Quote:
Originally Posted by Slava
It's not that I entirely disagree, but I've seen plenty of portfolios that amateurs build "because they can". Frankly, a lot of them are brutal for a variety of reasons. So sure, they're saving 1% by not paying someone and costing themselves much more.
I also think that DIY companies offering free trades or super cheap trades are almost certainly doing a disservice to investors. We know that this has people trading more, and we know that more trading means more poor decisions. So again...you might "save money" in terms of the upfront cost, but are you actually coming out ahead?
As far as quantifying the value of an advisor, there have been plenty of studies on the subject that come to a value of in and around 3%. That isn't going to be the same for everyone, of course, but that's the figure they come to in more than one study that I've seen.
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I can't speak for "people" or even general trends, but ditching the bank advisor selling me mutual funds versus buying my own ETFs through a discount online brokerage has been a godsend thanks to the Coach Potato Canada website. When I first started I had a basket of ETFs and rebalanced using a spreadsheet. Now I just buy the all-in-one ETF and call it a day. I think it costs an extra 0.1% for the auto-rebalancing, which I can live with. Fortunately, I'm far too lazy to track or try to time the market. I also like to make fun of my friend's stock tips.
As long as I am in registered accounts I think this strategy works for me. However, looks like I'll run out of contribution room soon. Once I get into taxable accounts, then I might want to have an advisor help with allocation for tax efficiencies. This is especially true if I go for the Smith Maneuver where you borrow against your home to invest. I've been eying that up for years, but have been too chicken spit to pull the trigger.