My financial advisor is a Harvard educated investment banker who got out of the game to have a better lifestyle. Her advice: Index funds. That’s all I need to know. Obviously age and risk appetite will change your allocations but a company like Vanguard makes that really easy and affordable to do.
Ask HN: Why would I use private banking?
11–20 of 28 posts
Re: Ask HN: Why would I use private banking?
#12Mistake - I meant high 7 figures, too late to edit.
Re: Ask HN: Why would I use private banking?
#13Fees would probably eat away a lot of your hard earned money. Take a look here: https://www.bogleheads.org/wiki/Managing_a_windfall
Re: Ask HN: Why would I use private banking?
#14You're right. Most of the brokers, "fund managers" and other b2c intermediates are nothing but elaborate fraud.
They don’t bring any value on the table beyond what index funds can possibly give you longterm.
And why those rare anecdotal exceptions would bother managing some random dude’s money if they know how to beat the market themselves?
Don’t you see it’s almost obvious?
Re: Ask HN: Why would I use private banking?
#15Fees would probably eat away a lot of your hard earned money. Take a look here: https://www.bogleheads.org/wiki/Managing_a_windfall
Not just only fees, but inflation rates too.
Interest earned needs to be above the inflation rate, otherwise your money evaporates away.
Re: Ask HN: Why would I use private banking?
#16Some possible reasons might be to access tax loss harvesting / other tax optimization strategies (which depend on your location, carried over losses, etc), or to access discounts / relationship pricing on mortgages or other loans and lines of credit (which can also be useful to avoid selling assets and paying capital gains taxes).
It's true that you can't really beat the market before tax, but it might be worth optimizing for your own after-tax outcomes instead.
Re: Ask HN: Why would I use private banking?
#17In order for this service to make sense, they would need to deliver returns that are at least 1% in excess of say the S&P 500 index performance. One quick way to verify is to test it. Put some amount of money in their care and see if their performance (minus fees) exceeds what you can get in a passive index. Also keep in mind the compounding effect of the fees towards your returns over time so the excess return required will likely need to be much higher than 1%. I'm too lazy to calculate it right now but you should be able to easily model the impact over 5 to 10 years.
Re: Ask HN: Why would I use private banking?
#18Private banking provides personalized service, exclusive investment opportunities, risk management, convenience, and legacy planning. Despite higher fees, it offers tailored advice and access to specialized products. If you prefer low-cost passive investing, using a basic index tracker through an online brokerage might be a better fit.
Re: Ask HN: Why would I use private banking?
#19Nothing. No evidence suggests that actively managed funds beat indexes.
Re: Ask HN: Why would I use private banking?
#20In order for this service to make sense, they would need to deliver returns that are at least 1% in excess of say the S&P 500 index performance. One quick way to verify is to test it. Put some amount of money in their care and see if their performance (minus fees) exceeds what you can get in a passive index. Also keep in mind the compounding effect of the fees towards your returns over time so the excess return requi…
You cant test it or back test it in any statistically significant way. If you have a way to tell if they have Alpha then you don’t need them.