1% is huge! You might look at it in the short term and say not a big deal. But you look at the amount over 10 years, it’s huge. When I talked to the company referenced in this post, I would be paying them over $500k over a 10 year span. That’s crazy, and they couldn’t guarantee that they would do better than what I have been doing (35% in some index funds, a couple stocks over 100% gain, and other index funds making 12-23%, all with expense costs of .02-.2%). And, if the market tanks like it did in 2008, and in 2022, you still have to pay your broker the fee on top of your 35% loss (paper loss), that would be a kick in the pants.
Learn how to become a boglehead and you will retain your investments instead of giving a large chunk away.
To successfully invest, you can use any number of brokerage houses to buy most index funds out there. For example, you can use fidelity, or Schwab and buy vanguard index funds.
A lot of the time, when you use a broker, they will sell you managed funds with high expense costs and sometimes with front end or rear end load costs. Also, when you look at a managed fund, you can’t just look at the expense that they state, it can be 2-3x more than that. Also, managed funds have much more turnover so your taxes at the end of the year will be higher.
Getting an annuity is like giving your money away to a stranger. High fees, low profit, and you are not getting most of the profits that the market will have most of the time. Don’t let people scare you about losing your money in the market, because the worst thing you can do is get spooked and sell low and then wait too long to get back in. Recessions only last a couple years and the recovery is usually really good. Look at 2008 and 2020 downturns. Never sold a share and after each downturn was over, I had much more money than before the event happened.
I did sell everything after I heard that inflation will be transitory. Everybody knew that wasn’t going to be the case and it wasn’t. I went straight into a money market paying over 5%, and it’s safe with no fees. But since late last year, I have been getting back to my index funds and a couple stocks to get the earnings stated above.
|