However when I look at the quarterly statements I never see a return more than 5-6%. I understand the cumulative quarterly return can equal the 18% over 2 yrs. Question: When my finacial advisor states that it returns 18% over 2 yrs is that misleading when quarter to quarter the return is 6% or less?
2007-12-05 11:40:05 · 6 answers · asked by J. Fatpaws 2 in Business & Finance ➔ Investing
Regarding what fund it is.. I asked this specific question and was told there is no fund symbol as it is an annuity rather than a mutual fund. It's through Metlife. Commision is like .75 plus .50 to the fund/ annuity manager.
Truth is I like the guy but he has 20% of my savings and is about to get 60% of it in the form of a 401K roll over and allocation.. So I want some reassurance that % of return since inception date is the only measurement I should be concerned with.
5% quarterly is OK. 18% since inception sounds great but is it? If that quarterly is 10% than the inception is more like 35%. What is the better indicator of performance?
2007-12-05 13:48:59 · update #1
Well, I don't much like annuities and I think quoting total returns over more than a year is misleading unless you also get the yearly returns at least. But he's probably not lying to you -- you may be forgetting the power of compounding.
If you put in $10K on January 1, 2005, and had $11,800 on January 1, 2007, that would be a two-year return of 18%. Sounds good, but that's really only an average annual return of something like 8.6%. Considering the markets over the last two years, that's OK but not impressive.
The power of compounding is why long-term investing is so much more rewarding than people think.
2007-12-05 14:27:11 · answer #1 · answered by enoriverbend 6 · 0⤊ 0⤋
Hi,
If you would please send me an email with the quotron symbol of the fund( or the exact name and share class) I will give you the exact return over the past two years. Is your advisor quoting a cumulative return or a 2 year average annual return? Another way to look at this would be to look at the dollar amount you had invested in the fund 2 years ago and the dollar value of the fund today. Subtract one from the other and divide that number by the original value of 2 years ago. That would be the total return for the 2 years. Again please read my profile and give me a shout. I would be more than happy to do the calculations for you.
2007-12-05 20:20:28 · answer #2 · answered by Richard Jackel 3 · 0⤊ 1⤋
Not really. If he or she said your annual return was 18% then that would be misleading. If you wanted to know the year to date return or the quarterly return then you should have asked. Maybe he/she benchmarks returns on a 2 year time horizon and talks to all clients like that.
I think the bigger question is this: Why are you with a Financial Advisor who you don't trust? This seems a bit petty so I imagine there is a much bigger trust issue than an investment issue.
2007-12-05 19:52:40 · answer #3 · answered by ck-cfp 2 · 1⤊ 1⤋
No , your advisor may well be within his rights to quote the return cumulatively for two years was equal to 18% of the original investment. If you invested $ 10,000. and two years later you have a value of $11,800., the return is 18 % on an accumulated basis. What was the Advisor paid to get you to this level?
2007-12-05 21:10:34 · answer #4 · answered by googie 7 · 0⤊ 0⤋
Sorry to tell you that, but your financial advisor sucks. Fire that bastard. He earns money, not you.
You can get a larger yield (20% per year) as I do.
2007-12-06 08:09:28 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Duh ! Do you have a calculator? What did you have two years ago? What do you have now? What's the difference?
Divide the difference by what you started with...is it 0.18 ?
2007-12-05 21:38:14 · answer #6 · answered by jebediabartlett 6 · 0⤊ 0⤋