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

Are you curious about why so many employers miss the mark and set up a high cost 401k or 403b plan?

Would you like to know the easiest and fastest way to set up a truly low cost 401k or 403b plan?

If you already have a plan, would you like to know the fastest way to slash its cost?

An important step that many employers ignore is this.  Before you contact vendors for information about what they sell, it makes sense to get focused on the target you want to hit.  It would be a mistake to become distracted by vendors who want to convince you to switch targets.

If you shift your sight to the target you want to hit, you cannot fail to hit the mark, and you will have a truly low cost plan.  Easy!

I know that not one employer would choose a high cost plan over a low cost plan on purpose.  However, if you have a high cost plan that you believe is low cost, the only way for you to see your mistake is to compare your 401k or 403b plan to a truly low cost plan. 

Best wishes,

Your teacher, Frank Cirullo

If you have read just one of my articles or blog posts, you know that I show you proven ways to improve your 401(k) or 403(b) plan, fast.

The only problem is this. Most people never realize that their plan can easily be improved, so they do nothing, at all. 

Just think about it. No matter how good (low cost) you may think your plan is, it probably can be improved–fast. But, first, you must be trained so that you can see your plan’s problems. Easy! I train you, free. Next, you need to be aware of how advancing technology can cut your plan’s cost.  And you need to be aware of how the vendors compete with each other for your business–why they are so successful at selling their expensive services and/or investments to plan sponsors.  It is not asking too much of you to know this stuff, because it is your fiduciary duty to be informed. And it is also your fiduciary duty to always act in the best interests of the participants (employees), right?

To see your plan’s problems, it is best to assume that you may have made a few mistakes and you simply don’t have the right kind of training to catch them. That way your mind will be open to see what you may have done that was wrong.

Okay, so how does one know where to look for mistakes?  In other words, how do you know that your plan may be costing you more money than it should?  And how is it possible to fix problems that you don’t even see–yet? 

It’s like this. You can improve your plan the easy way. Or you can hope that, somehow, you will notice your own mistakes. I bet you will never catch any of your own mistakes, which means your plan will continue to cost more than it should!

The easy way to fix your plan is to read my articles and blog posts, because I only show you the proven ideas that work every time they are tried.  That’s how you can improve your plan fast! See?

Best wishes,

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

So far you have learned how to compare expense ratios, choose a large-cap fund, mid-cap fund, small-cap fund, foreign fund, money market mutual fund, short-term bond fund, and an intermediate-term bond fund.

Today, your assignment is choose a long-term index fund.  Please use the same process that I taught you and choose a long-term index fund.  Easy!

Isn’t life great when people treat you right?  Really, don’t you love going back for more information that you can profit from

If you have been doing the required work, then after today you will have your own diversified, core, mix of no load, low cost index funds, which is guaranteed to match the market’s performance less the cost of your funds.  And it only required a few minutes of your time, each day.

By matching the market’s performance, your mutual fund picks will beat the pants off the mutual fund picks of most experts–long term. 

Best wishes,

You teacher, Frank Cirullo

You may be thinking, “Who is this guy that is giving us this wonderful and profitable information, free?”

Well, if you are curious and want to know who I am, you can use your favorite search engine to find out. 

Google Frank Cirullo at http://www.google.com/.  Or Yahoo Frank Cirullo at http://www.yahoo.com/, Or MSN Frank Cirullo at http://www.msn.com/.  Just type Frank Cirullo in the search box.  Easy!

Best wishes,

Frank Cirullo

Before we begin today’s lesson, I want to remind you of this.  Congress said that most plans are more expensive than they should be.  Also, they said that most employers and employees don’t even know how much their plan costs them.  Please be nice to service providers (vendors), but be careful of who you hire.  Only hire a vendor who will optimize your plan according to the instructions YOU give to him or her. 

Many years ago I was working my way through college, and I had a barber who was really a cool guy.  He wasn’t good at cutting hair, but he was cheap, and at that point in my life I had to watch every penny. My barber was always busy–it turns out that other people must have thought he was cool, too. 

One day, while I was waiting my turn for a haircut, I saw something that I had not seen before: My barber asked each customer how they wanted him to cut their hair; then,  he would look them right in the eye and repeat what they told him to do–”Okay, you want me to take a little off here and there, but you want it longer here…got it!”  The only problem was this.  He cut every man’s hair in the very same style.  That’s right, his customers looked alike as they left his shop!  And, at that moment, I realized that after he cut my hair I would look like the rest of his customers–no matter how I asked him to cut my hair! Imagine getting a haircut; then, you notice that every woman is leaving the beauty shop with the same hairdo.   How would you feel about your new hairdo?

You may be thinking, “What the heck does that have to do my 401(k) or 403(b) plan?” 

Well, there are many  cool vendors (service providers) who know how to advertise and market, and they are highly trained salespeople, as well.  In fact, they know every one of your objections before you say one word.  Now, that would not be bad if they were acting in your best interests and set up a plan for you that is optimal.

