The wealth-building thread

[levimax]

What? That is a silly comparison, you are talking about subjectivism, I am talking about actual returns on investments and investment opportunities.

I keep talking about risk because in order to compare actual returns you need to adjust for risk. This is done with statistical models, the Sharpe ratio being one of several methods. https://www.blackrock.com/ca/investors/en/risk-adjusted-return. While you assert that the opportunities offered to wealthy investors are superior to the opportunities offered to ordinary investors you don't offer any comparisons of risk adjusted returns to back up your assertions, just your subjective opinion.

 

[Audionaut]

I am talking about actual returns on investments and investment opportunities.

No, you don't. You're making completely vague claims without a single piece of verifiable evidence. It's all just subjective assertions and no facts.

 

[PristineSound]

While you assert that the opportunities offered to wealthy investors are superior to the opportunities offered to ordinary investors

Do me a favor and screenshot for me where I said this.

 

[PristineSound]

No, you don't. You're making completely vague claims without a single piece of verifiable evidence. It's all just subjective assertions and no facts.

What vague claims are you referring to exactly? That rich people have investment opportunities that poor people don't have access to?

 

[levimax]

Do me a favor and screenshot for me where I said this.

Here is an example:

I will say this. I been in the far orbit of private equity and investment bankers in my early twenties to early thirties, all that stuff you read and fantasized about, is all real.

And another one:

I Can say this, in the last 3 years, I came seen at least 4 opportunities that was very compelling, I'm not saying I was offer the opportunity to invest, but I have seen them. Yes, the risk is higher, but it beats the historical S&P500 by a far margin.

 

[PristineSound]

Here is an example:

I will say this. I been in the far orbit of private equity and investment bankers in my early twenties to early thirties, all that stuff you read and fantasized about, is all real.

And another one:

I Can say this, in the last 3 years, I came seen at least 4 opportunities that was very compelling, I'm not saying I was offer the opportunity to invest, but I have seen them. Yes, the risk is higher, but it beats the historical S&P500 by a far margin.

Ok, and what exactly about it do you take exception to?

You mentioned risk multiple times, can you tell me exactly what I said about the risk?

 

[JeffS7444]

What I might have done isn't what I would recommend to the general investor.

But this is what I have done during the dip, I moved some fixed income investments to equities, SPY specifically. I also took out a margin loan to put into SPY, I paid only interest for 3 months, and when it rebound, I sold and paid back the margin loan. I also rebalanced my portfolio.

The amount that I did was an amount I can afford to lose, which wasn't a lot.

I regret not able to do the same during the start of the pandemic. And I regret that I didn't have enough money during the great recession.

The key is, I'm young, and I got time, and with time, the S&P500 has been proven to be failsafe for 100 years.

But now, I don't think I will have enough time on my side to do things like that again.

EDIT: correction. S&P only has been around for 70 years.

No, I meant what you might've suggested to an average investor: I get the impression that your own tolerance for risk is higher than mine.

 

[PristineSound]

No, I meant what you might've suggested to an average investor: I get the impression that your own tolerance for risk is higher than mine.

For an average investor, I would recommend them to stick with an appropriate mixture of mutual funds, ETF and fixed income. And when the market dips, don't react, just stick it through.

Or get yourself a financial advisor, who can guide you through periods of market volatility. I know for many people, they feel the advisor fee is not worth it, and that they can do just as good if not better, that's a personal choice. I have a financial advisor, who does quite a bit for us and we are very happy with them.

 

[Chromatischism]

Financial advisors really do vary. They're human, after all. The one I had in 2020 talked me out of investing in Tesla before the model 3 launch. Sigh.

 

[levimax]

Ok, and what exactly about it do you take exception to?

You mentioned risk multiple times, can you tell me exactly what I said about the risk?

Maybe I am wrong but it seems to me that you are implying in your posts that rich investors not only have access to products and opportunities not available to the average investor, which is certainly true, but that these products and opportunities are superior. Since this is a science based fourum the tradditional way to compare investment opportunities is looking at risk adjusted returns, there are also other methods. You offer no objective evidence that these rich people opportunities are superior so your assertions are subjective opinions.

I will assert, outside of interest rates charged and paid, based on many studies of the risk adjusted returns of varous asset classes and strategies done over the years, that most of these rich people opportunities are not superior and in many cases lower performing than low cost index funds or ETF's available to everyone.

The only reason I am commenting at all is because I see a lot of this "unfair advantage" talk thrown around like it is a fact. This creates FOMO, or envy, or jealousy or what ever you want to call it which distracts people from building wealth. When people believe the system is unfair and stacked against them they start making suboptimal investment decisions like not investing or taking huge speculative risks rather than taking a disiplined approach to get rich slowly, which has by far the highest success rate.

I don't have anything else to say on the subject and wish you well on your investment journey.

 

[JeffS7444]

For an average investor, I would recommend them to stick with an appropriate mixture of mutual funds, ETF and fixed income. And when the market dips, don't react, just stick it through.

Or get yourself a financial advisor, who can guide you through periods of market volatility. I know for many people, they feel the advisor fee is not worth it, and that they can do just as good if not better, that's a personal choice. I have a financial advisor, who does quite a bit for us and we are very happy with them.

Mutual funds? Now I'm surprised. I bought into those when I was just getting started, because I hadn't heard of John Bogle and his low-cost index funds. Just to be clear, even when I was just getting started, I had no desire to actively trade; I was looking to buy and hold for decades. Legg Mason aka Clearbridge Value Trust did outperform the S&P for a number of years, but when things went wrong, boy did they ever go wrong, and recovery took many years. Ahh memories of 2008 and realizing that my money had been invested into the housing market and firms like Washington Mutual.

