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You are here: Home / Stock Investing Series / Stocks — Part IX: Why I don’t like investment advisors

Stocks — Part IX: Why I don’t like investment advisors

by jlcollinsnh 84 Comments

 During a recent trip to Ohio I caught up with RMak, a fellow member of a motorcycle forum I frequent.  Later he posted a report on our meeting and in describing me said:

“Out stepped a mountain of a man…this guy looked to be a cross between John Wayne, Justin Beiber and Bigfoot.”

 Kinder than many descriptions over the years.

Anyway this, for the first time ever, put Justin Bieber in my mind.  You can imagine the feeling of disconnect when a week or so later there he was on the cover of…….wait for it….

Forbes Magazine.

The self-described “Capitalist Tool.”

Interestingly he wasn’t in there as part of their ‘richest celebrities’ list or some such, but as a venture capitalist and a new darling of high-tech startups.  Courtesy of his manager and investment advisor.  Seems a key part of their strategy is that other VC firms and entrepreneurs will be willing to invite him to join in only the very best, most lucrative deals because….

…well evidently just because he’s Justin Beiber.  This has Forbes positively gushing over his business savvy.  Justin, buddy, you need to start reading jlcollinsnh!

Start here —  Simple Path to Wealth — and refer to Step 2:

2)  Avoid Money Managers.  They are expensive at best and will rob you at worst.  Google Bernie Madoff.  Seek advice cautiously and never give up control.  It’s your money and no one will care for it better than you.  But many will try hard to make it theirs.  Don’t let it happen.

When I say Money Managers, I am also referring to Investment Advisors, Financial Planners, Brokers and the like.  Any and all who make their money managing yours.

Now, I’m sure there are many honest, diligent, hard-working advisors who selflessly put their clients’ needs ahead of their own.  Actually, I am not at all sure about that.  But just in case, I put it out there in fairness to them.

Here’s the problem.

1.  By design, structurally, an advisor’s interests and that of their client are in opposition.  To do what’s best for the client requires the advisor to do what is not best for himself.  It takes a rare and saintly person to behave this way.  Money management seems not the calling of first or even second choice for the rare and saintly.

2.  Well intentioned, but bad advice is epidemic in this field.  Advisors who put their clients’ interests ahead of their own are, to steal a phrase from Joe Landsdale in his novel Edge of Dark Water, “rarer than baptized rattlesnakes.”  And then you’ve got to find one who actually is any good.

3.  Advisors are drawn not to the best investments but to those that pay the highest commissions and management fees.  Indeed, often they are compelled by their firms to sell these.  Such investments are, by definition, expensive to buy and own.

4.  Not surprisingly a field that provides access to people’s life savings is a magnet for….

 con men, thieves and grifters.

Investment Advisors earn their money in one of three ways:

1.  Commissions.  The advisor is paid each time you buy or sell an investment.

It’s not hard to see the potential for abuse here, and the conflict of interest is stark.   There is no “load” (commission) charged to buy a Vanguard Fund.  But American Funds, among others,  charge a princely load.  It goes into the pocket of the advisor.  Mmmm.  Wonder which he’ll recommend?

Still other funds offer a 1% (from your money) recurring management fee to the advisors who sell them.  That means you get to pay a commission not once, but every year for as long as you hold the fund.  No surprise advisors favor these too.

Insurance investments are some of the highest commission payers.  This makes them perhaps the most aggressively recommended products advisors offer and certainly among the most costly to you.  Annuities and whole/universal life insurance carry commissions as high as 10%.  Worse, these commissions are buried in the investment so you never see them.  How such fraud is legal I can’t say.  But it is.

Hedge funds and private investments all make their salespeople wealthy, along with the operators.  Investors?  Maybe.  Sometimes.

If this weren’t enough, if you’re not paying attention, there is more money to be mined at your expense by “churning” your account.  Churning refers to the frequent buying and selling of investments to generate commissions.  It is illegal.  But it is also easily disguised, principally as “adjusting your asset allocation.”

Bernie Madoff

Time was, people begged him to take their money.

His credentials were impeccable.   His track record too.

Only the “best” investment advisors could get you in.

Mr. Madoff paid them handsomely to do so.  As did their clients.

Oops.

2.  Management fees, the AUM model.  The advisor charges an annual fee to manage your money.  Typically 1-2% of assets under management (AUM).

With the rampant abuse of the commission model, in recent years charging management fees has grown in popularity.  It is presented as being more objective and “professional.”  But there are snakes in this grass as well.

First, 1-2% annually is a HUGE drag on the growth of your wealth.  Let’s say your portfolio earns 8% per year.  2% goes to the fee.  Let’s say 3% to inflation and maybe 3% to taxes and…..Suddenly there’s nothing left for you.  Investment returns are precious and under this model your advisor is skimming the absolute cream.

Let’s hop over to our pal Dave Ramsey’s site and borrow his calculator.  Suppose you have a nest egg of $100,000.  That’s about the minimum to interest an advisor.  Let’s suppose you invest it for 20 years and earn 8% per year.  You end up with $492,680.  Not bad.  Now suppose you give up 2% to a management fee.  Your net return is now 6% and after 20 years that yields $331,020.  $161,660 less.  You not only give up the 1-2% each year, you give up all the money that money would have earned compounding for you over the 20 years.

Second, we still have the problem of a conflict of interest.  It is not as pervasive as the commission model but it’s still there.  Maybe you are considering paying off your 100k mortgage or whether to contribute 100k to your’s kid’s college education instead of having them go into debt.  Most advisors will consul against either of these courses.  For you, depending on your situation, that may be good or bad advice.  For your advisor, it is the only advice that preserves the $1000 to $2000 in annual fees that 100k puts in their pocket.

Third, the vast, vast majority of advisors are destined to cost you still more money as they underperform the market. You won’t know for 20 years or so if you got lucky enough to pick one of the exceedingly rare ones who don’t.

3.  Hourly fees.

If you really need advice, this is the most straightforward way to pay for it.  But pay for it you will.  Rates of $2oo-$300+ per hour are not uncommon.  You are less likely to be cheated, but you still have the challenge of knowing if the advice itself is going to be good or bad for your financial health.

 4.  Some combination of 1,2 & 3 from above. 

That’s our last option.  If your advisor is using it, likely the reason is not for your benefit.

Pretty grim, eh?  Here’s an article written by investment advisor, Allen Roth, with some revealing admissions as to how the game is played.  He certainly spells it out.  Bravo, Allen!!  But where he and I part company is he also provides advice on how to pick a good advisor.  That’s probably even more vanishingly difficult than picking winning stocks or mutual funds.

If you are a novice investor you have a two choices:

  • You can learn to pick an advisor.
  • You can learn to pick your investments.

Both require effort and time.  But the second not only provides better results, it is the easier path.

The great irony of successful investing is simple is better.  Complicated investments only benefit the people and companies that sell them.  Not only do you not need complex investments, they actually work against you.  At best they are costly.  At worst, they are a cesspool of swindlers.  Not worth your time.  You can do better.

Nobody will care for your money trees better than you.

With less effort than choosing an advisor, you can learn to manage your money yourself.

….with better results.

Addendum I:

We like to capitalize on your stupidity

Note: Seems this video is no longer available. Too bad. It was a hoot!

Addendum II:

In the comment section below reader Prob 8 posted:

“If anyone doubts JLC’s claims regarding the impact of fees and commissions on your portfolio, please check out this video from PBS: http://www.pbs.org/wgbh/pages/frontline/
It’s called The Retirement Gamble. (You’ll have to paste that into the search box to find the video.) There are interviews with Jack Bogle and all you’ll need to know to realize fees and investment advisors are hurting your portfolio more than helping.”

I just finished watching it. Very powerful stuff and I highly recommend readers here check it out.

The math on how damaging even seemingly modest 2% fees really are is nothing short of breathtaking; and even I didn’t fully appreciate just how laden with fees 401k plans have become. Yikes!

Thanks Prob 8!!

Addendum III:

Prob 8′s comment above set me to exploring today’s 401k plans further. See: Stocks– Part VIII-b: Should you avoid your company’s 401k?

Addendum IV: Just what does that management fee cost you?

Addendum V: Life insurance sales people are taught by their companies to masquerade as investment advisors. It makes it easier to sell high-fee products like the seemingly endless varieties of whole life insurance. Don’t buy these products. If you need life insurance, buy term insurance for exactly what you need and only for as long as you need it. Take the money you save and invest it in a low-cost index fund like VTSAX.  If you are interested in a detailed analysis of why, Jason Hull has an excellent one: Another evaluation of an indexed universal life insurance

Addendum VI: My pal Kathryn who writes the weekly MSB Cheat Sheet just introduced her readers (and me) to Todd Froemlin and his new tool Stockchoker. Plug in three bits of info – the name of a stock or mutual fund, a date and an amount invested – and it will instantly spit out what you would have made along with a smart-ass comment. Very nice to have when some advisor is urging you to dump your index funds for his high-fee super-duper fund with the secret proprietary logarithms sure to make him, er, you rich.

Addendum VII: My pal Physician on FIRE shows just how Investment Fees will Cost You Millions

Addendum VIII: From Can I Retire Yet, the Worst Investment Advice ever Heard

Related

Important Resources

  • Talent Stacker is a resource that I learned about through my work with Jonathan and Brad at ChooseFI, and first heard about Salesforce as a career option in an episode where we featured Bradley Rice on the Podcast. In that episode, Bradley shared how he reached FI quickly thanks to his huge paychecks and discipline in keeping his expenses low. Jonathan teamed up with Bradley to build Talent Stacker, and they have helped more than 1,000 students from all walks of life complete the program and land jobs like clockwork, earning double or even triple their old salaries using a Salesforce certification to break into a no-code tech career.
  • Credit Cards are like chain saws. Incredibly useful. Incredibly dangerous. Resolve to pay in full each month and never carry a balance. Do that and they can be great tools. Here are some of the very best for travel hacking, cash back and small business rewards.
  • Personal Capital is a free tool to manage and evaluate your investments. With great visuals you can track your net worth, asset allocation, and portfolio performance, including costs. At a glance you'll see what's working and what you might want to change. Here's my full review.
  • Betterment is my recommendation for hands-off investors who prefer a DIFM (Do It For Me) approach. It is also a great tool for reaching short-term savings goals. Here is my Betterment Review
  • NewRetirement offers cool tools to help guide you in answering the question: Do I have enough money to retire? And getting started is free. Sign up and you will be offered two paths into their retirement planner. I was also on their podcast and you can check that out here:Video version, Podcast version.
  • Tuft & Needle (T&N) helps me sleep at night. They are a very cool company with a great product. Here’s my review of what we are currently sleeping on: Our Walnut Frame and Mint Mattress.
  • Vanguard.com

Filed Under: Stock Investing Series

« Happy Birthday, jlcollinsnh; and thanks for the gift Mr. MM!
I could not have said it better myself… »

Comments

  1. The Keichi One says

    June 6, 2012 at 10:42 pm

    Good advice. I’ve been doing it on my own for a few months now and am really happy I never paid anybody. It’s actually not so difficult if you, like you say, just keep it simple.

