Personal Finance

Investing with S&P 500 Funds Only or Use a personal finance manager?

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I recently spoke with a friend who put all his money for long term investing into a S&P 500 index fund and no longer works with a personal finance manager. He did this after reading about Warren Buffets investment bet:
Curious now, I spoke with my personal finance manager and he didn’t agree. He’s also making money based off his management of my money.
I’d be interested to see what everyone else thinks of this investment option? Could you put everything in S&P 500 funds and save on the personal finance manager fees?

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  • He has a self interest in keeping a customer. Of course he’s gonna tell you to stay with you, he makes money.

    I might argue a total market fund over s&p, but your friend is doing a lot better than you (and I think your manager is screwing you)

  • Find an adviser that is a fiduciary. But, Buffet put his money where his mouth is. And, he won. There may be a few funds that have done better than the market. But, how can you find them? Most of them are losers. Buffet recomends VOO and the like. I like ITOT.

  • S&P has consistently outperformed the majority of actively managed funds. As others have stated, of course your finance manager didn’t agree because if he did then he wouldn’t get a piece of your money! He’s trying to keep you as a customer. Those fees you’re paying him will seriously eat into your returns in the long run.

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    – [Investing](/r/personalfinance/wiki/investing)

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  • Your friend is right. The S&P fund won’t include those fees that pay for your advisor, which means more for you. Don’t listen to your advisor, they are a sales person who doesn’t have your best interest at heart.

    In the long run, low cost i dex funds will beat actively managed portfolios most of the time. You might get lucky with an advisor, but you don’t have any way of judging that in advance. Just buy the market for a low price, and don’t stress out or try to time things. In the long run, this is the best strategy.

  • This is actually pretty simple.

    Look at your yearly summary statement for 2018. Then figure out what would have happened if you had all your money in a S&P 500 index fund with someone like Vanguard, Fidelity, or Schwab. If your investment guy made you more money, stick with him. If he didn’t, cut him loose.

    Now there are some benefits to true investment/finance professionals. They can make certain moves that help when dealing with taxes. These are moves you can also make but might not know to.

  • why don’t you ask him what your risk adjusted return is. ask for volatility. ask for drawdown.

    Most people will just say invest in S&P500 and you’ll beat most actively managed funds.

    Great. But I’m not someone that’s up for possibly losing 20% of my net worth in a year and then rebuilding back up.

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