Were you able to get a good deal on your financial advisor? Ramit Sethi and others make it very clear that they consider typical fees of 1% of Assets Under Management to be very expensive, particularly when loss of compounding is considered. And they stress that such fees pretty much guarantee that your portfolio will underperform over the long run.

 

[PristineSound]

Maybe I am wrong but it seems to me that you are implying in your posts that rich investors not only have access to products and opportunities not available to the average investor, which is certainly true, but that these products and opportunities are superior.

My man, that was indeed said. . .in your imagination that is. But in real life I have said no such things.

Since this is a science based fourum the tradditional way to compare investment opportunities is looking at risk adjusted returns, there are also other methods. You offer no objective evidence that these rich people opportunities are superior so your assertions are subjective opinions.

You continued to accuse me of saying all sorts of things. Like you said this is a science forum, please provide me evidence of me saying such things that you are accusing me of. I've been asking you to take a screenshot of me saying this, you failed to do so.

Now let me refer you back to this post: https://www.audiosciencereview.com/...the-wealth-building-thread.26346/post-2626589

The only reason I am commenting at all is because I see a lot of this "unfair advantage" talk thrown around like it is a fact. This creates FOMO, or envy, or jealousy or what ever you want to call it which distracts people from building wealth. When people believe the system is unfair and stacked against them they start making suboptimal investment decisions like not investing or taking huge speculative risks rather than taking a disiplined approach to get rich slowly, which has by far the highest success rate.

My man, go read every word of every post that I have made on this thread and tell me what have I specifically and actually said that is offensive or egregiously wrong. I don't think you actually even read what I said nor do you even watch that video I posted.

 

[Joe Smith]

We use a good fiduciary management firm in our city and are very pleased with it. For people who don't want to worry about week in, week out management, I feel the fees are worth it. I have a smaller 401(k) piece from our main investments that I still manage separately, for the time being.

 

[PristineSound]

Financial advisors really do vary. They're human, after all. The one I had in 2020 talked me out of investing in Tesla before the model 3 launch. Sigh.

I agree 100%. Any FA makes an recommendation to buy one singular stock, that is a huge red flag.

What I am about to say may offend some financial advisors out there. But whatever. I would recommend the big institutions, like Fisher Investment or Fidelity, they have a whole infrastructure of professionals and tools to help guide you to LONG TERM financial success.

 

[Chromatischism]

I left mine after calculating actual fees over time.

It was literally going to cost me $100K USD, or more, by the time I retire. Those fees compound in a way most people would never comprehend.

If all they're doing is sticking you in index funds or even a mix of mutual funds, just do it yourself and save the money.

 

[PristineSound]

Mutual funds? Now I'm surprised. I bought into those when I was just getting started, because I hadn't heard of John Bogle and his low-cost index funds. Just to be clear, even when I was just getting started, I had no desire to actively trade; I was looking to buy and hold for decades. Legg Mason aka Clearbridge Value Trust did outperform the S&P for a number of years, but when things went wrong, boy did they ever go wrong, and recovery took many years. Ahh memories of 2008 and realizing that my money had been invested into the housing market and firms like Washington Mutual.

Mutual funds was just an example, and it works well for many, but YMMV.

Yes, I agree, day trading isn't investing. I recommend you watch that YT video I posted if you haven't.

Were you able to get a good deal on your financial advisor? Ramit Sethi and others make it very clear that they consider typical fees of 1% of Assets Under Management to be very expensive, particularly when loss of compounding is considered. And they stress that such fees pretty much guarantee that your portfolio will underperform over the long run.

FA isn't cheap, and they are tiered priced based on portfolio sized. For some, it's worth it and it pays for itself. For some, it's not worth it because they can do all of it themselves.

FA is a individual choice and often times, these choices and decisions changes based on many circumstances.

I recommend it to all those who aren't financially literate and just have no damn interest in learning it.

 

[PristineSound]

We use a good fiduciary management firm in our city and are very pleased with it. For people who don't want to worry about week in, week out management, I feel the fees are worth it. I have a smaller 401(k) piece from our main investments that I still manage separately, for the time being.

For some people, they feel the fee pays itself through the service and return they get.

There is no right now wrong choice, it is so individualized.

I used to have one and I got rid of if her, but I now currently one and I am pleased.

 

[muslhead]

If all they're doing is sticking you in index funds or even a mix of mutual funds, just do it yourself and save the money.

you forgot to mention the sage advice of buying and holding because retail investors sell when they should be buying and vice versa. Like audio, its plagued with bias, emotion and brain tricks

 

[PristineSound]

On the topic of FA, historical data shows that a low fee index fund will out perform any FA after their fees. When compound over time, it's a big difference, not small.

So clearly it's a bad idea to have an FA, right?

Personally, I say it all depends on the FA, for me it's the addition services I get from my specific FA, we get planning and strategy for all things in general life.

For example, we are purchasing a new home, they helped us structured the entire purchase by leveraging debt to bridge a cash flow gap without incurring tax penalties. They also help us to find the most tax efficient method in nearly everything we do. The money they help is saved while probably don't make up all the fees, but the convenience is a nice service to have available.

There are other factors as to why I think my FA is worth it, which is not necessary to get into.

But it's not a small casual decision, you have to think it through thoroughly to make sure it's a right decision for your personal self.

I do believe most people will do just fine putting all of their money into a low fee ETF.

 

[blueone]

Financial advisors really do vary. They're human, after all. The one I had in 2020 talked me out of investing in Tesla before the model 3 launch. Sigh.

This is exactly why I make all of my own investment decisions. I learned to want no one to blame but myself.