    Reply
    • jlcollinsnh says

      June 6, 2012 at 11:37 pm

      Thanks, Keichi One!

      Feels good, doesn’t it?

      Reply
  2. milfordmarineTom Kemper says

    June 6, 2012 at 10:47 pm

    They are the scum of the earth. It’s no wonder the Lord chased them and their predecessors out of the Temple.

    Reply
  3. milfordmarineTom Kemper says

    June 6, 2012 at 10:49 pm

    They are the scum of the earth. No wonder the Lord kicked them and their predecessors out of the Temple.

    “Disturb us, Lord when we are too well pleased with ourselves,
    When our dreams have come true because we have dreamed too little,
    When we arrive safely because we have sailed too close to the shore.
    Disturb us Lord, when with the abundance of things we possess
    We have lost our thirst for the waters of life;
    Having fallen in love with life, we have ceased to dream of eternity.
    Disturb us Lord, to dare more boldly, to venture on wider seas where storms will show Your mastery;
    Where losing sight of land, we shall find the stars.”

    Reply
    • jlcollinsnh says

      June 6, 2012 at 11:39 pm

      Mmmm. Sounds like you’ve some 1st hand experience there, Tom.

      Sorry, but glad to see you back commenting here! Oh, and I like the quote. Where is it from?

      Reply
  4. Mr. Risky Startup says

    June 6, 2012 at 11:00 pm

    My employer offers small incentive to some of the employees – for every dollar that I put into company registered pension fund (Canadian name for 401K), company does the same. This is capped at 3% of the pay or $2000 per year, whichever is lower. Because my deposit is also tax deductible, not taking part in this plan would be idiotic, so I faithfully contribute each month.

    I love Excel spreadsheets and last Christmas I was bored so I decided to import all the data from this pension fund performance (deposits, year end values…) to see how good they are at managing my money. Their own calculations are skewed towards making it look like they are making me a bundle, but they are only showing results for different mutual fund, without calculating their “management fees”.

    So, after removing their fake results and simply entering each deposit that was made to my account, adding it up for each year, and then comparing year end balance of my account, I discovered that on my total deposit of $33,856, after 10 years, they increased my investment value by $4361 with average yearly gain of 1.36%. You would think that for all their “smarts” my return would be better than this???

    Worse of all, during this time, they made $5643!!! So, it was my money at risk, they provided lousy results, but they made 20% more money than I did???

    Two weeks ago, I called them to see if I can speak with one of their “financial guru’s” and was promised a call back within 2 days… I am yet to hear back from them…

    Reply
    • jlcollinsnh says

      June 6, 2012 at 11:40 pm

      Good on ya, Mr. Risky!

      Amazing what you see when you run the numbers. Thanks for sharing!

      Reply
    • McLantern says

      September 18, 2019 at 5:40 am

      Dear Mr. Risky Startup,
      just wanted to briefly thank you for sharing your findings from your Excel analysis with us!
      this is indeed very informative and shows a real life example of what it’s like to hand your money to the so-called experts.

      Reply
  5. investlike1percent says

    June 7, 2012 at 1:42 am

    jim,

    i have about 1M invested on my real estate projects that come from investors. i split the profits 50/50 with no junk charges like acquistion fee, success fee, management fee mumbo jumbo. i also invest my own money in and structure it whereby i lose all my money before the investors lose theirs. i treat their capital better than i treat my own. the investors should be earning ~25% with roughly little to no risk since they are secured against the real estate. i think most of them are really happy.

    i secretly want to be a nazi financial planner. since i dont need the income, i can really tell the clients what to do without caring if i lose them. my whole stick would be, why not listen to someone who has made millions rather than some financial planner just trying to make his own.

    tell me they arent all bad. id like to think we are becoming friends and you can tell me the truth even if it hurts my feelings.

    1%

    Reply
    • jlcollinsnh says

      June 7, 2012 at 3:15 am

      private deals like what you offer your investors are all about trusting and backing the individual executing the deal.

      They can be wildly profitable. They can lead to tears. It’s like venture capital. You bet as much on the entrepreneur as on the biz plan. There is no shortage of $$$ for good people with good ideas.

      As for being a financial planner, personally I’ve never figured out how to make any money doing it that’s fair to the client. But that’s me.

      Reply
  6. Mike says

    June 7, 2012 at 11:21 am

    Reminds me of the time I bought a used car for cash from a dealer. Him: “We can finance this for you. Wouldn’t you much rather keep your money in the bank?” Me: “Well, can you finance it at less than 1%?” Him: “No.” Me: “There’s your answer.”

    Reply
    • jlcollinsnh says

      June 7, 2012 at 11:46 am

      Hi Mike…

      Great story. Frequently I’d bet these folks are so financially clueless themselves they think what they are suggesting really is a good idea. the others are just predators.

      Reply
  7. Mallery says

    June 7, 2012 at 11:52 am

    Years ago we had an investment adviser. His favorite phrase when we were losing money was “in 6 months from now, you won’t even remember this”………yeah right. Funny but we always remembered. We left him (much to his complete shock) and started handling all our decisions ourselves. We’ve had great years and we’ve had some stinker years. We remember them all, but at least it was from our own doing and not just sitting back and letting some one else plan our destiny.

    Reply
    • jlcollinsnh says

      June 7, 2012 at 12:18 pm

      That’s it exactly, Mallery!

      Advisors lose our money just as easily as we do. They are certainly not able to insulate their clients from the ups and downs of the market. Our long term perspective does that for us.

      Better to have our own mistakes and victories. More to learn, more to gain.

      Kudos to you in seizing the reins!

      Reply
    • Matt Mecham says

      March 13, 2017 at 7:59 am

      We had the same kind of experience, Mallery. Our “ELP” (Endorsed Local Providers), among other clever colloquialisms, would often say, “Just wait until year 5! Then you’ll see some fireworks!” Year 5 came. And went. No fireworks. Not even snakes and sparklers. But I guess it’s difficult to see much growth when the ELP has your money planted in funds with 5.75% front-end load fees with higher-than-average ERs. I’m really glad that I finally educated myself and stuck my money in Vanguard recently, thanks largely in part to this blog, and others (MMM, Root of Good, Can I Retire Yet, etc.).

      Reply
      • Jonathan Pless says

        August 22, 2017 at 11:55 pm

        Matt Mecham,

        I’ve recently made the switch from an ELP to managing my own money in Vanguard too.

        I wish I would’ve done this when I started out about a year ago (I’m 20), but, all in all, I didn’t pay nearly what I could have had I continued along that path.

        When the ELP tried to sell me whole life insurance, giant alarms and red flags began going off and waving rapidly in my face. That’s when I began doing research on my own and came across Jim’s WONDERFUL blog.

        I agree with most of Dave Ramsey’s ideas, but certainly not with his investment advice. He’s really doing a whole lot of people a disservice, and I can’t help but believe he knows it. Such a shame and a damaging witness to the Christian faith.

        Reply
  8. Shilpan says

    June 7, 2012 at 9:34 pm

    “They are expensive at best and will rob you at worst.” — good thinking Jim. I’m ceaselessly amazed at masses handing over their money to these so-called experts, who know nothing more than average Joe. They work for themselves and their masters.

    Reply
    • jlcollinsnh says

      June 8, 2012 at 12:13 am

      Thanks Shilpan!

      It is a question I wrestle with. Financial concerns are not taught in our schools and yet, as I’ve said on this blog, in this complex world we live in money is the single most powerful tool. It is critical to learn how to use it.

      Unfortunately, as you point out, most ‘advisors’ are in it to line their own pockets.

      Reply
  9. Danielle says

    June 7, 2012 at 11:34 pm

    I know this is a huge question that could go off in many directions but how does one take back charge of their money? I have had an advisor since my husband died and I have to say any real growth I have seen has been when the stock market is up. I sometime think the investment firm is making more off their fees off my account than my account is growing. I need to educate myself but where does one begin?

    Reply
    • jlcollinsnh says

      June 8, 2012 at 12:26 am

      Hi Danielle….

      First, my condolences on the loss of your husband.

      If you haven’t already, you might want to read Mallery’s comment below.

      As for where to begin, at the risk of sounding immodest, the Stock Series right here on this blog is designed to provide that start. In it I’ve tried to point out that it is not mysterious, it can and should be very simple, what to expect from markets, some sample investments/portfolios and the only investment firm you need in Vanguard.

      As you read thru those, be sure to read the comments too. You’ll find some excellent questions and observations that will add to your understanding.

      Next you should follow any of the many links to Vanguard you’ll find in those posts and look around there. Great information. Then call them. I have never failed to be impressed with the calibre of people and, importantly, when I’ve asked questions they couldn’t answer they’ve always said so and then found an expert who could. Plus, unlike your paid advisor they have no agenda other than helping you.

      Finally, feel free to ask any questions in the comments section of any of these posts and I’ll try to help.

      You can do this!

      Reply
      • Danielle says

        June 8, 2012 at 3:10 am

        Thank you for your speedy response, I am new to your blog and I am trying to catch up reading it all. Thank you again.

