You are visiting this website because you
- Have little confidence in your ability to accumulate wealth
- Have no idea how to proceed
- Have little knowledge of the stock market
With that confessed deficiency, you are easy prey for professional investment advisors. They will coddle you and give you confidence that all is well and get you started with a nice Diversified Portfolio. As we have seen it is likely that the performance of the prescribed portfolio will not outperform the Dow Jones Industrial Average.
By the time you account for the fees that you will pay an investment advisor, there is no way that you will outperform The Plan.
Recall from “Higher Costs For A Diversified Portfolio” that there are considerable expenses associated with monthly investment into a Diversified Portfolio … assuming you used an investment advisor.
- transaction fee for each security each month
- usually a front end load of 4.5%
In addition to the above direct costs, the investment advisor or his firm, will typically charge 1.5% for small accounts. Let’s say that over a 47 year period, your account averages $400,000. Here’s what it costs you for the warm fuzzy feeling you get by having an investment advisor:
$400K x 0.015 = 6K a year x 47 years = $282,000
Move that figure up or down as you wish… it’s still a LOT of money to pay for something you don’t need. Follow The Plan!
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