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Expenses Killing You-It can drastically hurt your retirement

Updated: Nov 18, 2022

I want to share a story with you from somebody that our team ran into this week, and I want to just share it with you, because this is not uncommon out there. This person is getting really close to retirement, and we’re all thinking about retirement, right? We want to hopefully move that lower and lower number right, so we can retire sooner, we’d love to work. When we’re 65-70 years old, we want to retire early, early. Anyway, this person is about close to retirement is actually retired and went back to work part time. And their planning to stop working in the next year. Now the person is already has some good investments. And by the way, you know, this is an opinion. So, if you want investment advice, go find a financial planner. This is an opinion, do your own research. Okay, so this person has real estate five investments in real estate, which is great mutual funds, and the mutual funds totally told us, they’re paying a 1.8% fee, that’s what they see. Now, I want to tell you something about mutual funds, real quick. Mutual funds, I have to tell you what they’re paying. But there’s a lot of hidden fees that are in there, too, that you have to dig to find what they are; b1 fees, sales fees, there’s expense ratios, all kinds of little fees, that really, there was a study done a few years ago, add up to about 3.4%. Now, that’s your 3.4%. So that’s right off the top. So, if you have a great year, if you’re making 30% of your money, that’s great, but a year, like this year, you’re losing 10, 15, 20 or 30%, some people have money in Facebook and zoom, and they’ve lost 80% of their money, right? But still, that broker gets paid that 3.4% Every year, and it comes right off the top right out of your money. So, you got to be careful about having other people manage your money. I have a saying and you know it, “never give up your power in your health, your wealth or your time.” And this is part of that saying is that to be able to take control of what you’re doing. Ronald Reagan said, “Trust, but verify.” So, if you’re going to have other people handling your money, just make sure they know what they’re doing, make sure they’re doing it right. And that you can look over their shoulder and go, “Okay, I agree with this investment philosophy.” That means you have to take power into your hands to learn some of this stuff, it’s your money, you should know about it. All right. Now this person said they lost 10% of their mutual funds in the recent downturn. Now, I don’t know when this recent downturn was that they’re talking about, but I can tell you that the S&P 500 was down about 22% recently. Some stocks, like I just mentioned, Netflix and Zoom and Upstart were down like 85%, some stocks are down 70-80%, maybe 90%, the market in general is down 20%. So, if they lost only 10% of their mutual fund, I have to say, congratulations, that’s awesome. You didn’t lose as much money as the regular market. And they’re mostly a buy and hold trader. Now I call it buy and hope, because you don’t have any control. And then just well, I’m just going to keep buying. So thereby a buy and hold investor and they’re just buying and holding. Now, if you held that stock that went down, 80%, you’re going to have to hold a long time for it to go back up to even, we’re not investing to get even are we? So, you know, if you invested in a stock that goes down 8% It’s got to go up about nine or 10% to get back to even. If you invest in a stock that goes down 50% now it’s got to go up 100% to get back, it’s got to double. How many stocks double? If you know, let me know, because I can invest with you. And then if it goes down 80% it’s going to be years before you get that money back, right? Yes, it’s Netflix, and it’s not going to go out of business or whatever you tell yourself, but it’s going to be a long time before it climbs back up and goes through all those sellers that sold on the way down. So, buying and holding is a just a weak strategy. It In theory, it works. Because the markets, in theory, go up over time. It’s actually the dollar is the basing over time, that’s a different issue. But you know, it doesn’t always go up like right now, like people are having a lot of trouble. Hedge funds are going out of business, because they can’t figure out what to buy and when to buy, what to short or what to sell. And it’s been crazy out there. And this person wants something they could do in retirement and they liked the idea of being able to travel while they invest. So they’re looking for basically another career. And I highly recommend if you got any kind of money at all, that you should learn how to handle it, you should learn how to invest it. So let me let me boil this down. You need to have some kind of a system, a proven system that gives you safe reliable income and income that comes in no matter what, right? If you don’t have to wait for the government five years for the stock to come back. You know, so you can make a capital gain, you get income. We have a system called the cash flow machine where we teach people how to make safe, reliable income and we shoot for two to 4% a month. We frequently overshoot but I’m here to talk to you about how great people are doing. Because it’s been a tough year this year as well, we just haven’t lost as money as much money as the rest of the market has. And so, we are actually backup to even and the markets come back a little. And that engine that gives us that safe, reliable income helps us helps us do that. Now, if you’re going to learn a system, you should learn a system that’s proven. Why do we learn a proven system? Well, it’s like anything, if you want to learn anything, you don’t just you know. If you want to learn golf, you don’t just pick up a golf club and go to the golf course and figure out that you’re going to be a great golfer. You’re probably going to read a book, I’m reading a book, does it make you a great golfer? Maybe, or maybe you take a course, right? But buying a ticket, of course doesn’t make you a great golfer, maybe you go practice, right? That’s cool. But sometimes you might practice the wrong thing. So, you get a coach. Well, now you’re getting there, right? Now he could see some things that you’re doing right or wrong, and have you fixed them right there and then to start practicing those correctly. I can tell you that I’m really good at hitting a slice, because I practice it for a lot of years. It wasn’t till I got a coach and I figured out what I was doing wrong to get rid of that slice. So, you’ve got to be immersed in an ecosystem that’s going to support you. And it’s going to teach you the right way to do things and it’s going to teach you from experience of what other people have done. We have a system called the cash flow machine that makes safe reliable income. And it does it from the stock market. We take a stock market asset like Amazon, or Apple or Tesla stock. And we basically create our own dividends from it, we create our own rental and if you want to look at it as a real estate analogy, and that helps us make what we shoot for,, 2 to 4% a month. Doesn’t sound like a lot, but it adds up. And if you can stay away from the pitfalls of losing money, you can end up making money over time. So, if you’re going to be invested in mutual funds, just understand that mutual funds have hundreds, maybe 1000s of stocks, no, you’re not going to do that. Well, because there’s crappy stocks that are weighing down a mutual fund. There’s good stocks that are doing well. And there’s average stocks in there, why not get rid of all the average ones, and just focus really well on the things that are doing well. And that’s creating a safe, reliable income strategy. From having a proven system, we can tell you more about it if you want to text us or message us or figure out how to get a hold of us. But that’s really the key. And that’s was the key to this person. Great job on having real estate, real estates, that passive income most of the time but you still have to plunge that toilet in the morning, sometimes, but five properties in real estate. That’s good concentration. Mutual funds, not so sure, right? This person said they lost 10% on mutual funds in the recent downturn. I don’t know maybe that’s okay. I’d rather have control of it and be able to create income off of that. So that’s the situation. That’s how we kind of want to figure out the way things go in retirement. And I hope that helps you as well.

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