        Reply
  10. femmefrugality says

    June 8, 2012 at 12:17 am

    I love the way you put that: you can learn one skill or the other. And the second saves you money long-term, too! Such great advice.

    Reply
    • jlcollinsnh says

      June 8, 2012 at 12:28 am

      Thanks FF! The last few paragraphs making that point proved to be the toughest to write. But it is the most important point of all.

      Reply
  11. Janice says

    June 10, 2012 at 12:50 pm

    Here, here! You have burst through the sound barrier which has protected the conspiracy of silence that revolves around brokers.

    I am now entering my 4 th week of escaping from the Merrill Lynch prison to Vanguard. That being said, now I am even more committed to getting out from under ML’s reign of terror and to Vanguard where virtually everyone you speak to is kind, respectful, and knowledgeable. Vanguard people have even answered emails from me, and returned my calls, when it is their day off!

    The payback from ML for fleeing their prison was to, literally, kill me off. According to SS and my health insurance company, I died the very day that I first told an ML agent that I was going to move my money out. Now, keep in mind, ML still has my money because they have made switching teams THAT difficult. ML gives “jumping through hoops” and all new meaning.

    Rendering me “deceased” raised all kinds of havoc as I am sure you can imagine. It has taken me hours and hours to reverse that notion and it will be another 3 weeks before, financially, all of ML’s destruction will be remedied financially.

    That being said, I am even more stalwart in my efforts to press forward with the transition to Vanguard, even though I am supposedly dead. The pay off is that great. No more selling and purchasing of American Funds by ML, often several times a month, yielding them great commissions at my expense.

    By the way, moving my annuity over to Vanguard from Ameriprise was a comparatively painless process. Looking at the numbers, I so wish I had never purchased an annuity. However, the return on investment on virtually any of the 17 annuity choices I had with Vanguard is well worth the shift out of Ameriprise. The total fee was $30 and, of course, it was a charge from Ameriprise. Vanguard charged nothing. Why am I not surprised?

    Reply
    • jlcollinsnh says

      June 10, 2012 at 11:01 pm

      I am so sorry to hear you’ve had to go thru this, but not surprised.

      This is another point I should have made in the post. Once an advisor has his hooks into your money they can and too often do make it very unpleasant to pull it loose. They hate to see their gravy-train head out the door. One more and very important reason to avoid them.

      thanks for sharing your tale of woe. Courage. You are almost thru with them and you’ll never have to deal with this crap again!

      Reply
  12. Fritz Hahn says

    June 13, 2012 at 11:17 am

    Thanks, Jim-
    It is surprising to me that many of my acquaintances don’t understand brokers’ hidden charges.
    The most popular refrains that I hear are “I’m just not a money person,” “I have more important things to do than worry about money,” “I’d rather leave it to the pros” and “they only charge me 1-2% and that’s so small an amount – it really won’t impact my portfolio.”

    When questioning a CEO as to why the company I was working for was hiring a broker to manage their new SEP retirement program and not affording the employees the Vanguard advantage, he replied that “(he) didn’t believe that the average person could understand the complexities of investing.” Shocking and diminishing!

    At one time I was the CFO of a small business and I set up a SEP program for the 15 employees.
    It was amazingly simple. It was also very meaningful to spend time with the employees explaining investment strategies with them in a very objective manner – it took very little time. It empowered them. In the end most chose Vanguard, but some chose brokers, including the CEO of the company!

    You don’t need to be a “money person” to work with Vanguard – in fact when you compare a broker’s approach to Vanguard’s, the broker creates needless complexities; Vanguard simplifies.

    I have been an investor with Vanguard for almost 25 years and found their responses to my questions friendly and adept. I am not the smartest kid on the block and so frequently have to ask a question numerous times before I understand the response.

    Money managers are often impatient and condescending in this instant; Vanguard, on the other hand has always been patient and courteous. Vanguard is owned by their investors (one of whom is yours truly) and so when I call them, the representative’s attitude is that they are speaking with “their boss,” (me).

    I’m a lower middle class wage earner and Vanguard has afforded me the opportunity to invest
    wisely. Despite my lower wage status, I have been able to send two children to college and am now semi-retired at age 62. Of course there are other variables not mentioned here that have effected that early semi-retirement reality – living below our means, living in the same home for 30+ years, etc.

    While your blog will be off-line (June 25 – Aug. 25 (?) I would encourage your readers to visit Bob Brinker on line or listen to him on your local a.m. radio station. He’s usually on Sat/Sun afternoons. You and Bob are singing the same tune. I wonder if he is aware of your blog…I think he’d be very interested!

    Best,
    Fritz – the New Mexico Lobo!

    Reply
    • jlcollinsnh says

      June 13, 2012 at 1:23 pm

      Hey Fritz….

      thanks for stopping by and sharing your stories. Congratulations on your financial success!

      You make an important point. 1-2% seems so little to most people, which is how advisors get away with charging it. It is, as you point our, a huge drain on your wealth. Unnecessary, too.

      Reply
  13. lian says

    July 9, 2012 at 6:44 pm

    Got here through Mr. MM. Just read through Stocks parts I – IX. Great series – clear explanations of stocks and investing for newbies like me. I haven’t invested yet (outside of employer’s 401K and an IRA in Vanguard index funds), and have been researching strategies that make sense for me. I’m an ex-gilded slave – took me five years to dig out of that hole! I’m 57 now, but despite my foolish past FI is still achievable for me. I read MMM wishing I had known this stuff when I was young, but it’s never too late to learn and change.

    Reply
    • jlcollinsnh says

      August 15, 2012 at 1:21 pm

      Welcome Lian…..

      glad you found your way over here and enjoyed the series.

      I, too, wish info like that on MMM and, if I may be so bold, here was available in my youth. Ah well!

      In fact, at the moment I’m reading “A Guide to the Good Life (The ancient art of stoic joy)” by William Irvine. It was recommended, I think, on the MMM site.

      Never too late to find a philosophy of life, too!

      Reply
  14. chris says

    January 4, 2013 at 1:34 am

    Speaking of scum and stupidity….I was just starting my teaching career back in 1993 and I thought I should save more of the $24,000 a year I was getting for teaching 32 kids in a class. Obviously I was overwhelmed and not thinking clearly.

    I ended up going to a financial advisor who talked me into signing up for 403b variable annuity. I have blindly given $100 a month for a total of $19200 which has now has a balance of $22,000. That is about 1% growth per year?

    I now see this sucks. Many young people need your Dadly advice!! So I recently stopped the salary withholdings and called Vanguard….they graciously even called my advisor for me on a conference call and my advisor said I can’t get out of it unless I turn 59 and a half or change employers.

    Ok Dad JC….Is this true??? Can you give me advice on what you would do to get out of this?

    Chris

    Reply
    • jlcollinsnh says

      January 4, 2013 at 5:19 pm

      Ouch!

      Unfortunately, I am no expert in annuities. Everything I’ve read about them makes my skin crawl.

      That said, I very much doubt that there is no way, short of reaching age 59 or job change, to get out of it. Sounds to me like the kind of game sleazy advisors like to play. He is likely drawing a yearly commission on your account he just doesn’t want to loose.

      I’m not sure what you can do, other than go back at him with a firm demand. Oh, and expect to be hit with outrageous fees on the way out.

      If that doesn’t work, threaten to go to your state insurance (annuities are insurance products) commission with a complaint.

      The good news is that, as investment mistakes go, you could have made much worse. I know because I have. Lick your wounds, move on and know you are on a better path.

      Please check back and let us know how it plays out.

      Reply
      • chris says

        January 5, 2013 at 12:34 am

        Thanks JC,

        Please excuse me while I bring you up to date…cause its kinda lengthy. I apologize in advance.

        I actually had a talk with him today. His assistant who I spoke to last week was mistaken. I can get out…and supposedly after 8 years…I am in 16 so far, there are no fees to leave. That was good news.

        I told him I had done some research about annuities and everyone says they have high fees. He agreed but said in 1996, when he sold me on this it was the only option for an IRA for a teacher in WA state. It is called a TSA(Tax Sheltered Annuity) 403b. He says he never recommends them for anyone else but it was the only thing available per govt rules at that time for people who wanted to have a little taken out of every check….can anyone tell me if that is accurate? .

        He explained that no for-profit company would nurse along this kind of investment for low fees at the time. He says that only the insurance industry back in 1996 would take on this because I was only able to put in $100 per month very different then the $10K min for low fee companies like Vanguard. He said if Vanguard would have been available back then and was willing to take $100 per month with low fees he would have recommended them. I don’t know how much of this is true?

        I asked him to explain to me why the investment had done so poorly. I had run the numbers in a retirement calculator. I punched in 0 for the starting value with $1200 a year and with a 1% return and I had $23,000 16 years later. At this point I am thinking that is shitty!!

        He disagreed. He said ( and I I am starting to agree with him on this) that from 1996 till 2001 or so I was putting only $100 in a month and that even though the market went from 6000 up past 10K I didn’t have much money in there to compound.It was maybe $5000 at the end of 2001. He then stated that the next 10 years didn’t go well. I noticed Vanguard says it got about 7% in the Total Stock fund during this period. I am guessing my annuity is more conservatively positioned and it got about 5% minus the 2% fees. I ran the numbers and sure enough he was right. My question is what am I missing here? How can 5 years at 10% followed by 11 years at 3% equal 1%?

        I must be an idiot but I don’t understand this? So I ran the numbers on a white piece of paper and sure enough he was pretty close????

        My to do list includes reading the terms and conditions for this annuity and trying to find out if I can transfer it to something other then an annuity. I haven’t been able to find anyone yet to tell me that one? Anyone out there know?

        Thanks again for your time and advice!

        Reply
        • jlcollinsnh says

          January 5, 2013 at 6:18 pm

          That makes more sense.

          Hard to believe it was the only option, but options might have been somewhat limited in those days. Not sure what he means by no “not-for-profit” company. Vanguard is a for profit company, it just channels the profits to its customers the fund owners.

          Vanguard will also happily accept $100 per month or even less. It does have minimum starting investments on its funds, ranging from $1000 to $10000 depending on the fund.

