Vestarter vs. American Funds
Data and Assumptions

 
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For our comparison between broker and Vestarter, we chose to us the American Funds group because of their stellar reputation that has led to them being the largest broker-sold, active-fund manager in the United States.

Because American Funds employs a very different means of identifying asset classes and primarily focuses on investments in large company growth stocks, it is impossible to create an exacting comparison of the two groups. We tried to come close to a 50% U.S./50% international allocation overweighted toward small-cap stocks, plus 10% in emerging markets stocks. American Funds does not offer any REIT (real estate investment trust) funds.

We used American Funds "C" share funds as they are both popular with brokers (as they can sell them as "no-load" funds since they do not deduct an upfront commission) and they allow a more accurate dollar for dollar comparison. 

Our return assumptions are purely hypothetical and do not, in any way, reflect real-world performance or imply future returns. We used an 8% return because it is well below the 40-year historical annual return for a total global market portfolio. Our hypothetical assumptions do not take into account the effects of taxes or inflation. 

The American Fund portfolio return assumes a $10,000 investment growing at a straight-line 6.42% annual compounded rate (8% minus the current 1.58% in annual fees). The Vestarter portfolio return assumes a $9,600 investment (Schwab requires that 4% remain in cash in exchange for waiving ETF commissions) growing at a straight-line 6.9% annual compounded rate (8% minus the current 0.20% in annual ETF fees and 0.9% Vestarter advisory fee).

All information is provided for educational purposes and should not be construed as an indication of actual future returns. Past performance does not indicate possible future returns.