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Dana Anspach

Is Your Broker Making You Broke?

By October 27, 2012

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This Boglehead's forum thread called portfolio spring cleaning is a must read for anyone who has a complicated portfolio built by a broker and wants to figure out how to reduce expenses and taxes.

It starts off with someone who posts this "I've been lurking on this site for several weeks now and could use some advice on how to significantly simplify our portfolio, reduce expenses and minimize our ongoing tax liability."

They go on to layout their entire portfolio.

The first response includes these comments.

"In your shoes, I would:

  1. Restrain my inclination to go postal on your investment salesmen to date.
  2. Think really hard about whether there is any reason that a simple three fund portfolio won't take care of your needs. Well, three fund modified a little bit. Total stock, a good international, total bond, maybe a TIPS fund, and a tax exempt bond fund if there is not enough room in your retirement accounts for all the bond fund money you need. You need a serious reason to add complexity to your investments beyond this point. Or maybe some serious delusion that you can beat the market. Your salesman will happily provide a fill load of BS along these lines."

The discussion goes on for pages as strangers help this person rearrange and simplify their portfolio into a few index funds. They even get into details about short term and long term capital gains and losses, and which funds to own in which accounts to be tax-efficient.

If you're so inclined, check it out at need help with portfolio spring cleaning.

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