          I’ll leave it to you to calculate the percentage returns. But the percentage an investment earns has nothing to do with how much is invested. That is, if a fund rises by say 5% your investment in it will rise by exactly that same 5%. Whether you own $1 worth or $1,000,000. You’d wind up with $1.05 or $1,050,000 respectively.

          You can definitely transfer your annuity to something else. The folks at Vanguard can help with this, even if you want another less costly annuity.

          Of course, if it is still in your 403b account you will be limited to the options offered by your employer in that 403b plan, which may very well not include Vanguard. At least until you leave that job at which point you can roll it into a regular IRA invested in anything and anywhere you choose.

          Hope this helps!

          Reply
  15. David says

    January 18, 2013 at 2:16 pm

    Great site, I’ve been reading through your posts and have found them both helpful to a newbie and worth reading for someone who actually enjoys the topics (ie me).

    99% of financial planners give the other 1% a bad name.

    On average I get solicited by a financial planner/advisor/salesperson around once a year. Because I really do believe that the elusive 1% of them do exist (and I enjoy the discussions), I always say yes to meeting with them. So far I have found exactly 1 who seemed to know what he was talking about and all the others were just trying to sell expensive financial products. One couldn’t even tell me the difference between 2 types of educational savings accounts and suggested I google it.

    All of the mutual fund products they have tried to sell me have had fees in the 1-2% range. The most recent person I talked to wanted to put all my money in a fancy blend of stocks and bonds with a management fee over 2%. When I asked her why in the world I would pay her 2% when my funds at Vanguard are below .25% she said “some people don’t like to think about it and would prefer to pay someone to do it for them”.

    I think part of the problem is that people see lots of values floating around and have trouble making sense of them. They see a 2% management fee and think “well taxes will be 25%, so what’s another 2%?” They don’t realize that tax is on the gain (generally) while management fees are a percent of total assets, regardless of performance. A little bit of education on the topic, no matter how little someone might want to do it, can end of meaning hundreds of thousands of dollars or more over their lifetime.

    I’ve come up with a standard response for anyone who wants to manage my money that I gleaned from the book “The Millionaire Next Door”. I tell them that if they will give me the last 5-10 years of their financial and investment records and can show me that they have done better than me in my unsophisticated low cost funds then I’ll happily let them manage my money.

    Needless to say I’m still managing it myself.

    Reply
    • jlcollinsnh says

      January 18, 2013 at 6:31 pm

      Thanks David….

      I think you make (several) a good point(s). Most people don’t realize just how expensive over time 1-2% really is…

      I’ve even hear some say, “If I save you from only one mistake it will pay the fees many times over.” As if they aren’t going to make any mistakes.

      Reply
  16. Prob8 says

    June 18, 2013 at 11:03 pm

    If anyone doubts JLC’s claims regarding the impact of fees and commissions on your portfolio, please check out this video from PBS: http://www.pbs.org/wgbh/pages/frontline/
    It’s called “the retirement gamble.” There are interviews with Jack Bogle and all you’ll need to know to realize fees and investment advisors are hurting your portfolio more than helping.

    Reply
    • jlcollinsnh says

      June 19, 2013 at 12:15 am

      Thanks Prob 8….

      I just finished watching it. Very powerful stuff and I highly recommend readers here check it out. In fact, I’m going to move this up into the post as an addendum.

      Even I didn’t fully appreciate just how laden with fees 401k plans have become. Yikes!

      Reply
      • Prob8 says

        June 19, 2013 at 6:25 pm

        You are very welcome. I’m happy to provide some useful input.

        I should have mentioned this in my original comment but the discussion of fees doesn’t start until around 20 minutes into the show. For those looking to save some time and only want the “fees” discussion, I would start at that point.

        Reply
  17. TRob says

    October 8, 2013 at 6:14 pm

    I’ve just started pouring through your blog posts after stumbling across MMM. After learning about the various fees and other ways of financial advisers like to graft your investment I can see why people should walk, no, run away from them. My only question though is if you have a sizable amount to invest in Vanguard, they offer the advice of one of their CFP’s for free. Should you talk with them and take their advice, or keep it simple like you’ve outlined numerous times.

    Reply
    • jlcollinsnh says

      October 8, 2013 at 6:38 pm

      Welcome TRob…

      You ask a very interesting question. I actually did this with Vanguard a few years ago as a test run.

      As I recall, they felt the need to recommend more funds than I do and some, disappointingly, were ones actively managed. All were fine funds, but my sense was part of their motivation was to spread the love across several of their offerings.

      They also recommended the international index, which is a very common recommendation. But as you may know from reading this series I don’t see the need for those.

      My guess is what you’ll get will be a bit more complex than what I suggest.

      If you have enough assets for this service to be free, by all means hear what they have to say. They are very low key and low pressure, so you can expect a pleasant experience. You can also expect them to clearly explain the reasoning behind what they suggest.

      I find the folks at Vanguard very knowledgable and I would bet it will be an enlightening conversation

      After that, read (or re-read) the thoughts and strategies discussed here. From there you should be able to decide what best fits your needs and temperament and your decisions will be better founded for your efforts.

      Good luck and let us know how it goes!

      Reply
  18. WorkLess, Live More says

    November 15, 2013 at 9:15 pm

    I have been drawn into your blog after listening to your podcast interview with the MF and find your ability to explain investing information extremely helpful. Also the comments from your readers are extremely useful and offer great insights and differing points of view.

    I have been trying to simplify my investments and move them to low fee options with Vanguard. My first step is trying to roll over our IRA’s b/c I thought that would be simple due to lack of tax implications and then move over my other money slowly as it made sense with help from a tax advisor. However, even this is not simple as we have discovered that our “financial advisor” has one of our roll over IRA accounts worth approximately $1ooK in a variable annuity. I am not sure why we are in this as I never even remember discussing it and didn’t even know what it was. Sadly, I feel I am a fairly educated and interested investor and never even noticed this when reviewing my statements casually as I usually do, assuming we are doing fairly well. Can you explain what a variable annuity is and how they work? Do you know if we can roll this into a regular IRA invested in index funds?

    Thank you for your work on this blog! Reading the stock series as well as listening to the MF’s podcast has made me really look at my investments, the fees I am paying and the quality of advice I am getting. I did a conservative estimate and figure that through a combination of paying the advisor a fee, front loaded 2.5% sales charges on my mutual fund investments, bad advice causing me tax implications and being placed in funds with P/E ratios all at greater than or equal to 1% I have lost VERY conservatively $7,500 this year alone and more than likely more than 10k on a $400K portfolio vs having it invested on my own w/ index funds. (And as I stated above, I thought I was good w/ my money!) May I be a tale of caution to really watch your investments and keep them simple!

    Reply
    • jlcollinsnh says

      November 16, 2013 at 8:23 am

      Welcome WLLM….

      Glad you found your way over here and that you enjoyed the podcast, it was fun to do and MF and I are planning anther one of these days.

      Very sorry to hear you’ve had the “advisor experience” and I know from talking to others they don’t make it easy to leave.

      First step, call Vanguard and let them know you want to move your assets to them. They are very helpful and can walk your thru the process. You should also be able to roll your annuity to them. More on that here:

      https://investor.vanguard.com/what-we-offer/annuities/transfer-an-annuity?Link=facet

      You’ll also notice other tabs with more annuity info.

      Basically when you buy an annuity you trade a chuck of capital for a lifetime income stream. You can think of it as buying a pension. Your money is pooled with that of other investors.

      Since insurance companies are very good a predicting mortality rates over groups of people, they can calculate how much they can afford to pay out and still have a hefty profit for themselves. Since some will die early, this payout amount is more than you’d earn on your investments if you held them yourself.

      The longer you live, the more valuable your annuity will turn out to be. If you are one of the ones to die early, you’ve helped finance the lifestyle of the longer-lived.

      Of course, once you die the money is gone and your heirs get nothing.

      I don’t like annuities for that reason and because they tend to be laden with fees.

      That said, there is something to be said for guaranteed income for life. Seems studies have shown (and in full disclosure I’ve not read these) that retirees with guaranteed income sources like Social Security, pensions and annuities tend to be happier.

      Since investing is mysterious and scary for many, I can believe this.

      So, while I wouldn’t and don’t recommend annuities, now that you have one it’s not all bad.

      If you are still working with the advisor, calmly ask him to explain the annuity you own in detail. What it cost, what the payouts will be, when they start, do they continue to be paid to your spouse after you’re gone and what are the on going fees and expenses.

      Don’t waste much time on how it wound up in your portfolio and what fees your paid to buy it. Those are sunk costs. Better to focus on learning exactly what you have and how best to move on.

      Good luck!

      Reply
      • WorkLess, Live More says

        November 16, 2013 at 5:26 pm

        Thanks for the input and link. I’ll definitely be calling him Monday morning to set up a meeting to have him explain this and our options at this point.. The fund we have has a death benefit which seems to be the full value of the annuity per my reading. However, it seems to have a 5.5% surrender fee if we want to just cash it out and move on. The more I read about variable annuities, the more confusing and complicated they seem. The one constant is that every source I read notes that they are one of the highest fee investments you can buy , benefitting the advisor (salesman). The main advantage is that they are tax exempt and not subject to contribution limits of IRAs but being that this is already in an IRA and was a roll over which we are no longer investing in, I don’t understand any benefit to us. The prospectus for this particular fund is combined with 4 others and is 169 pages long making it nearly impossible to even know what we own.

        Reply
  19. Chris says

    June 4, 2014 at 6:22 am

    Hey Jim,

    I wanted to share this with you. Your stock series was extremely instrumental in figuring out my own investments. I had previously been using an advisor for about 10 years before seeing the light thanks to you and some other bloggers. I wrote about my experiences with an advisor. I wanted to use my case to demonstrate how ridiculously expensive using a financial advisor really is and just how bad the advice can be. If you have a chance take a look and let me know what you think. This may be of benefit to your readers to drive these points home.

    http://eatthefinancialelephant.com/?p=162
    http://eatthefinancialelephant.com/?p=175
    http://eatthefinancialelephant.com/?p=180

    Chris

    Reply
    • jlcollinsnh says

      June 4, 2014 at 9:54 am

      Hi Chris…

      Thanks for sharing your cautionary tale.

