Re:How the 0.001% invest
by tanderson92 on Monday December 17, 2018 @09:43AM
(#18699200)
There is additional value that can be added by forgoing an index fund, though. Tax management can be enhanced by rolling your own Total Stock Market index fund, since individual names can be harvested for capital losses, increasing the after-tax returns of your portfolio relative to a vanilla index fund. I'm not sure quite how to quantify that, but I'm sure someone has been able to do so.
Absolutely. There are a lot of reasons to run your own family office investment office.
"Because Vanguard charges too much" isn't one of them, IMO.
Re:How the 0.001% invest
by Scoundreller on Monday December 17, 2018 @05:28PM
(#18702844)
I thought you were only able to write-off $3k in capital losses per year against income?
If so, not worth dealing with for a billionaire, but definitely an opportunity for a middle-class robo-advisor.
You can write off capital losses up to the amount of capital gains plus an additional $3K. So, if you have $5MM in capital gains, especially short-term, it makes sense to sell off up to $5MM in capital losses.
Yeah, I don't think it's that great of an idea. Any sort of operational or execution-related risk you introduce by replicating indices with single names could cost you a lot more than $500k and really isn't worth it.
Even at 5 bps on a billion, I think you'd be extremely hard pressed to do everything Vanguard does for you for $500K/yr.
I'm at least a factor of 500 away from having to consider this question, but if you told me it would cost me $500K to have one fewer critically important person on my staff to deal with, that would be a good tradeoff in itself.