Facts are facts: Not one vendor will  fire his or her  company for selling you a high cost plan that only appears to be low cost.  Nor will he or she refer you to a truly low cost service provider who can provide better service for a lower fee. 

My point is this.  If you really want a truly low cost plan, you will have to set it up yourself by giving the vendors instructions on what you want them to do.  But you should seek advice (from the vendors your hire) on the laws, rules, and regulations.  However, just remember that it would be a mistake to ask a vendor how to set up a truly low cost 401(k) or 403(b) plan.

This is the bottom line: Your plan is either optimal or it is not.  The word “optimal” means that it is truly low cost with a core mix of investments that match the market’s performance day-after-day, month-after-month, quarter-after-quarter, and year after year.  Easy! 

If you could sit in on some meetings with various service providers and employers, you would see and hear about the same thing at every meeting–no matter which company or who gave the sales presentation.  Just like my barber, who was good at acting like he listened to his customers, service providers will waste your precious time asking you many questions, but they will sell you whatever is profitable for them.  Remember, you must protect the employees (participants in the plan) at all times.

Lessons learned:

Lesson 1: If a service provider happens to be an insurance company ( No, I am not picking on insurance companies), then every plan they sell will look the same–no matter what the employer says he or she wants.  Ditto for brokerage firms, mutual fund companies, registered investment advisers, and financial planning firms.  No matter what the employer tells a service provider, he or she will come out of that meeting with a 401(k) or 403(b_plan that looks like all of the others that that vendor recommends. 

Lesson 2: Not one salesperson (vendor) who works for a brokerage firm, mutual fund company, registered investment adviser firm, financial planning firm, or insurance company has at least a ten-year track record of picking mutual funds that beat a diversified, core, mix of no load, low cost index funds in performance.  Yet, they may try to encourage you to make a costly mistake by picking a mix of managed funds and/or asset-allocation, target-date, lifecycle, lifestyle, and balanced funds from a large universe of 10,000 or more funds. Just think about it.  What they are really doing is encouraging you to experiment with the employees’ (participants’) retirement money.  Is that prudent?  No!  Instead, it’s prudent to give employees a diversified, core, mix of no load, low cost, index funds that will match the market’s performance.  Employees who think they can beat the market (index funds) can set up low cost self-directed accounts.  See?

Now do you see why it would be a mistake for you to ask the service providers to assist you in setting up a plan?  Always, ask for a track record of at least ten-years and watch out for cherry picked funds that the investment adviser did not pick for any 401k or 403b plan, back them.  And watch out for cherry picked time frames, too.

Lesson 3: Rather than ask service providers (salespeople who have inherent conflicts of interest) for advice on how to set up a 401lor 403b plan, it makes more sense to give vendors instructions as to what you want them to do for you.  For instance, you can pick up your telephone and say,  “Can you get me the following items?” 

1. A diversified, core, mix of no load, low cost index funds? Pay not more than 0.07% to 0.20%, per year.
2. Low cost self-directed accounts for employees who still believe they can beat index funds in performance.
3. Low cost recordkeeping and administration that is timely and accurate.  Pay not more than the benchmark, which is $25.00, per eligible employee, per year.  Remember, no hidden or camouflaged costs are allowed, because they create the illusion of a low cost plan and you may not catch it if you are not paying attention.

That’s how you set up a truly low cost plan with a core mix of investments that will at least match the market’s performance.

By the way, you can learn more about how to set up a 401(k) or 403(b) plan that is optimal (truly low cost), right here, free.

Best wishes,

Your teacher, Frank Cirullo

So far you have learned how to compare expense ratios, choose a large-cap fund, mid-cap fund, small-cap fund, and a foreign fund.

Today, your assignment is choose two more funds.  Please use the same process that I taught you and choose a money market mutual fund and a short-term Treasury index fund. Easy!

Isn’t life great when people treat you right?  Really, don’t you love going back for more information that you can profit from?

Remember, if you do the work, you will have your own diversified portfolio in eight days–total.  And it only requires a few minutes of your time, each day. 

Just think about it.  If you have been using my proven process to pick out a mix of index funds, after today, you will have already picked out six funds.  Then, in only two more days you will have your own portfolio that is guaranteed to match the market’s performance less the cost of your funds. 

By matching the market’s performance, your mutual fund picks will beat the pants off the mutual fund picks of most experts–long term.  See?

Best wishes,

You 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

In my previous blog posts you learned how to compare expense ratios, how to choose a large-cap fund, mid-cap fund, and a small-cap fund.

Use the same process to choose a foreign index fund. Easy!

Isn’t life great when people treat you right?  Don’t you love going back for more information that you can profit from?

Remember, if you do the work, you will have your own diversified portfolio in eight days.  And it only requires a few minutes of your time, each day. 

Just think about it: If you have been using my proven process to pick out a mix of index funds, you have picked out four funds.  In four days you will have your own portfolio that is guaranteed to match the market’s performance less the cost of your funds.  By matching the market’s performance, your mutual fund picks will beat the pants off the mutual fund picks of most experts–long term.  See?

Best wishes,

You teacher, Frank Cirullo