      The other thing readers who have used advisors have shared with me is the difficulty they’ve faced in getting their money once they decide to leave. Seems there are no end of roadblocks and fees advisors will throw up to hang on.

      Disgraceful.

      Reply
      • Chris says

        June 4, 2014 at 12:01 pm

        Jim,

        We fortunately haven’t had that experience as the company we used is actually “reputable” comparable to others like those you’ve referenced. That is why I tried to emphasize the fact that we weren’t “scammed”. The thing that I think makes our story interesting and important is that it is not extraordinary. As bad as things look when broken down, it is actually pretty standard for what you get with the financial advice industry.

        One thing I didn’t write about but plan to in the future is that the cost to not use an adviser will actually likely be even more expensive this first year. We had to pay a $5500 surrender fee for the variable annuity we were sold. Since most of our funds were in taxable accounts, we will pay at least $1000 this year in long term capital gains taxes to sell off the most expensive funds, despite being able to cancel out some gains by selling off all of our losers in the taxable accounts. We also continue to hold about $150k in their funds in our taxable brokerage account because of tax consequences to sell them off immediately. This means over $1500 fees continue to go back to this company/advisor for the year.

        1% here and 2% there that seem meaningless when starting are a really big deal as you start to accumulate assets. Hopefully my story will help others to understand this.

        Helping others and laughing about it occasionally are about the only things that we can do at this point except cry or pull our hair out about it.

        Best to you and thanks again for the work that you do!

        Reply
        • ChrisEE says

          November 7, 2014 at 5:28 am

          Jim,

          As stated in my above comments, I realized about a year ago how much our investment advisor was hurting rather than helping our wealth building. Your blog really inspired me to try to become an advocate to help others better understand issues related to finance and avoid repeating our mistakes. I recently had a chance to be a guest on the Radical Personal Finance Podcast where I talked to Joshua Sheats about this topic. His background is as a financial advisor. He is a really interesting and fair guy. We had a good discussion of what an advisor can or can’t do for you that I think could be very informative to people who are learning about this issue. I’m linking his show here:

          http://radicalpersonalfinance.com/an-ordinary-pursuit-of-financial-independence-interview-with-eat-the-financial-elephant-rpf0097/

          It is a lengthy interview and the first part is my personal story. For anyone interested in the financial advisor discussion, just skip over the beginning and start at the 50 minute mark.

          Thanks for sharing.
          Chris

          Reply
          • jlcollinsnh says

            November 7, 2014 at 11:21 am

            Hi Chris….

            I’ve been listening to your interview this morning and very much enjoying it. You have a great story to tell.

            I know Joshua and count him as a friend, although I tease him that he has drunk the financial industry kool-aid. 🙂

            He does a great job with his show and I wish I had more time to listen.

            He has also interviewed me, way back when he was first starting:
            http://radicalpersonalfinance.com/rpf-0009-why-your-house-is-a-terrible-investment/
            and we are planning to do another just as soon as I can make the time. My bad.

            Anyway, the two of you talked for nearly an hour and a half and never once mentioned jlcollinsnh??? 🙁

            You wound me, Chris. 😉 🙂

          • ChrisEE says

            November 7, 2014 at 1:06 pm

            Jim,

            This was my very first interview since starting the blog and I thought I did OK but there were a lot of things I wanted to talk about and didn’t get around to even in that extended format. If it makes you feel any better, I got the same complaint from my own Mom, who feels I implied my dad taught me everything and I slighted her!

            BTW, you are my recommended site for anyone looking to learn about investing: http://eatthefinancialelephant.com/favorite-links/
            and
            http://eatthefinancialelephant.com/early-retirement-resources-giving-those-ahead-of-me-their-due/

            I agree Joshua is a great guy, despite his financial advisor training and credentials;) I didn’t realize you were on his show, but I’ll have to check that out and look forward to hearing you on there in the future.

            Cheers!
            Chris

  20. Val says

    May 30, 2015 at 8:15 pm

    Jim,

    I’ve been reading your website for the past week and felt I really had to post this link:

    http://www.awolgeordie.com/2014/10/how-i-lost-250000-with-centaur.html

    http://www.awolgeordie.com/2006/03/how-i-retired-at-39.html

    This man followed the principles you speak of until the fraudsters got the better of him.

    Reply
    • jlcollinsnh says

      May 31, 2015 at 1:34 pm

      Hi Val…

      Thanks for sharing this very sad and cautionary tale.

      This is a post I wish got more readership here: https://jlcollinsnh.com/2012/03/09/you-too-can-be-conned/

      Had he read it he might have avoided these guys. It is on my list of favorite to the right, but somehow gets mostly overlooked….

      Reply
      • Val says

        June 1, 2015 at 9:27 pm

        Thank you for that link Jim!

        I’m slowly going through your blog posts one at a time. Reading all these FI articles can be overwhelming and EXCITING at the same time!

        In honor of your blog I will be stopping at Jim’s Original Polish on Roosevelt & Union this weekend. Hah! I saw your comment on 1500days.com and had to mention that as a Albany Park resident!

        Reply
      • jlcollinsnh says

        June 2, 2015 at 12:37 am

        Have one with everything (except ketchup!) for me. 🙂

        Reply
        • AWOL Geordie says

          August 7, 2016 at 6:49 am

          I’m AWOL Geordie the author of that disaster. I’m back on my feet now with about $30k saved. Currently organising it into 40% Vanguard global index fund, 40% Vanguard FTSE100 index fund and 20% bonds with https://www.axaselfinvestor.co.uk/

          I wish I had read this site in 2011. We’ve had nothing back from that Centaur farce so it looks like we’ve lost the lot. Time to bounce back and try again.

          Great website
          Cheers
          AWOL Geordie

          Reply
        • jlcollinsnh says

          August 7, 2016 at 12:23 pm

          Welcome AWOL Geordie…

          Thanks for checking in and the update. Glad to hear things are turning around for you.

          Most, including me, have had our own debacles. 🙂

          Here’s to your future success!

          Reply
  21. Will Norton says

    August 28, 2015 at 4:53 pm

    Jim –

    I love your stock series and it’s opened up a lot of great insights for me, both by virtue of your own writing and all of the useful links, experts, and other blogs you generate awareness for. Thanks so much!

    Quick question (and maybe a stupid one): fees, money management costs, advising rates, etc. – these things don’t apply to simply having an account open at Fidelity that holds investments (VTSAX chief among them), correct? The only fee in that regard, assuming you have all load-free funds, is the expense ratio, right? I am getting into the Vanguard family of funds in a major way, so in that regard I know I’m limiting my expense ratio. There is no money manager here, or someone who I meet with regularly, etc.

    Thanks,
    Will

    Reply
    • jlcollinsnh says

      August 28, 2015 at 6:40 pm

      Hi Will…

      Glad you like it and I’m very pleased you also found the other resources useful.

      Since I don’t deal with Fidelity I can’t give you a definitive answer. But my guess is they do charge fees over and above the ER of the Vanguard funds you own. You should give them a call and investigate.

      That said, why hold your Vanguard funds thru Fidelity? Personally, I’d move them directly to Vanguard itself. If you give them a call they’ll walk you thru the process.

      Good luck!

      Reply
  22. Jay says

    November 1, 2015 at 1:03 pm

    JLC,

    I’m in Canada. I currently have some non-registered money in a major investment firm, sitting in loaded mutual funds with DSC. I didn’t know at the time. I still have 7 years until there are no more DSC. Would it make more sense to pull out and pay the DSC so I can invest it in a CAD currency of VTSAX or VTI or let it ride out and then pull out? They also have me in whole and term life… and critical illness.. even though at work o have group life, disability and LODD (line of duty death)
    Please advise!

    Before learning more, I moved a lot of my money to wealthsimple. As my money grows a bit more, I’m likely to just purchase Vanguard funds (through a discount brokerage.. due to restrictions in Canada for Vanguard).

    Reply
    • jlcollinsnh says

      November 10, 2015 at 6:02 pm

      Hi Jay…

      Not being from Canada, I’m not following your questions and I have no idea what DSC is.

      If you can repost with a bit more detail and clarity, I’ll try to help if I can.

      Meanwhile, maybe one of my Canadian readers will chime in?

      Reply
      • Jason says

        November 12, 2015 at 2:22 am

        I have about 25K in mutual funds with high MERs. The discharge service fee is currently at 5% if I should take my money out or move it elsewhere. It’ll take 7 years for these fees to clear entirely.

        My question is, would it make sense to pull the money out incurring charges, and put it into the Canadian version of VTSAX, hoping the returns will more than cover the discharge fee and not having to deal with MERs of 2+%? Or wait the 7 years with a potentially reduced return because of the MERs and whatever non-index funds my money is currently in?

        Reply
        • Ab says

          November 29, 2015 at 9:23 pm

          As a Canadian that has gone through the same process, i looked at each fund individually. The penalty is quite steep at the beginning years so an alternative is to stay with the same company but switch to an index fund or something similar that they may offer. I believe there is no fee as long as you stay within the same family of funds. You can also take out 10% per year without paying a penalty so 10% now and another 10% in January (as long as the fund hasn’t depreciated too much for you). You can do a search on Dan Bortolotti’s site Canadian Couch Potato. Lots of good stuff there.

          Reply
  23. Ron Cameron says

    April 23, 2017 at 11:29 am

    I was a Financial Advisor for awhile and I while I love most of this blog I can tell you it hurts my head and heart to read most of this entry. There are always horrible people out there, but in my admittedly narrow experience the majority of FAs I know work hard to do what’s right for the client. I never once (ever) made a transaction or gave advice that was for my best interest over the client. Often my advice meant making less money for myself. Getting a client NOT do execute their idea to sell/change was often my struggle during the crash of 2008. JL, you should be familiar with this from the 1987 crash that you sold out of (most people don’t realize that year the market was…about flat. That’s right. Flat!) That’s one of the benefits of having an Advisor – to help protect you from yourself. And unfortunately people often make horrible decisions.

