How To Invest Like A Professional

If you have some money to invest, it means you understand the first step to creating wealth. However, if you are like most people, you got the last two steps wrong, which means you do not have as much money–as of today–as you could have.

Step 1: Save at least ten percent of all you earn. Unnecessarily spending your hard-earned money always results in pain. Saving your money always results in pleasure.

Step 2: Plan your estate as if you will die tomorrow. Ask an attorney if you need a will, and ask him or her if you need a trust. Always ask an attorney to help you with your estate planning.

Step 3: Plan your investments as if you will live forever. You will have more money if you pick a diversified, core, mix of investments that can match the market’s performance than if you pick a mix of managed funds, and/or asset-allocation, target-date, lifecycle, lifestyle, and balanced funds that  underperform the market. Most investors who fail to beat the market don’t even know that they have created a major problem for themselves by trying to beat no load, low cost, index funds in performance.

Summary: To have more money, more time, and less stress you will need to go three for three: (1) Save at least ten percent of all you earn. (2) Plan your estate as if you will die tomorrow. (3) Plan your investments as if you will live forever.

You are guaranteed to go three for three if you read my blog posts and do the required work. It’s free information.

Best wishes,

Your teacher, Frank Cirullo

Do you really treat others as you wish to be treated?  

For instance, does your 401(K) or 403(b plan serve YOU? Or does it cost more than it should?

Remember, procrastinating on cutting your plan’s cost won’t help anyone at your company,

You can do the right thing by taking five easy steps, today:

1. Switch out of a core mix of investments that does not at least match the market’s performance.
2. Hire a recordkeeper and administrator who will charge you not more than the benchmark for the cost of recordkeeping and administration.  Remember, no hidden or camouflaged costs are allowed.
3. Manage your plan so that it is truly low cost.
4. Educate the employees so that they, too, can become part of an effective system of checks and balances.  That way they will protect themselves and your company from a renegade fiduciary who does not get it on what a truly low cost plan looks like.
5. Monitor your plan so that it remains truly low cost month-after-month, quarter-after-quarter, and year-after-year.

Best wishes,

Your teacher, Frank Cirullo

Often, the employer is the only person at a company who believes that the company’s 401(k) or 403(b) plan is a good one.  That’s because he or she set it up and never took the time to learn what an optimal plan looks like. 

The word “optimal” means that a plan has low cost services (no hidden and camouflaged costs) and its core mix of investments match the market’s performance day-after-day; quarter-after-quarter; year-after-year. 

Easy!

The good news is this: Every employer can set up a plan that is optimal, and it will require not more than one hour of his or her time to set it up.  That’s what I teach employers to do, free.  However, most employers cannot fathom that their plan can be improved that easily, so they do the same old, same old and never even try something that is this simple and easy to do.

An optimized plan saves you money because its truly low cost. And it even frees up more of your time because it requires less time to manage and monitor. 

If the cost you pay for services is too high and if investig in no load, low cost, index funds is not an option, then you can ask your employer to improve your plan by cutting its cost and adding a core mix of index funds.  If your employer refuses to improve your plan (he or she may be stuck on stupid), then you may want to take the following action:

1. Contribute just enough money to get the company’s matching contribution.
2. Use a self-directed account (if your plan has that option) so that you can invest in no load, low cost, index funds.
3. Set up a low cost IRA account and contribute up to the maximum allowed by law.

Best wishes,

Your teacher, Frank Cirullo

The bottom line is this: How much money do you have in your 401(k) plan, 403(b) plan, or IRA account after you pay for everything, which includes any hidden and camouflaged costs that you are paying but don’t see, yet? 

This is important: Always compare your results to an appropriate benchmark. That way you will know, for certain, if you are doing more harm than good to yourself and your loved ones.  

For instance, let’s say that your net return was 4.00% per year because you paid 3.10% in expenses. 

In other words, we are using an illustration whereby your mix of investments earned 7.10%, per year, but after expenses your net was 4.00%. 

Got it?

Okay.  Now, let’s say you are using an appropriate benchmark, and after expenses it had a net return of 7.00%, per year, because it did the right thing and paid only 0.10% in total expenses.

Now let’s compare the two returns after compounding each ROI.

Both portfolios invested in the same mix of investments, so both earned 7.10%, per year.

1. At 4.00%, per year (after expenses), your money will double every 18 years.
2. At 7.00%, per year (after expenses, your money will double every 10.29 years.

Which 401(k) plan, 403(b) plan, or IRA account would you rather have?  The plan that had lower costs and doubled your money every 10.29 years, or the plan that had higher costs and doubled your money every 18 years–don’t forget that both plans had same mix of mutual funds that earned 7.10%, per year.

Now, do you see why it is important cut your plan’s expenses today and not procrastinate?  If you cut your plan’s expenses today, you are guaranteed to have more money tomorrow. That is a fact!

Cutting a plan’s expenses gives the plan’s participants more money every time it is tried.

