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#1 User is offline   Sloshy 

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Posted 18 March 2017 - 05:12 PM

This is a topic I don't think I've ever seen tackled on the board...

Thinking of making a change from a fairly passive Vanguard IRA/Roth IRA situation to one of the robo-advisors (Betterment). Anybody use a rebalancing robo advisor?
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#2 User is offline   Winterset Resurrection 

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Posted 18 March 2017 - 05:14 PM

I've actually tried to start investing talks here before, by my last attempt only had Maco reply with "Investing? Not unless you count baseball cards!", and I'm pretty sure that was the only response.

I would welcome an investing thread, although I have to be honest that I've never heard of a robo-advisor. What is it, and can you program it to give you a handjob?
"The problem in this country, is that almost no one's sense of community or country extends beyond their wallet." -GoBucs
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#3 User is offline   Sloshy 

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Posted 18 March 2017 - 05:21 PM

View PostWinterset Resurrection, on 18 March 2017 - 05:14 PM, said:

I would welcome an investing thread, although I have to be honest that I've never heard of a robo-advisor. What is it, and can you program it to give you a handjob?

It's a fleshlight taped to a calculator...

A robo-advisor is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners.

The trouble with most mutual funds is in keeping a balance across asset classes. Not just different sectors, but also small cap, mid cap and large cap. Robots can help you remain well balanced and equally-exposed, while also responding to the market using algorithms that are meant to exploit market trends.

So, you know, computers and stuff.
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#4 User is offline   Winterset Resurrection 

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Posted 18 March 2017 - 05:55 PM

That's interesting. Thanks for the explanation.

The only part I don't understand is "keeping a balance across asset classes" for mutual funds. If that's what you want, wouldn't you just pick a mutual fund that's a blend of small-, mid-, and large-cap stocks?
"The problem in this country, is that almost no one's sense of community or country extends beyond their wallet." -GoBucs
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#5 User is offline   Sloshy 

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Posted 18 March 2017 - 07:10 PM

View PostWinterset Resurrection, on 18 March 2017 - 05:55 PM, said:

That's interesting. Thanks for the explanation.

The only part I don't understand is "keeping a balance across asset classes" for mutual funds. If that's what you want, wouldn't you just pick a mutual fund that's a blend of small-, mid-, and large-cap stocks?


Well, sure, but you have three variables to keep track of:

--- industry parity
--- cap-diversity
--- performance of individual stocks

It isn't easy to keep all of that balanced at all times.
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#6 User is offline   Winterset Resurrection 

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Posted 18 March 2017 - 07:19 PM

View PostSloshy, on 18 March 2017 - 07:10 PM, said:

Well, sure, but you have three variables to keep track of:

--- industry parity
--- cap-diversity
--- performance of individual stocks

It isn't easy to keep all of that balanced at all times.


Okay but, the point of a mutual fund is that the fund itself invests across a (usually) wide variety of stocks, etc., and the fund is required to keep within certain parameters. Are you saying that a lot of mutual funds don't keep within their stated parameters?

I'm not trying to be condescending in the slightest; I just don't totally understand what you're saying here. Thanks.
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#7 User is offline   ECBucs 

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Posted 18 March 2017 - 08:10 PM

View PostWinterset Resurrection, on 18 March 2017 - 07:19 PM, said:

Okay but, the point of a mutual fund is that the fund itself invests across a (usually) wide variety of stocks, etc., and the fund is required to keep within certain parameters. Are you saying that a lot of mutual funds don't keep within their stated parameters?

I'm not trying to be condescending in the slightest; I just don't totally understand what you're saying here. Thanks.


Either
find a good financial advisor or go with mutual funds that have investment strategies of 5 years, 10 years and 20 years to spread risk over time. You don't need to invest equally in all 3, at least at first but will want to review and rebalance periodically.

We've used the same brokerage service (part of a credit union) for over 20 years and have gotten good advice and good returns.

I did have a separate 401k at work but had my broker help with allocations for several years.
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#8 User is offline   GoBucs21 

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Posted 18 March 2017 - 08:18 PM

View PostECBucs, on 18 March 2017 - 08:10 PM, said:

Either
find a good financial advisor or go with mutual funds that have investment strategies of 5 years, 10 years and 20 years to spread risk over time. You don't need to invest equally in all 3, at least at first but will want to review and rebalance periodically.

We've used the same brokerage service (part of a credit union) for over 20 years and have gotten good advice and good returns.

I did have a separate 401k at work but had my broker help with allocations for several years.

My financial adviser rebalances my 401K every six months.
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#9 User is offline   Winterset Resurrection 

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Posted 18 March 2017 - 08:43 PM

View PostECBucs, on 18 March 2017 - 08:10 PM, said:

Either
find a good financial advisor or go with mutual funds that have investment strategies of 5 years, 10 years and 20 years to spread risk over time. You don't need to invest equally in all 3, at least at first but will want to review and rebalance periodically.

We've used the same brokerage service (part of a credit union) for over 20 years and have gotten good advice and good returns.

I did have a separate 401k at work but had my broker help with allocations for several years.


I mean, that's definitely good advice. I'm just trying to understand what sloshy means about robo-advisors. Every mutual fund I've ever invested in constantly rebalances their positions, which is why you have to keep an eye on management fees, etc.

I was just looking to learn about an aspect of investing I didn't know existed.
"The problem in this country, is that almost no one's sense of community or country extends beyond their wallet." -GoBucs
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#10 User is offline   Sloshy 

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Posted 18 March 2017 - 09:24 PM

Robo-advisors rebalance more frequently:

https://support.bett...lio-rebalanced-

And typically mutual funds do not provide maximum exposure across all three variables: risk (cap size), sector and performance.
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#11 User is offline   donwengert4life 

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Posted 18 March 2017 - 09:25 PM

I love this topic even though I have no tolerance for risk and tend to invest like an 80 year old man.