    Another thing that drives me nuts is the FI community hate of all actively managed funds. There ARE excellent funds out there that put the client first. There ARE funds that consistently beat “the market” or the benchmarks over long periods of time. In fact, the American Funds you mention in this post is one such company – the vast majority of their equity funds beat “the market”, often with much less risk/volatility. And yes, that’s after whatever maximum fees and charges you want to include. AIVSX (more conservative) and AGTHX (more aggressive, but still not any more risk than the market) stand out in my mind. Use Stockchoker to see how zany I am (and thanks for pointing that site out! It’s hard to find hypothetical calculators without paying companies like Morningstar).

    Overall I love this blog, and am a BIG fan of the FI movement that I only discovered months ago. I’m 40 years old and am on the edge of “retiring”, as I’ve been planning it out for 20 years now. Your advice is generally impeccable and hugely valuable. Just don’t throw the baby out with the bathwater! And I’d be happy to discuss this more, publicly or privately. Show me anything I can do to advance the FI community, and I’m in!

    Reply
    • jlcollinsnh says

      April 27, 2017 at 4:30 pm

      Hi Ron…

      Over the years, and since writing this blog, I have gotten to know several financial planners who are decent folks genuinely trying to help their clients. As you appear to be. I salute you all.

      But they and you tend to associate with others in the field who are equally decent. Unfortunately, this means you all tend to be unaware of what a cesspool the field truely is.

      But it takes more than decency to be an effective advisor, you must also be financially astute and astute enough to discount the propaganda fund and insurance companies put out.

      I don’t mean to be unkind, but you show appalling ignorance when you say:

      “There ARE excellent (actively managed) funds out there that put the client first. There ARE funds that consistently beat the market or the benchmarks over long periods of time.”

      40 years of independent research demonstrates this to be completely untrue. American Funds, with their high fees and sales loads, are especially poor choices.

      https://jlcollinsnh.com/about/#comment-4217481

      I imagine these comments have rubbed your fur the wrong way, but I hope you keep an open mind as you further explore the FI world and expand your horizons.

      Reply
      • Ron Cameron says

        April 28, 2017 at 10:12 am

        While I could easily snap back in response to being called appallingly ignorant, I’m going to be more productive and simply ask: Do you want to have a reasonable conversation about this?

        There was a time that people said that bumblebees couldn’t fly. Their bodies were to large, their wings were too small, their wings can’t flap fast enough. Therefore, they can’t fly. And yet, you can point to a group of them and say “Hey, look! Flying bumblebees!” It would be jaw dropping to be shown flying bumblebees and declare they can’t fly.

        I can easily show you (and the FI community, which I am a part of) the assumption that actively managed funds can’t beat the market is wrong. If you -don’t- want to be shown, please tell me now! I always hope, however, people are genuinely interested in being proven wrong. That’s how we learn. I love having my assumptions (“You can’t retire by doing THAT!”) challenged in a meaningful conversation. Everyone, including me, might learn something. But it takes talking and listening, with a willingness to to say “Huh. I didn’t know that.” That’s what most people probably say when they read your blog. I hope you’re open to that same joy!

        So again, before I get a little into the data and weeds, do you want to have a reasonable conversation about this?

        -Ron “The Beekeeper”

        Reply
        • Brent says

          April 29, 2017 at 5:48 pm

          Hi Ron,

          Your very points are a prime reason so many hard-working individuals are in such bad financial shape. When financial advisors knowingly sell their clients an actively managed fund laden with excessive expense ratios, sales loads, marketing fees, advisory fees, etc., they are subjecting them to vastly subpar returns compared to the general indexed market. This is fact, and has been supported by years of unbiased research.

          If this is the point you would like to argue, or that many of your financial advisor friends would like to argue, that is your call. But, by arguing this very point, you are either vastly uneducated about this topic, or you are knowingly doing what is worst for your clients financial future while your “investment firm” (i.e. Edward Jones, Northwest Mutual, etc.) skims off the investment returns in a compounding manner which absolutely destroys the overall returns of the clients. That is essentially stealing, especially when the advisory firms hide this behind pages of complex documentation that makes it hard to truly figure out the real “cost” off these “advisory” services.

          Let’s run a simple experiment…

          Example 1) 1,000,000 in Vanguard’s VTSAX returning 7% over 30 years with a 0.05% expense ratio. This totals about 7,500,000.

          Example 2) 1,000,000 in a typical actively managed fund returning 7% over 30 years with a 1% e.r.. This totals about 5,743,000.

          That is nearly 2 million dollars in losses over that time period, or around 25% of total returns of your client. And this experiment was conservative, not factoring in sales loads, advisory fees, etc..

          If you want to be a financial advisor and truly support people’s financial futures, teach and educate your clients on the harmful effects of excessive expense ratios, how compounding interests work, and how mutual funds actually work. I’m sure once you do, they will gladly accept your future advice in a flat-fee financial advisory setup, and you and your advisory firm can make boatloads of money helping people secure their financial future, and also making money yourself, too ;).

          Reply
          • Ron Cameron says

            April 30, 2017 at 9:33 am

            Brent, to simplify this current thread I’ll focus on just one thing: There -are- funds that, despite all the evil excessive fees, actually perform BETTER than the index over meaningful periods of time. (I’d be happy to talk about a firm like Edward Jones some other time). And, to simplify, I’ll focus on just a few funds: AIVSX and AGTHX. Both are run by American Funds, whose mantra is to buy high quality investments and hold them for much longer (3-4yrs) than the typical fund while avoiding trendy investing. And for the record I -was- an advisor, but left about five years ago. I have no skin in the game for this company, like Jim has no skin the game with Vanguard. But I AM an unabashed fan of American funds because of what they do and how they do it, like Jim is of Vanguard. So let’s make some apples to apples comparisons. I’ll use VFINX which is an S&P500 index. I choose this fund because it has a longer history than VTSAX to track.

            AIVSX (Investment Company of America) focuses on large, boring companies that pay dividends. It’s a lower risk, lower volatility option to the index. If you compare these two investments over the longest period of time (83 years!) AIVSX had a 12% return, the market a 10.8% return. Your next egg would be about 250% larger with AIVSX than the market. Yes, 2.5 times more money, period. All in. All expenses. Max sales load (which isn’t what most people pay, they get discounts). If you go with shorter periods of time, the % results are similar. (Anything less than ten years to me is not meaningful, and when you compare 1, 3 or 5 year returns it’s almost meaningless as any investment in the short term is up and down based on the whims of the investing public. Rockstar investments can look bad a turds can look great.)

            AGTHX (Growth Fund of America) focuses on faster growing, more aggressive companies.
            It’s has a hair less risk/volatility as the S&P. And, because Amfunds uses their same process religiously, it destroys the index. It’s averaged over 13% returns since 1973. Yes, all in, all max expenses. I don’t have market info onhand going back that far, but I know it hasn’t returned 13%. Probably closer to 10-11%. And they still run their funds now as they did then.

            There are more. Most of their equity funds with meaningfully long track records have beaten their indexes. They’re great at more conservative investing – the higher risk stuff like NEWFX and SMCWX works but it’s not their core. And all bond funds almost always lag the index, including their funds.

            My point to all of this is that these Black Swans exist, despite all the unbiased 40 year research telling you otherwise. These are two of many (but not too many). I’m happy to get as into the weeds or technical as anyone wants here. And total returns are only part of the story – you can have a fund with lower overall returns perform -better- when you’re withdrawing (another Black Swan!). I’m not a brilliant guy but this is one topic that I have exhaustively researched while trying to prove myself wrong and have a very firm understanding of the actual facts, not theories. In the end, I want all of us to be in a better place with better knowledge, not just finger pointing and name calling!

          • Mr. 1500 says

            April 30, 2017 at 10:31 am

            It looks like AIVSX has indeed beaten the S&P 500 since its inception (I used Morningstar charts). However, there a lot of moving parts:

            Will the same managers continue to run it? If you’re 30, you’ll be in the market for 60 to 70 years. What happens when the superstar manager leaves? Does the average person have the time or desire to keep up with these developments? Probably not.

            Will they be able to continue to outpace the S&P 500 if the fund gets massive? As Buffett frequently points out, it’s difficult to outperform when you’re managing a massive amount of cash.

            I see that the opposite thing is happening though; the fund is experiencing an outflow of money. Will they have to raise expense ratios down if money continues to go out?

            I also noticed another interesting thing about this fund. If I go back to it’s inception, it has outperformed. However, go back 10 years and it hasn’t. They did very well when dot coms imploded because they didn’t hold them. That event was a one time anomaly. Will they be on the right side of the market when the next debacle goes down?

            Bottom line for me is that this fund (or any fund) could outperform the indices over the long term. Some people like Buffett can and have. However, it’s very rare. Most funds don’t beat the markets and it gets even worse when you consider survivor bias (bad performing funds get canned). I’m sticking with indexing.

          • Ron Cameron says

            April 30, 2017 at 7:07 pm

            Mr. 1500, you bring up excellent concerns. I’ll tell you what I know for sure, and what I personally think. While the past is no guarantee, it helps to know how, why, and what they’ve done in the past. They think buying high quality investments (even when it’s out of favor), staying diversified (even when it’s out of favor) and holding them for long periods of time (even when it’s out of favor) is the best way to invest. And that happens to 100% match my personal mantra.

            Will the same managers continue to run it? It’s impossible to tell, but I think it’s likely as they have some of the most tenured managers on the planet. I’m not interested in any fund that has a revolving door of managers or managers with low tenure, regardless of performance. And with their group managing process, if a superstar leaves it’ll have a minimal impact on the remaining 5-10 managers. If they do change it up dramatically the advisor that you pay via the funds -should- be making you aware (or you can look it up yourself if he fails you). That wasn’t a call I need to make often as an FA, and never with American Funds, but it does happen and they should call. (did I emphasize should?)

            Will they continue to perform if it gets massive? I’d say yes, for a very long time. I remember a trade publication quote that expressed the same concern for AGTHX (which is currently almost twice as large), and that was decades ago. So far, none of their funds have shown any negative effects of being “too large”. But it’s always been a concern for some.

