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You Shouldn’t DIY Your Finances

Thinking You Can’t Afford to Hire an Investment Advisor is Costing You Thousands

Trying to manage your own investments could be costing you tens, if not hundreds, of thousands

But I get it. We are brought up believing that we need to save our money. We think that paying for a service will cost us money. And it’s easy to fall into that trap.

But if that were true, the wealthiest people in the world would be managing their own money. But they don’t. They know that they won’t be able to maximize their investments over the years. In fact, the average investor – and that’s likely you – under performs by 4 percent per year. That means you are likely missing out on 4 percent of growth each and every year.

For example, the most popular index fund with very low fees, Vanguard’s S&P 500 fund, if you bought it ten years ago and didn’t touch it you would have made 9 percent. But investors in that exact same fund only made 5 percent per year. [*This information is from Morningstar as of May 31, 2018.]

So if you’re looking at investment management services, a firm like mine charges 1 percent a year. But, you may earn 4 percent more. So you tell me, what’s the better “deal?”

Instead of looking at how much it costs, consider what you will gain and save:

Time.

The first thing is time. Consider how many hours will you have to put into this to give it the attention that it deserves. Will that be ten hours a week or more? If you make $60,000 a year, that’s $15,000 worth of your time.

Say goodbye to panic.

The second thing you can do is say goodby to panic. Next time the news screams that the bottom is dropping out, you’ll feel better knowing that someone is watching your money.

More money.

The third thing is that you’ll end up with more money. You’ll end up with more money in your account year after year than the do-it-yourself investors. Without the 4% drag, you end up with 3 times more money in thirty years. Three times.

You don’t want to run out of money.

And the fourth thing is you don’t want to run out of money. A professional will make sure your money grows. And you’ll likely never see the bottom of your checkbook.

Look, if you don’t use an investment manager, statistics show that you’re throwing away money on costly mistakes. Don’t chase after the next fad (you know, BitCoin anyone) or sell at the wrong time. Turn it over to a pro.

Do you really want to make 4 percent less year after year? When your account balance is $60,000, that may not seem like much. But how bout when you have half a million in your retirement account? Then, that’s $20,000 check that you’re just leaving on that table year after year. And don’t forget, it add ups!

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