The Great Recession really fucked with my head.
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#12 User is offline   Dale Berra's Nose 

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Posted 18 March 2017 - 09:45 PM

View Postdonwengert4life, on 18 March 2017 - 09:25 PM, said:

The Great Recession really fucked with my head.

Why? If you stayed "all in" throughout the recession and never took risk off the table through the market bottom, you're ahead now. That's a long time ago, and we're into an 8+ year bull market.
IS THIS THE GAME THREAD???
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#13 User is offline   ECBucs 

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Posted 18 March 2017 - 09:46 PM

View PostSloshy, on 18 March 2017 - 09:24 PM, said:

Robo-advisors rebalance more frequently:

https://support.bett...lio-rebalanced-

And typically mutual funds do not provide maximum exposure across all three variables: risk (cap size), sector and performance.


rebalancing
frequently can add to fees so you want to check it out carefully.
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#14 User is offline   ECBucs 

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Posted 18 March 2017 - 09:49 PM

View PostGoBucs21, on 18 March 2017 - 08:18 PM, said:

My financial adviser rebalances my 401K every six months.


we
look at ours closely every six months but don't necessarily rebalance each time. I am fairly aggressive with at least a portion of our funds and expect to stay that way at least until we get social security.

Figure that if the higher risk group drops we will hold onto it and cash out of other areas. A loss really isn't a loss until you sell.
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#15 User is offline   Dale Berra's Nose 

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Posted 18 March 2017 - 09:53 PM

I love risk. I don't even worry much about rebalancing. It just means my riskiest asst classes probably take up a larger chunk of my portfolio than a year ago. I'll worry about it when I get closer to retirement.
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#16 User is offline   Winterset Resurrection 

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Posted 19 March 2017 - 05:39 AM

View PostSloshy, on 18 March 2017 - 09:24 PM, said:

Robo-advisors rebalance more frequently:

https://support.bett...lio-rebalanced-

And typically mutual funds do not provide maximum exposure across all three variables: risk (cap size), sector and performance.


Thanks for the link. It was well-explained, and I never knew about mutual fund "drift."

Personally, I would still prefer a good human manager over an automatic rebalancing. My concern would be that you might get rebalanced out of a position that is incredibly bullish, simply because you are drifting too far away from your initial position.

I don't know if any of you guys use Scottrade for your investments, but I am a huge fan. The costs forced everyone in the investment world to lower theirs, the customer support is superior, and even though I don't have an actual human investor recommending things to me, their stock screeners- especially for mutual funds- are excellent.
"The problem in this country, is that almost no one's sense of community or country extends beyond their wallet." -GoBucs
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#17 User is offline   Winterset Resurrection 

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Posted 19 March 2017 - 05:42 AM

View Postdonwengert4life, on 18 March 2017 - 09:25 PM, said:

I love this topic even though I have no tolerance for risk and tend to invest like an 80 year old man.

The Great Recession really fucked with my head.


Then you should absolutely invest in some physical precious metals (gold, silver, platinum, palladium) to keep hidden as an absolute fallback. It will give you great piece of mind.

Over the years, I've accrued 3 of these commodities in various formats from a reputable dealer in Maryland. Although all have increased in value, they are more my "shit hits the fan"-type fallback, in case the US dollar ever plummets as it should, because it's basically just fiat money now.

I could tell you more about it if you're interested. It makes a great hedge and fallback to traditional investment.
"The problem in this country, is that almost no one's sense of community or country extends beyond their wallet." -GoBucs
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#18 User is offline   donwengert4life 

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Posted 19 March 2017 - 10:22 AM

View PostDale Berra, on 18 March 2017 - 09:45 PM, said:

Why? If you stayed "all in" throughout the recession and never took risk off the table through the market bottom, you're ahead now. That's a long time ago, and we're into an 8+ year bull market.


Because I don't like seeing money disappear by the thousands every day. I know logically you are absolutely correct but I don't have much of a stomach for it.

I also would love to retire early. So although I am not THAT close to retiring I am not 25 years old either, with 35-40 more years of work ahead of me. I hope not, anyway.

There are also periods of time, rare as they may be, where risk would not have done you much good. If you were set to retire in, say, 1938 and you had spend most of your life investing in the market, you would have been somewhat fucked. If you are of the mind that the global economy is ultimately unstoppable then you are fine, but I don't necessarily feel that way.
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#19 User is offline   ECBucs 

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Posted 19 March 2017 - 03:08 PM

View Postdonwengert4life, on 19 March 2017 - 10:22 AM, said:

Because I don't like seeing money disappear by the thousands every day. I know logically you are absolutely correct but I don't have much of a stomach for it.

I also would love to retire early. So although I am not THAT close to retiring I am not 25 years old either, with 35-40 more years of work ahead of me. I hope not, anyway.

There are also periods of time, rare as they may be, where risk would not have done you much good. If you were set to retire in, say, 1938 and you had spend most of your life investing in the market, you would have been somewhat fucked. If you are of the mind that the global economy is ultimately unstoppable then you are fine, but I don't necessarily feel that way.


you
need to garden and can food too.
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#20 User is offline   donwengert4life 

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Posted 19 March 2017 - 04:27 PM

View PostECBucs, on 19 March 2017 - 03:08 PM, said:

you
need to garden and can food too.


Fuckin' A. I will be the last one laughing.
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