            Same with an outflow of money. Outflows of their funds are cyclically pretty common as people try to chase the high performers, and they typically are underperformers during strong bull markets of irrational exuberance. This happened big time in the last 90’s. This hasn’t caused any drastic changes in their expense ratios that I’ve seen, and I don’t see any reason they would. Could they? Yes, any fund could. But they’ve been extremely consistent for a long time.

            You’re correct, they generally stayed out of the frothy frenzy of the internet bust. That’s a benefit of the rare well-run fund: They should reduce the crazy. The problem with that is they needed to go against the grain. They looked like idiots for years while everyone made (and eventually lost) money hand over fist. If you’re willing to stick to your guns on proven principle while looking stupid for long periods of time (and losing short term business by doing so), I’m a fan.

            The last 10 years many of their funds have lagged or merely matched their indexes. That’s rare but it occasionally happens. Historically every time it’s happened their established funds rebound to more than make up for the shortfall. I’m OK with that as long as they continue to manage money the way have for decades. If they change how they do that (high turnover, low quality, managing outside their stated goals) then the advisor -should- be aware and make you aware. And then you get out!

            These are all well-founded concerns and I’m glad you’re open to discussing them. I’ve heard and/or thought about every one of them extensively. And in order for me to buy into any fund I a)Have to have faith in what the fund does, and b)Have to have faith they’ll continue to do it. That’s extremely rare, but these guys do it. I’ve seen other funds crash and burn because they changed how they ran. And I’ve seen funds crash and burn because of obscene risks they took that worked for longer than they should. This is one of the most consistent fund companies I’ve ever seen.

            I look forward to reading and hearing more about the “1500 story”. It’s on my rather long list of things to learn about! So many blogs and podcasts, so little time…

            Ron

          • Mr. 1500 says

            April 30, 2017 at 11:47 pm

            I found this thread on Bogleheads discussing American Funds versus the indices: https://www.bogleheads.org/forum/viewtopic.php?t=144914

            No further comment from me.

  24. Ashley Gallagher says

    May 4, 2018 at 9:22 am

    Addendum 1 link does not work

    Reply
    • jlcollinsnh says

      May 4, 2018 at 10:09 am

      Thanks for letting me know, Ashley.

      Too bad that one is gone, it was a hoot. 🙂

      Reply
  25. Andrew says

    May 10, 2018 at 9:25 pm

    Though I love personal finance, it has to be aknowledged that some people need hand holding in making these big decisions. They claim to not have the time / interest in reading up on personal finance, and thus avoid it all together, get swindled by bad products, or develop awful habits (i.e., debt).

    Unlike the underpermance fees from fund managers, a fee for a good financial advisor could pay off massive dividends as they can also be a financial coach in helping you develop better habits. The fee you pay annually might help you save/invest 2-3x more than when you were doing it solo.

    Anyway, I am planning to become FI in a few years and start building a blog around the subject (free help) but also want to become a CFP and open up an RIA. My thoughts were to have a monthly fee retainer either flat fee or based on income (0.5%) and net wealth (0.5%) – with a minimum and a maximum. Hoping to best align the interests of advisor and client! Though my goal would be for the client to drop me because they become comfortable with managing their own finances 🙂

    Side note: the whole industry isn’t terrible. There are some great new revenue models for fee-only fiduciary independent financial advisors servicing younger clients. XYPN is a great driving force in trying to turn the industry around from its current money-sucking vampire tendencies.

    Reply
    • jlcollinsnh says

      May 11, 2018 at 11:07 pm

      I agree there is a need for good advisors, but they are as rare as baptized rattlesnakes. Too many are incompetent or dishonest or both.

      It is good to hear efforts are being made to improve this situation, but the industry has its work cut out it.

      As I say in the post, by the time people learn enough to pick a good one they could have learned enough to handle their investments themselves.

      Good luck in your efforts!

      Reply
  26. Cb2013 says

    June 3, 2018 at 12:37 am

    My whole life I was told to use a financial advisor. So as soon as we had savings, we got one. I’m 36 and my husband is 39. We have a little over $800k with an advisor after saving as much as we could and selling our house for a decent profit. After reading your book, I bought VTSAX and would like to get rid of our financial advisor. My question is how to go about doing this. I know we will pay capital gains taxes so should we pull it slowly or all at once? I’m new to this and trying so hard to learn.

    Reply
    • jlcollinsnh says

      June 3, 2018 at 10:20 am

      You should be able to disengage with your advisor without selling your assets. Then you can move those assets where and when you see fit. If you want to move to, say, Vanguard, you should call them and ask for their help on the mechanics of getting it done.

      If your assets are held in a tax-advantaged account like an IRA, you can move them with no tax consequence. Otherwise, you will be subject to tax on any capital gains on the sale. You can also offset those gains with any losses. The percentage tax amount will depend on your tax bracket and could be as low as 0%. This post has a nice chart in it showing this:
      https://www.nerdwallet.com/blog/taxes/capital-gains-tax-rates/

      The second half of this post has some of my tips:
      https://jlcollinsnh.com/2015/10/07/personal-capital-and-how-to-unload-your-unwanted-stocks-and-funds/

      As for leaving your advisor, it should be simple. But, be prepared. Many advisors drag their feet and almost all will try hard to convince you not to go. You are, after all, a nice source of income that is walking out the door. Any sleazy, guilt-trip kinds of tactics should only steel your resolve. This instructional video might help:
      https://www.youtube.com/watch?v=ABXtWqmArUU

      Good luck and enjoy the journey!

      Reply
      • Cb2013 says

        June 5, 2018 at 2:02 pm

        Thank you! Loved the instructional video????. My husband is military and this year we moved to Hawaii and it’s the first year I haven’t worked. I think we can get our income down to $77k so we don’t pay any capital gains taxes. Love your book and your blog!

        Reply
  27. Lisa Lubin says

    March 24, 2019 at 9:14 am

    Hi JL!
    First off, I want to thank you for ALL of this. I found you after finding the ChooseFI podcast and community (from a BBC article on RE). Your blog is recommended over and over on the ChooseFI FB group.

    I’ve been going through your Stock series (and telling my partner all about it and I’ll be writing my own post on my blog soon and linking to you). I also listened to your interview (first part so far) on the ChooseFI podcast.
    All so enlightening! I love your ‘daughter’ post (it’s a great gateway ‘drug’ to your posts!) and sent it to my partner who has two young sons.

    I also applaud you for trying to answer all your commenters. I am also a blogger/writer and am asked for advice and ‘can-i-pick-your-brain’ sessions on the regular and it can be time consuming!

    Fortunately, I’ve been investing my money (401K, then IRAs, and also brokerage accts) since my early 20s.

    Unfortunately, I’m now learning so much more about fees, expense ratios and the like.
    I’m 46. So I’m mainly trying to figure out what’s best to do at this point.

    Inside my IRAs (Roth, Trad, and SEP) I’m going to switch to Vanguard.

    But inside my taxable brokerage accts (with Chase, Dreyfus, and TD-A-trade), I’m a bit unsure what to do bc of taxes.
    I have one managed acct (ugh!) that I was just convinced to set up 1-2 yrs ago, that I’m going to get out of.

    But what about all the funds in my brokerage accts? Some are Amer. Funds (paid some front load fees) and all kinds of other funds with higher expense ratios. I’m a bit confused on the math if I sell now bc of the tax implications for cap gains, etc. Do I just sell them all slowly over the next several years and buy vanguard? How do I figure out if it’s worth it at this point? Ugh!

    Just looking for a little direction or even some posts that discuss what people should do when they are 20 yrs into investing already and are in these funds in a taxable account!

    Thank you again! Great info and good writing for anyone to understand!

    Reply
    • jlcollinsnh says

      March 25, 2019 at 3:37 pm

      Hi Lisa…

      Thanks for the kind words.

      Unwinding the “cats & dogs” in taxable accounts is always a challenge. This post might help: https://jlcollinsnh.com/2018/06/28/stocks-part-xxxiv-how-to-unload-your-unwanted-stocks-and-funds/

      Reply
  28. Tampa Dave says

    June 11, 2019 at 8:38 pm

    I worked in local government and had a 457 plan. I could never get the numbers on the statement to balance and the “financial advisor” couldn’t either. We got on conference calls with his boss who could not make the numbers come out either.
    I put $1,000 in a mutual fund inside my 457 and $1,000 in the same fund in my personal account. The very first quarter the fund in the 457 lost 1.5% while my personal account made 1.2%. I took both quarterly reports to my management and the 457 company got the boot. They cannot be trusted.

    Reply
  29. Hockeymom32 says

    August 8, 2019 at 2:24 pm

    Ugh….The points that this article brought up made this middle-aged gal physically ill. I’ve argued with my spouse for years that we were getting fleeced by our “financial advisor,” and that the 1% was costing us dearly. Because of this article, I took a deeper dive into the expense ratios and turnover rates of the funds we own inside our IRAs. It wasn’t pretty. I am so angry at my 20 years of stupidity and what it has cost. Although I finally have an answer to “why does our balance never seem to go up beyond what we put into it.” Thank you for pushing both myself and my spouse over the edge. I have called Vanguard today to set the wheels in motion….

