In September 2006, I created a hypothetical $200,000 portfolio for some expatriate American teachers at Singapore American School.
To build this portfolio at Vanguard, investors would have had:
- No sales charges to pay
- No account maintenance fees to pay
- No redemption fees to withdraw money, should they choose to
The initial $200,000 went through one of history’s biggest tests: the 2008/2009 economic crisis.
Despite this, the original $200,000 portfolio (which I rebalanced taking less than 10 minutes a year) would now be worth $267,088.81.
The overall gain has been $67,088.81
Indexed Portfolio: September 2006-October 2012
|
Chart |
Ticker |
Company Name |
Cost |
Shares |
% of Total |
Current Value |
|
Overall Gain: |
+$67,088.81 |
|||||
|
Total |
$267,088.81 |
|||||
|
$10.35 |
9,113.6345 |
38.15% |
$102,072.71 |
|||
|
$15.00 |
5,612.3335 |
30.04% |
$80,368.62 |
|||
|
$28.35 |
2,376.8043 |
31.82% |
$85,137.13 |
|||
Why is this even better than it looks?
American expats can’t contribute much money to their IRA accounts, so most of what they invest is fully taxable. Actively managed mutual funds are far less tax-efficient than indexes. But most advisors will stuff your accounts with actively managed products instead.
Why? Advisors earn higher commissions on actively managed products; they buy them at your expense (and their personal gain).
I can’t afford to buy somebody else a Mercedes Benz. Can you?
Consider contacting a company that can help you build indexed portfolios. Here are a few:
But remember…these are for Americans only.
