And you thought Halloween was scary. Forbes lists a series of financial decisions 30-years-old make that can spook them in their 50s. Many of us can relate to some of these boo-boos: the money twiddled away on unworn new clothes and must-read, now dusty books — the graveyards of paychecks past.
We’re interested in the point made that investing in high-cost managed accounts means outsiders are getting their ghoulish hands into your hard-earned money. Notes the article:
“According to Forbes contributor Rick Ferri, founder of Portfolio Solutions, those fees can add up to 40% of your return each year. Rick shares an example of how, with annual mutual fund management fees of 1.1% and an additional advisor fee of 1% (on the first $1 million of your assets), an investor trying to squeak out a return of 5.3% (the expected return) of a portfolio of 60% global stocks/40% U.S. bonds could actually pay 40% of that return in fees. Make sure you weigh the long-term impact of fees when investing; consider choosing low-cost mutual funds or index funds for retirement savings.”
Now let’s get back to the money you could be growing through stocks, but it’s flowing into Trinketland.
We’ve found this great blog post where somebody calling himself Mr. Money Mustache charts the average monthly expenditures of a Typical Fancy Professional Worker versus a Future Early Retiree. He shows how a family can save better than $82,000 through cutting expenses on an annual income of $140,000. His philosophy? “Your current middle-class life is an Exploding Volcano of Wastefulness.”
Um, Mount Vesuvius could be erupting in our living room.
This youthful retiree writes: “But then what do I do with all the money? You invest it. In stock index funds, in paying off your own house, in rental houses if you are interested in local real estate, and in other sources as you continue to learn about making money work for you. My own retirement income comes from a dead-simple asset allocation: one high-end rental house with no mortgage, and some 401(k) and taxable stock accounts which pay quarterly dividends.”
To get started on finding some of these stocks, check out the trial version of BetterInvesting’s Stock Selection Guide. And don’t let your future be haunted by the ghosts of financial mismanagement.
BetterInvesting is a national nonprofit organization that has been empowering individual investors since 1951. Founded in Detroit, the association (formerly known as National Association of Investors Corporation) was born out of the conviction that anyone can become a successful long-term investor by following commonsense investing practices. BetterInvesting has helped more than 5 million people become better, more informed investors by providing webinars, in-person events, easy-to-use online tools for analyzing stocks and mutual funds, a monthly magazine and a community of volunteers and like-minded investors. For more information about BetterInvesting, visit its website at http://www.betterinvesting.org/investing/landing/openhouse/blog/index.html or call toll free (877) 275-6242.