Best wishes,

Your teacher, Frank Cirullo

If you believe that investing in a diversified, core, mix of no load, low cost index funds is the way to go, I can explain why it would be a mistake not to tell your loved ones, friends, and associates about my free lessons on investing in index funds and how to set up a truly low cost, IRA account, 401(k) plan, or 403(b) plan.

Here is why it makes sense and why it’s profitable for you to ask everyone you know to visit my blog at

http://fcmstudents.com/wordpress/

First, please don’t make the classic mistake of trying to teach people this stuff yourself, because they may think that you are an arrogant know-it-all.  And they may even think that you are just another foolish person who likes to give people unsolicited ”hot tips.”  Neither of us wants that for you, do we?  Truly, we want to help people with their IRA account investments and 401k and 403b plans, not alienate them, right? 

Okay, are you ready to learn how you will profit by asking people to visit my blog?

Well, it turns out that the price you pay for index funds, recordkeeping and administration, and other services is always based on supply and demand.

People (vendors /service providers) compete for your business and they use advancing technology to save time and slash the cost of doing business with you.

How does that help you?  Do you remember what I taught you about paying as little as possible for your index funds?  The less you pay, the more money your earn on your investments, right?

It’s competition for your business and advancing technology that lowers the cost of index funds.  See?

Low hanging fruit (foolish investors) are keeping plan costs higher than they should be.  Foolish people hire high cost service providers who sell expensive mutual funds and expensive retirement plans. Often, a trusted person will unwittingly refer you to a high cost service provider.

Nobody will cut his or her fee if they have plenty of business, right?  You wouldn’t volunteer for a pay cut, either, right?  And, as long as the mutual fund companies have plenty of business, not one mutual fund company will cut their cost on the mutual funds that they sell to the public.

Are your loved ones, friends, and associates low hanging fruit (foolish investors) and don’t know it, yet? Their problem is lack of knowledge about investments, investing, and 401(k) and 403(b) plans, because they may be focused on the hype, myths, and half-truths that is everywhere in the media. That kind of stuff only looks like it’s good advice, to amateurs.

Just think about it. Competition for your business and advancing technology are your friends, that is, if you don’t follow the large crowd of investors who are still trying to beat the market by investing in managed funds. If you are following this large herd of people who are trying to beat the market, you, too, will underperform index funds, and you, too, will be part of the problem with the high costs people pay for IRA accounts, 401k and 403b plans, mutual funds. consulting, investment advice, and recordkeeping and administration.

As more people learn about index funds and how they beat the pants off most expert picks, you will see the cost of index funds come down even more.  Remember, the price you pay is always determined by supply and demand.  Be a wise consumer…get the facts and stop listening to people’s opinions.

By the way, don’t fall into the trap of saying this: “If everybody invests in index funds, then index funds won’t be any good anymore.”  First of all, everybody won’t invest in index funds because most people will always be jerked around by their own fear and greed because most people like excitement. 

You should not be afraid to invest in index funds, because, long term, your diversified, core, mix of no load, low cost, index funds will beat the picks of most experts. 

So don’t let financial planners and other experts talk you into selling your elegant mix of index funds and buying managed funds, and/or asset-allocation, target-date, lifecycle, lifestyle, and balanced funds that don’t even have a long term track record of beating no load, low cost, index funds. Experts have inherent conflicts of interest, which means that they will always act in their own best interests–not yours.  See? 

And don’t touch any of those expensive, enhanced, index funds that experts like to sell to the public; especially, if they don’t have at least a ten-year track record of beating the plain, no load, low cost, index funds that we are talking about, right here.

Best wishes,

Your teacher, Frank Cirullo

Many experts still don’t get it–they are still trying to beat the market (index funds) by creating a myriad of packaged products and/or software that they can sell to you.  The only problem is this. Not one expert has ever picked a mix of funds that beat a diversified, core, mix of no load, low cost index funds in performance.

My point is this.  If you already own a mix of no load, low cost index funds, it would be a mistake to let someone talk you into selling  them and buying a mix of funds that the expert hopes will beat the market (index funds).  Never allow anyone to experiment with your hard-earned money.  See?

Best wishes,

Your teacher, Frank Cirullo

Did you know that most people don’t know their investment performance?  They may know the performance of the mutual funds they picked, but not their own performance.

Why?  It’s because they don’t know how to compare their results.

For instance, ask someone these questions:

You: “Do you believe you picked some good mutual funds for your IRA account, 401(k) or 403(b) plan?”

Him or her: ”Yes, I got some good advice.”

You: “To what are you comparing your mutual funds?” 

Him or her: ”What do you mean?”

Go ahead, ask a friend or associate these questions so that you can hear what he or she has to say about the mutual funds that he or she picked.

It’s like this.  If you do a time-weighted rate of return and compare the performance of  your mutual funds to a diversified, core, mix of no load, low cost index funds, you may learn that the mutual funds you picked are awful, because during the same time frame they underperformed a core mix of index funds.

Always do a proper comparison, which involves using a time-weighted rate of return.

Is it not better to learn the performance of your mutual funds sooner rather than later? 

