Portfolio review

Question

Unsure whether this area is separate to the FIRE site but I just wanted to know whether there are specialist portfolio reviewers. I know there is no such thing as the “best” portfolio but it would be nice to know whether the investment vehicles selected are “good” quality. The type of professional I have in mind is like a broker etc that is aware of all the different ETFs etc and can comment on which ones have been solid performers. As far as I can deduce the whole investing thing doesn’t differ much from going to the track - it’s all a gamble.

Answer

Hi G Force.

Great question.  I’d say it’d be difficult to find such a person, though an ‘hourly rate’ type of advisor might work.

In most cases, whether an investment is «good quality» will be determined by investment philosophy and what an individual believes about long term performance and what is likely to be the most sensible approach.  That often differs even among the FIRE community + even among professionals.

So to be honest, you’re likely to end up more confused afterwards if you got opinions from more than one person.

Investing, to my mind, is wildly different from gambling.  But that doesn’t stop people approaching it like gambling (by picking random stocks and hoping one of them goes to the moon).

That said, you want to put the probabilities on your side as much as possible.  In the sharemarket that often means…

— Low cost funds.  Lower fee funds typically outperform those with higher fees.
— Indexing.  Index funds are incredibly hard to beat for long term investing, most professionals fail to outperform over 10+ yrs.
— Wide diversification.  Funds with more companies are more likely to hold the companies which outperform over the long run (hard to pick in advance).

It’s not so much about finding ETFs that have been solid past performers, it’s about understanding the fundamental way markets work and how to capture the most upside possible.  The highest probability way to do that for the average person is with index funds.

That’s my 2 cents anyway.

Cheers, Dave

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