Well hello there boys and ghouls.
Happy Greenbacksween.
Hey if Geoico can have Geicoween, then surely so can we.
On today’s spooktacular blog post, we are talking about why you should avoid the black cat of investing: fees.
They come in all shapes and sizes. From front-load, back-load and even fees you pay to trade stocks.
However, one of the most overlooked of all fees come from commission based salesmen disguised as your friendly neighborhood financial advisors.
They wear the greatest costumes 365/24/7: a suit.
And we are not just talking any suits my friends, but the kind you drop a month’s wages on; think more John Wick and less death of a salesman, as to portray a sense of wealth that make you feel like you be anyone or can do anything and believing you want to run up and kick that football that Lucy is holding.
You are unstoppable.
Then it happens.
You get that investor statement in the mail. You are so excited that you rip the envelope open to see how well you are doing. The market is firing off dividends and capital gains the likes of which you have never seen before. You just know you are making a killing in Mr. Market, right?
Then you see that 2% of your portfolio goes to the fund managers and realize that you just got punked!
You look to your left, you look to your right, but Ashton is nowhere to be found.
Why you must be your own financial advisor
I hate to be the bearer of bad news, but I must confess that being a DYI investor is best.
While reading a plethora of books on the subject of personal finance, I have learned the following:
- Don’t invest in anything you don’t understand. It is not enough to buy the product. You must research the company behind the brand.
- Know if a company has a competitive edge. For example, once digital cameras came on the market Kodak fell off the face of the earth. The last time I had a Kodak moment was right before Apple unveiled the iphone.
- Don’t time the market. If you have money to invest, then do it!
- Don’t invest in anything you can’t draw with a crayon.
- Invest in index funds instead of individual stocks.
- Only invest in funds with an expense ratio of less than 1%.
- You can do exchanges between index funds you already own without paying any fees. This is pretty sweet!
- Most millionaires are worth between $1 million and $5 million dollars.
- 90% of millionaires over the last 200 years achieved wealth by investing in real estate.
- Forget buying the product and own the stock. Millionaires collect assets – stocks, bonds, real estate, and intellectual property – like monopoly pieces. The poor collect consumer liabilities like big houses, boats, and cars. An asset pays you. Collect assets.
No one cares about your money more than you do
Although self-explanatory let us dig deeper children.
Would you hand over all the passwords to your bank, credit card, and investment accounts over to strangers?
Of course not.
However, in an essence that is what we do when people hand over the financial reins to business partners, financial advisors, and handlers.
Instead of working through the struggles of figuring out how money works, many just give up the responsibility to someone else. Nothing screams “just take some” more than giving people free range access to your money. Nothing attracts grifters more.
Just pick up a few free library books on investing and get started right there.
Heck you can even search online for podcasts or website that talk about money! That is how I got started.
Why you want to have $100,000 in investments
It is simple. If Mr. Market does what he has over the last 90 years, then you can turn $100k into $1M in 30 years. Not bad for a kid that gets picked last to play dodge ball.
Once you hit this number, then the money starts finding you.
Depending on your rate of return you could double your money to $200k in less than 8 years. It took me about 2 to 3 additional years to get that next $50k after the first $100k.
Do you want chocolate Halloween candy or a rock?
If any of you out there have seen The Great Pumpkin Charlie Brown, then you know what I’m taking about.
The reason many of us invest is the same reason kids trick-or-treat because we want the treat, that is something that gives us great pleasure.
You go from house to house looking for a reward for putting together that perfect costume.
Investors buy investment after investment looking for the same thing.
Nobody wants a rock!
I remember a time in school that I sold so much for a fundraiser that I got a chance to go in the money machine (where you stuff money into your pockets for like 60 seconds). I wanted that reward!
But guess what? The night before the big event I stayed up late and overslept the next morning! I missed the whole thing. That could have been my seed money to start this blog! That could have helped me start a Roth IRA at 17! The funny thing about rewards is that you may earn them, but you still have to go and pick them up.
Now I write down everything in a journal so that I do not miss a thing!
I wanted to one day be able to have ‘F everyone’ money like Mark Cuban said: “‘F everyone’ money means you can have your favorite band in your backyard, not care how much it costs, and lend them your jet to get there.” You should invest for your future self to have that option.
If you take nothing else from this post, at least remember this: we like the kind of money that jingles, but we invest so that we can have the kind that folds.
Coins are wonderful but paper folds so nicely.
“I’m just so excited. They come in, I help them, they give us money in exchange for goods, you give me money for working for you. I have a place in the world now. I’m part of the system. I’m a workin’ gal.” – Anya (Season Five).