Yes, the sooner you learn the truth the better.  That way you can make the necessary adjustments to your portfolio.

Best wishes,

Your teacher, Frank Cirullo

Experts want your business, and they have a myriad of ways to try to capture it.

If you know what a trap looks like, you can avoid it–right? 

Well, the kind of trap I’m talking about is one that causes you to make investments that underperform index funds. 

If your investments underperform index funds, you will have a large opportunity cost–long term. 

An opportunity cost means that you will have less money than you could have had by doing something else that produced a better result for every one who invested their money in that way.  For instance, let’s say that you have an IRA account, and you are trying to beat the market by picking a mix of managed funds.  Years later, after you retire, you learn that a mix of index funds–that you could have invested in–outperformed your managed investments.  If that is the case, then you would have an opportunity cost–you would not have as much money as you could have had.  See?

Experts know that you want to beat the market, so they create a myriad of financial plans that take advantage of people’s fear and greed.  The only problem with every financial plan they create for you is not one expert has ever picked investments that beat a diversified mix, of no load, low cost, index funds in performance–long term.

Successful investors don’t get caught in silly traps, because they don’t waste their time trying to beat the market.  Instead, successful investors have a goal to match the market’s performance by investing in a diversified mix of no load, low cost, index funds.  Successful investors know that NOT matching the market’s performance, long term, will cost them money, because they will have a large opportunity cost. 

So the best way to avoid the myriad of traps that can cause you to lose your money is to ask for the expert’s long term track record, which should be more than ten years. 

For instance, if an expert wants to sell you managed funds or packaged products such as asset-allocation, target date, lifecycle, lifestyle, or balanced funds, you need to ask for his or her track record.  I bet that he or she has never picked a mix of funds that beat a diversified mix of no load, low cost, index funds–long term.  You can prove it by asking for the expert’s long term track record.  Easy!

If someone has never beat index funds in performance, would you trust him or her with your hard-earned money?  No!  Why would you pay him or her a fee or a commission to experiment with your money?

Please, avoid the myriad of traps.  Always ask for a long term track record.  Easy!

Best wishes,

Your teacher, Frank Cirullo

If you have a savings account and no debt, it’s because it makes you happy to spend less than you earn. 

Anyone who has a job can save up a pile of money and be debt free, fast: 

Step 1.  Be happy being a saver.  Savers automatically spend less and less. 

Step 2.  Be happy being an investor.

Step 3.  Be happy being a fan of compound interest–it’s the best magic show you’ll ever see.

Step 4. Be happy being frugal:

1. Water/beverages: Can you save money on beverages?  How?
2. Food: Do you prepare your own food?  Can you save money on food?  How?
3. Clothing: What are the benefits of paying less?
4. Shelter: What are the benefits of paying less?
5. Transportation: What are the benefits of paying less?
6. Travel: What are the benefits of paying less?
7. Entertainment: Can you save money on entertainment?  How?
8. Gifts: Can you buy fewer gifts?  Can you spend less per gift?
9. Other: What are some other ways you can save money?

Best wishes,

Your teacher, Frank Cirullo

“It’s not what you know that causes you problems.  It’s what you know that ain’t so.” –Will Rogers.

Slow down. 

Take your time. 

Don’t be in a hurry.

It will serve you to work on opening your closed mind so that it can learn the truth about investments and investing. 

First, consider the possibility that you are making costly mistakes with your money.

Second, be honest because that is the only way you can learn what’s best for you.  For instance, have you ever picked a mix of managed funds that beat a diversified, core, mix of index funds in performance–long term?  No!  Has your investment adviser?  No!  Always ask for the expert’s long term track record, which should be at least ten years.  Why would you have silly portfolio reviews will people who don’t have a track record?

Third, learn what will make you a successful investor, long term:  For instance, a diversified, core, mix of index funds will match the market’s performance less the cost of the funds you own.  That will give you a track record that will beat the performance of most experts–long term.  Long term, you will be a successful investor providing you don’t listen to the cleaver fools who want to dumb you down. Cleaver fools are the people who don’t have a long term track record but use charts and graphs to pretend they do.

Forth, think about what having a better track record than most experts means.  It means you will save precious time, because you won’t have anymore silly meetings with experts.  And you’ll have more money, too, because you will match the market’s performance, not underperform it like most experts do.

Your assignment for today is to think about the truth about investments and investing. 

For instance, you may hope you can beat the market, but is hope a strategy?  No!  Is picking investments that will match the market’s performance a strategy that will serve you?  Yes!  It will beat the pants off most experts and it will also beat the pants off any of your friends who don’t get it yet 

By the way, you can help yourself even more by helping your friends.  How?  Point them in right direction so that they, too, can learn the truth.  Warning: If you try to teach them they won’t believe you, because their mind is closed.  Instead, send them an e-mail; ask them to read my blog posts if they want free lessons on investing their money.  Easy!

In conjunction with what you are learning here, how will pointing your friends and associates in the right direction help you?

I’ll show you, tomorrow.

That was easy, right?

Best wishes,

Your teacher, Frank Cirullo