Being Smart with $$ - Did You Earn Enough in 2021

 

The books are closed on 2021.   So, how did your portfolio do?  Did your adviser boast that he or she earned you a 7% return on your investments, or maybe a more-impressive 10%?  Before you send out a thank-you note, those returns are less than you should have earned for most people.  A simple investment in the Vanguard Target Retirement 2035 Fund (for those in their early 50s) returned over 13-1/2% in 2021.  The 2045 Fund (for those in their early 40s) earned over 16%.  While your circumstances and risk profile may be somewhat different than others who are in their 40s or 50s, this comparison may put your 2021 performance in perspective.  Are you 60? The conservative Vanguard 2025 Fund returned almost 10% in 2021.  And these are all static portfolios without a manager guessing what to buy and sell.  Many advisers claim they have a special ability to give you extra returns but much research suggests that the majority of advisers are unlikely to beat the markets after their high fees are taken out. And what’s worse, many guess wrong on market direction and cost you a fortune in lost earnings.  If you are 50 and paid 1% of your assets in fees to an adviser for a 10% return this past year, then your $1 million portfolio may have earned $35,000 less than it should have and then you paid $10,000 in fees on top of that for poor advice.  If you earned returns this year that were well below those provided by Vanguard target retirement funds matching your horizon, then you might want to question your adviser’s investment strategy and why you are paying such high fees for someone who shouldn’t be gambling with YOUR money.  Consider speaking to an hourly, fee-only adviser who doesn’t time the market or make false claims that he has a crystal ball.  (Past performance may not be an indicator of what to expect in the future and your individual circumstances should be considered in any investment choice. 2021 market returns were higher than historical averages.)

Larry Pike, CFA

Client Priority Financial Advisors LLC
www.clientpriority.com

Hourly, Fee-Only Financial Planning and Advice.

No Commissions.  No automatic, annual fees.