Stop wasting time analyzing, invest in lower fees

I cannot tell you how much time I have wasted trying to figure out:

  1. Is this a good investment?
  2. Is this the best investment I can make?

There is so much conflicting information out there it can be difficult to cut through the noise. Everyone is telling you what to do and what to buy. What’s the next big stock. What’s the hottest commodity.

How do I know this? Because I was the person they target. A young millennial with a decent job that knows enough about money to be dangerous and wants to get the best return for their invest. I was listening and paying attention. I thought – if I do enough research and learn enough about stocks I can pick those unicorns. Just like the people they highlight.

But there’s too much information out there. There are too many voices and opinions to listen and read. There are thousands of stocks to sort through. And really I didn’t want to dedicated all my time looking at income statements and 10k documents. And this is all in an effort to setup your won personal stock account. Then there are there is your 401k and mutual funds.

As an employee the minimum you should be contributing to your 401k is whatever the business matches. If you are not you are basically giving money away. But I really the 401k system. You are limited to purchasing what the 401k plan offers. And if those choices suck, well too bad. Why would a mutual fund really suck? Terrible performance is possible, but the dark secret is fees. Mutual funds will fee your money to death. They make it seem all innocent. Only 1% or 2%. But over 30 years that means a fortune less in your account gains.

You need that 1 to 2 percent in order for your account to reach critical mass and really grow big.

The 2 things that will kill your investment gains are taxes and fees. You must pay your taxes. Uncle Sam will get his piece of the pie one way or another. So don’t stress about paying taxes. And there are ways to reduce your taxes if you reach a certain size and you can consult a tax professional. Now fees on the other hand. There is no reason you should be paying more than the bare minimum in fees.

I love technology. It has really changed the game. There are so financial tools out there now, because of tech there is no reason on earth to pay high fees.

Back to mutual funds. Your best strategy is to pick a stock fund with the lowest fees. Between .5% to 1% is what you should aim for. Anything about 1% run for the hills. If you do not like any of the choices to choose from in your 401k harass your HR department to change and encourage other employees to do the same. You are all in the same boat.

I am a total believer in index investing. Why own one stock when you can just as easily own the entire market? That way if one business fails it will not kill your entire portfolio. Index investing is also set it, forget it investing. You just consistently put money into the account and it runs on autopilot.

Vanguard is one of the best. And I am not sponsored by them or anything, they just offer really low fees. Like .2% There are also others like iShares and Investco. Jack Bogle just passed away this year. If you don’t know about Jack Bogle the founder of Vanguard you should read about him. He really did change the financial game for the consumer.

Full disclosure, I do own a few stocks of companies that I just love and want to support. Like Costco COST and Starbucks SBUX.

There is also such thing as a Target Retirement Date Fund. Which is great for people that are worry warts about investing aka my dad. Basically the idea is that you choose a retirement date in the future and the fund adjust automatically as you get closer to that date. It takes money out of stocks and put the money in bonds for capital preservation. So you know you will be taken care of when you reach that age. This is pretty much what 90% of America should be doing. Because most people have no idea about investing.

In conclusion, choose the fund with the lowest fees possible even if the other funds say they have higher gains. You will not enjoy those gains because you will be paying high fees! Your first loyalty is to yourself when it comes to investing. Not a financial institution. It is not a privilege to invest in the stock market reserved for the elite. It is your right as a citizen.

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