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Savings challenge: $100k in five years.

 
Old 06-13-2019, 02:50 AM
  #651  
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Default Re: Savings challenge: $100k in five years.

Explain expense ratios to me like I just give my money to a financial adviser and have him figure it out for me.
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Old 06-13-2019, 02:58 AM
  #652  
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Default Re: Savings challenge: $100k in five years.

Originally Posted by The GreenD16 View Post
Explain expense ratios to me like I just give my money to a financial adviser and have him figure it out for me.
It's how much the fund charges to do what it does. The smaller the better, but sometimes higher costs can go with a better fund. In general though low cost index funds are preferable. If you pay someone to manage your funds and they put your money into a high expense ratio that can eat 4% per annum. Or the EILI5: if we are at a restaurant imagine if Everytime the waiter brought you food they ate a few bites. After a few visits they've gotten a whole meal you could have eaten.
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Old 06-13-2019, 07:42 AM
  #653  
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Default Re: Savings challenge: $100k in five years.

Originally Posted by Skelly View Post
Is it advisable to diversify said bonds?
You would want to diversify them into short term/mid term/ long term bonds just like you would have small cap, mid cap, large cap stocks.

The long term bonds would be a bit more risky because the chance of fluctuation of interest rates within the time frame, while a short term bond would be less risky, (but also less yield) because there's less chance of fluctuating interest rates.
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Old 06-13-2019, 08:02 AM
  #654  
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Default Re: Savings challenge: $100k in five years.

Just to be clear, the one I mentioned was a 3% tax free return. The expense ratio is included in that.

So yes, you could get more if there wasn't an ER, but with this specific account, it has to be managed. You cannot do it on your own.

If you know of a liquid/no-term investment that returns better than that, I would be very interested in moving my money there. My finance guy/friend who manages our stuff (and hundreds of millions of other dollars/clients) moved a lot of client assets to that and closed their old stuff.
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