    Reply

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      • Case Study #15: The Scavenger Life -- Freedom first, then Financial Independence
      • 3rd Annual (2015) Louis Rukeyser Memorial Market Prediction Contest results, and my forecast for 2016
  • ► 2015 (18)
    • ► December (2)
      • Q&A - IV: Strawberry Patch
      • Seasons Greetings! and other cool stuff
    • ► October (2)
      • Personal Capital; and how to unload your unwanted stocks and funds
      • Stockchoker: A look back at what your investment might have been
    • ► September (2)
      • Case Study #14: To Dream the Impossible Dream (and then realize it)
      • Hotel Living
    • ► August (1)
      • Mr. Market's Wild Ride
    • ► June (4)
      • Gone for Summer, an important note on comments and random cool stuff that caught my eye
      • Around the world with an Aussie Biker
      • Case Study #13: The Power of Flexibility
      • Stocks — Part VIII: The 401(k), 403(b), TSP, IRA & Roth Buckets
    • ► March (2)
      • Stocks -- Part XXVIII: Debt - The Unacceptable Burden
      • Chautauqua October 2015: Times Two!
    • ► February (2)
      • YNAB: Best Place to Work Ever?
      • Case Study #12: Escaping a soul-crushing job before you're 70
    • ► January (3)
      • Case Study #11: John, a small business owner in transition
      • Trish and Stan take an Intrepid Sailing Voyage
      • 2014 Annual Louis Rukeyser Memorial Market Prediction Contest results, and my forecast for 2015
  • ► 2014 (29)
    • ► December (2)
      • Diamonds and Happy Holidays!
      • Micro-Lending with Kiva
    • ► November (3)
      • Chautauqua February 7-14, 2015: Escape from Winter
      • Stocks -- Part XXVII: Why I Don’t Like Dollar Cost Averaging
      • Jack Bogle and the Presidential Medal of Freedom
    • ► October (3)
      • Tuft & Needle: A better path to sleep
      • Nightmare on Wall Street: Will the Blood Bath Continue?
      • Help Wanted
    • ► September (1)
      • Chautauqua 2014: Lightning strikes again!
    • ► August (2)
      • Stocks -- Part XXVI: Pulling the 4%
      • Stocks -- Part XXV: HSAs, more than just a way to pay your medical bills.
    • ► July (3)
      • Stocks -- Part XXIV: RMDs, the ugly surprise at the end of the tax-deferred rainbow
      • Summer travels, writing, reading and other amusements
      • Moto X, my new Republic Wireless Phone
    • ► June (1)
      • Stocks -- Part XXIII: Selecting your asset allocation
    • ► May (1)
      • Stocks -- Part XXII: Stepping away from REITs
    • ► April (3)
      • Q&A III: Vamos
      • Q&A II: Salamat
      • Q&A I: Gaijin Shogun
    • ► March (2)
      • Top 10 posts
      • Cafe No Se
    • ► February (4)
      • Chautauqua 2014 preview, closing up for travel and other random cool things that caught my eye of late.
      • Case Study #10: Should Josiah buy his parents a house?
      • Case Study #9: Lars -- maximizing some good fortune and considering "dollar cost averaging"
      • Case Study #8: Ron's mother - she's doin' all right!
    • ► January (4)
      • roundup: Some random cool things
      • Stocks — Part XXI: Investing with Vanguard for Europeans
      • Case Study #7: What it looks like when everything financial goes wrong
      • 1st Annual Louis Rukeyser Memorial Market Prediction Contest 2013 results, and my forecast for 2014
  • ► 2013 (41)
    • ► December (4)
      • Closing up for the Holidays, see you in 2014
      • Betterment: a simpler path to wealth
      • Case Study 6: Helping an ill and elderly parent
      • Stocks -- Part XX: Early Retirement Withdrawal Strategies and Roth Conversion Ladders from a Mad Fientist
    • ► November (3)
      • Death, Taxes, Estate Plans, Probate and Prob8
      • Case Study #5: Zero to 2.6 million in 25 years
      • Case Study #4: Using the 4% rule and asset allocations.
    • ► October (3)
      • Republic Wireless and my $19 per month phone plan
      • Case Study #3: Let's get Tom to Latin America!
      • The Stock Series gets its own page
    • ► September (2)
      • Case Study #2: Joe -- off to a fast start!
      • Chautauqua 2013: A Week of Dreams
    • ► August (1)
      • Closing up shop plus an opening at Chautauqua, my new podcast, phone, book and other random cool stuff
    • ► July (1)
      • They Will Kill You For Your Shoes!
    • ► June (4)
      • Stocks -- Part VIII-b: Should you avoid your company's 401k?
      • Shilpan's Seven Habits to Live More with Less
      • Stocks -- Part XIX: How to think about money
      • My path for my kid -- the first 10 years
    • ► May (5)
      • Why your house is a terrible investment
      • Stocks — Part XVIII: Investing in a raging bull
      • Dining with the Ghosts of Sarah Bernhardt and Alfons Mucha
      • How we finally got the house sold
      • Stocks — Part XVII: What if you can't buy VTSAX? Or even Vanguard?
    • ► April (4)
      • Greetings from Prague & a computer question
      • Swimming with Tigers, a 2nd chance on the Chautauqua, a financial article gets it wrong and I'm off to Prague
      • Storage, Moving and Movers
      • Homeless, and a bit on the strategy of dollar cost averaging
    • ► March (4)
      • Wild Turkeys, Motorcycles, Dining Room Sets & Greed
      • Roots v. Wings: considering home ownership
      • How about that stock market?!
      • The Blog has New Clothes
    • ► February (5)
      • Meet Mr. Money Mustache, JD Roth, Cheryl Reed & me for a Chautauqua in Ecuador
      • High School Poetry, Carnival, cool ads and random pictures that caught my eye
      • Consignment Shops: Best business model ever?
      • Cafes
      • Stocks -- Part XVI: Index Funds are really just for lazy people, right?
    • ► January (5)
      • Social Security: How secure and when to take it
      • Fighting giraffes, surreal landscapes, dancing with unicorns and restoring a Vanagon
      • My plan for 2013
      • VITA, income taxes and the IRS
      • How to be a stock market guru and get on MSNBC
  • ► 2012 (53)
    • ► December (6)
      • See you next year....until then: The Origin of Life, Life on Other Worlds, Mechanical Graveyards, Great Art, Alternative Lifestyles and Finding Freedom
      • Stocks -- Part XV: Target Retirement Funds, the simplest path to wealth of all
      • Stocks -- Part XIV: Deflation, the ugly escort of Depressions.
      • Stocks Part XIV: Deflation, the ugly escort of Depressions.
      • Stocks -- Part XIII: The 4% rule, withdrawal rates and how much can I spend anyway?
      • How I learned to stop worrying about the Fiscal Cliff and you can too.
    • ► November (2)
      • Rent v. owning: A couple of case studies in Ecuador
      • So, what does a month in Ecuador cost anyway?
    • ► October (4)
      • See you in December....
      • Meet me in Ecuador?
      • The Podcast: You can hear me now.
      • Stocks -- Part XII: Bonds
    • ► September (6)
      • Stocks -- Part XI: International Funds
      • The Smoother Path to Wealth
      • Case Study #I: Putting the Simple Path to Wealth into Action
      • Tales of Bolivia: Calle de las Brujas
      • Stocks -- Part X: What if Vanguard gets Nuked?
      • Travels in South America: It was the best of times....
    • ► August (1)
      • Home again
    • ► June (4)
      • Yellow Fever, closing up shop for the summer and heading to Peru y Bolivia
      • I could not have said it better myself...
      • Stocks -- Part IX: Why I don't like investment advisors
      • Happy Birthday, jlcollinsnh; and thanks for the gift Mr. MM!
    • ► May (6)
      • Stocks -- Part VIII: The 401K, 403b, TSP, IRA & Roth Buckets
      • Mr. Money Mustache
      • The College Conundrum
      • Stocks -- Part VII: Can everyone really retire a millionaire?
      • Stocks -- Part VI: Portfolio ideas to build and keep your wealth
      • Stocks -- Part V: Keeping it simple, considerations and tools
    • ► April (6)
      • Stocks -- Part IV: The Big Ugly Event, Deflation and a bit on Inflation
      • Stocks -- Part III: Most people lose money in the market.
      • Stocks -- Part II: The Market Always Goes Up
      • Stocks -- Part 1: There's a major market crash coming!!!! and Dr. Lo can't save you.
      • You can eat my Vindaloo, mega lottery, Blondie, Noa, Israel Kamakawiwo 'Ole, art, film and a ride on the Space Shuttle
      • Where in the world are you?
    • ► March (7)
      • How I lost money in real estate before it was fashionable, Part V: Sold! and the taxman cometh.
      • How I lost money in real estate before it was fashionable, Part IV: I become a Landlord.
      • How I lost money in real estate before it was fashionable, Part III: The Battle is Joined.
      • How I lost money in real estate before it was fashionable, Part II: The Limits of the Law.
      • How I lost money in real estate before it was fashionable, Part I: Impossibly Naive.
      • You, too, can be conned
      • Armageddon and the value of practical skills
    • ► February (6)
      • Rent v. Owning Your Home, opportunity cost and running some numbers
      • The Casanova Kid, a Shit Knife, a Good Book, Having No Regrets, Dark Matter and a bit of Magic
      • What Poker, Basketball and Mike Whitaker taught me about Luck
      • How to Give like a Billionaire
      • Go ahead, make my day
      • Muk Finds Success in Tahiti
    • ► January (5)
      • Travels with "Esperando un Camino"
      • Beanie Babies, Naked Barbie, American Pickers and Old Coots
      • Selling the House and Adventures in Staging
      • The bashing of Index Funds, Jack Bogle and a Jedi dog trick
      • Magic Beans
  • ► 2011 (22)
    • ► December (1)
      • Dividend Growth Investing
    • ► November (2)
      • The Mummy's head, Particle Physics and "Knocking on Heaven's Door"
      • "It's Better in the Wind" or why I ride a motorcycle
    • ► October (1)
      • Lazy Days and School Days
    • ► July (2)
      • The road to Zanzibar sometimes goes thru Ecuador...
      • Johnny wins the lotto and heads to Paris
    • ► June (16)
      • Chainsaws, Elm Trees and paying for College
      • Stuff I’ve failed at: the early years
      • Snatching Victory from the Jaws of Defeat
      • The. Worst. Used. Car. Ever.
      • Top Ten reasons your future is so bright it hurts my eyes to look at it
      • The Most Dangerous Words Your Customer Can Say
      • How not to drown in The Sea of Assholes
      • What we own and why we own it
      • The Ten Sales Commandments
      • My ever so formal and oh so dry CV
      • How I failed my daughter and a simple path to wealth
      • The Myth of Motivation
      • Why you need F-you money
      • My short attention span
      • Why I can’t pick winning stocks, and you can’t either
      • The Monk and the Minister

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