% broken into 16% large value, 16% total stock market and 8% small blend.
international equity (total 35%) - emerging 15%, developed large 15%, developed small 5%
There's your answer!