Excessive investment expenses take 2% of individual investor’s assets every year
Year after year, millions of people lose large amounts of money on unnecessary and unproductive investment costs and investment expenses.
The typical investor loses about 2% of portfolio assets every year by paying too much and getting too little in return.
This wasted 2% is not a percentage of your investment returns. It is a percentage of your financial assets — money that is already yours. What right does anyone have to a percentage of your assets every year, unless he or she actually contributes to growing your money more than you pay out in fees and other costs? (See: Excessive investment costs are a huge problem for individual investors and The investment industry is not your investment partner)
VeriPlan helps you to improve your decision making related to investment expenses in two primary ways. First, you cannot decide to make changes, until you clearly recognize that there is a problem. Therefore, VeriPlan and The Skilled Investor website and blog educate you about the findings of the scientific investment research literature on investment costs. These findings are diametrically opposed to many of the things that the financial services industry tells you that you should do.
Implicitly or explicitly, the financial services industry tells you to spend more on their services so that you get higher returns. On the contrary, the scientific finance literature tells you to spend less on fees and other expenses so that you can get higher returns. The scientific literature is right, and the industry is wrong. However, most people do not yet understand this. They keep paying excessive costs, and they keep getting suboptimal returns. (See: Passive individual investors are “free riders” who benefit from the higher costs of active traders)
Second, VeriPlan fully automates the modeling and analysis of your total lifecycle investment costs. VeriPlan allows you easily to compare lifecycle financial plans that use either the investment cost characteristics of your current portfolio or alternate investment costs that you think are reasonable to pay. VeriPlan automatically measures your personal lifecycle costs for: 1) fees to buy investments (e.g. front-end purchase “loads”), 2) investment portfolio management fees (e.g. the management expense ratio), 3) marketing and sales fees (e.g. 12b-1 fees for investment funds), 4) trading costs (e.g. trading costs, which are indicated by rates of portfolio turnover), and 5) personal account custody fees, commissions, and advisory fees. (See: VeriPlan helps you to understand the full lifecycle cost to you of excessive investment expenses)
If your investment cost strategy is already highly efficient, then VeriPlan will demonstrate this to you. However, if you are like most people, VeriPlan will quantify for you how much would squander of your future financial well-being by continuing to pay excessive investment costs.
It is hard to overstate that excessive investment costs are such a serious issue to individuals. In VeriPlan, when you compare a low cost investment strategy with an average investment cost strategy for a young middle-class professional couple, the differences in future cash, bond, and stock portfolio values are staggering. For example, leaving all other projection assumptions the same, a low cost investment strategy could lead to a million dollar financial asset estate at age 100, while paying average investment costs could lead to bankruptcy by age 90. Which road would you take?
VeriPlan starkly illustrates just how much you personally could waste on excessive investment fees. For this couple, the value difference exceeds $1,000,000 in current purchasing power dollars. That is not a bad return on an $39.95 personal financial lifecycle planner!
Personal Financial Planning
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Yes, it can matter significantly how a financial advisor is paid.
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- The Fund Authority Score – A Better Mutual Fund and ETF Rating System (Fund Authority Scores rate mutual funds and ETFs on the most important economic factors influencing long term diversified investment fund performance
The Skilled Investor developed the Fund Authority Score system to provide individual investors with concise and objective mutual fund and ETF comparisons within investment asset classes.
Fund Authority Scores measure investment fund cost, maturity, efficiency, and [...])
- Rational Mutual Fund and ETF Screening Rules (Scientific mutual fund and ETF screening criteria: a summary
Scientifically based selection criteria are rational methods to screen mutual funds and ETFs.
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- Part 2 of the Biggest Personal Finance Story of the Past 30 Years (< -- Go to Part 1
The Biggest Personal Finance Story of the Past 30 Years - Part 2
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- American Funds – Capital World Growth and Income Fund – Class A Shares (CWGIX) warrant a +2 Fund Authority Score (Fund Authority Scores rate mutual funds and exchange traded funds (ETFs) on the most important economic factors that influence individual investors' net long term diversified investment fund performance. The Skilled Investor developed the Fund Authority Score system to provide individual investors with concise and objective summaries of mutual funds and ETFs for comparisons within investment [...])
- Your Valuable Assets Are Simply Your Evolving Estate (
Your investment portfolio and other property assets are simply your evolving estate
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- Passive Personal Investment Strategies are More Time Efficient with Better Returns and Risk Control (
The scientific investment literature indicates that passive investment strategies usually are more time efficient, while they also increase returns and add more value to your investment portfolio.
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- Dodge and Cox Stock Fund (DODGX) picks up a +8 Fund Authority Score (The table below in this article presents The Skilled Investor's Fund Authority Score and other information for the Dodge and Cox Stock Fund (DODGX).
The diversified investment fund strategy of the Dodge and Cox Stock mutual fund (DODGX)
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- Part 4 of the Biggest Personal Finance Story of the Past 30 Years ( < <-- Go to Part 3
The Biggest Personal Finance Story of the Past 30 Years - Part 4
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- Always Completely Diversify Your Investment Portfolio (Complete portfolio diversification is always a better idea.
On average, the securities markets will not pay you to hold any skewed subset of the overall market. Doing so is just a gamble that may or may not pay off. You should not expect to be paid any more for the added risk and anxiety.
A previous article, [...])