How To Invest Like A Professional

Here are five smart moves you should take today:

1. Keep it simple and profitable: Use no load, low cost, index funds for your plan’s core mix of investments.
2. Set up self-directed accounts for employees (participants) who think they can pick managed funds and/or asset-allocation, target-date, lifecycle, lifestyle, and balanced funds that will beat a core mix of index funds in performance. Warning to employees: If you have never picked managed funds that beat index funds in performance–long term–what makes you think you can do it going forward?
3. Consider the possibility that you are paying more than you should for services such as recordkeeping and administration, consulting, and investment advice. For instance, what does added value really mean? The bottom line is how much money YOU earn on your investments after you pay for everything. That is why it makes sense to compare your ROI (Return on Investment) to an appropriate benchmark.
4. If you pay for an asset-allocation and re-balancing program, stop it. Instead, use the classic asset-allocation and re-balancing model and set it up on auto-pilot. It is free and it works as well as the most sophisticated asset-allocation and re-balancing programs.
5. Stop wasting your money. Yes, you can save at least ten percent of all you earn. Savers have a mind-set that makes it hard to let go of their money; they study ways to cut their living expenses. Spenders have a mind-set that makes it hard to hold onto their money. Before you make a purchase, you should ask this question: Whose plan do I want to contribute my hard-earned money to? Can you feel the pain of throwing your money away? Can you feel the joy of looking at your statement and seeing more money in your 401(k) or 403(b) plan than you thought was possible for you to save?

Fall in love with cutting costs and improving investment performance, not with service providers who you may think are the best, brightest, and most popular.

Best wishes,

Your teacher, Frank Cirullo

The easy way to understand your 401k or 403b plan is by seeing–not thinking.

Your vantage point will determine whether you set up a truly low cost plan or keep your high cost plan that only appears to be low cost.

For instance, if you only look at high cost plans that create the illusion of being low cost, your plan will almost look normal. But once someone shows you a truly low cost plan and you understand what makes it low cost, you won’t touch a high cost plan again, ever.  With that insight, you will be able to spot the  high cost plans, instantly. 

To learn the truth about your 401k or 403b plan the easy way, you should study the six questions below. After you read the final question, you should be able to visualize what a truly low cost plan looks like:

1. For a core mix of investments, does your plan use managed funds and/or asset-allocation, lifecycle, lifestyle, and balanced funds or index funds? (If your core mix of investments is managed funds, you are experimenting with your hard-earned money, because you don’t have at least a ten year track record of picking a diversified mix of managed funds that beat a diversified mix of index funds in performance. If your mix of managed investments underperform index funds, will you have more money or less? Less, right?)
2. In addition to your plan’s core mix of investments, do employees have the option to set up a self-directed account? (Employees who don’t have a track record of picking managed funds that beat index funds can try it if they have a self-directed account).
3. For recordkeeping and administration, do you pay not more than $25.00, per eligible employee, per year (remember, no hidden or camouflaged costs are allowed)? (The less you pay for recordkeeping and admintration the more of your own money you keep).
4. Did you hire a consultant who has never set up a truly low cost plan? (Always ask for a consultant’s track record so that you know his or her history of setting up low cost plans. First, you need to learn what a truly low cost plan looks like so that you know which consultants actually know how to set up a low cost plan).
5. Did you hire an investment adviser who does not have a long term track record (ten years or more) of picking managed funds that beat a diversified, core, mix of no load, low cost index funds in performance? (Always ask for a long term track record of ten years or more.  You may learn that not one investment adviser has a long term track record of picking managed funds and/or asset-allocation, lifecycle, lifestyle, and balanced funds that beat a diversified, core, mix of no load, low cost index funds in performance). 
6. Does the co-ficuciary for your plan sell investments and/or other services such as recordkeeping and administration, consulting, or investment advice to your plan? (Why would you allow a co-fiduciary to sell investments and/or services to your plan?  Just think about it. It makes no sense to seek advice on how to set up, manage, and monitor a plan from someone who has inherent conflicts of interest. Would he or she fire his or her company for not setting up a low cost plan for you? No!However, it does make sense to ask vendors to explain the laws, rules, and regulations to you).

Many employers and employees have not seen what a truly low cost plan really looks like, yet. That’s  because they have been looking for a 401k or 403b plan in all the wrong places. Their vantage point impacts their judgement, and they don’t know how easy it is to switch to a truly low cost plan. 

To set up a truly low cost plan, you must see what to do–not think about what to do.

See?

Best wishes,

Your teacher, Frank R. 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 don’t have an effective system of checks and balances, you probably won’t cut the cost of your 401(k) or 403(b) plan anytime soon. Just think about it. How can you cut costs that you don’t even see, yet? 

If you will take one hour to educate employees on the following six issues, they will help you monitor the plan to ensure that it is low cost. Why would they do that? It is in their best interests to have a truly low cost plan. See?

A good plan has low cost services (no hidden or camouflaged costs) and a core mix of investments that match the market’s performance. You can do yourself and the employees a favor by educating employees on the following:

1. Why you want employees to bring you their ideas on improving the plan.
2. Why your plan uses no load, low cost, index funds for its core mix of investments.
3. Why your plan provides self-directed accounts for employees.
4. How the plan is set up and why it was set up that way.
5. How the plan is managed and why it is managed that way.
6. How the plan is monitored to ensure that it remains low cost month-after-month, quarter-after-quarter, and year-after-year.

Read my articles and blog posts so that you, too, can learn how to set up a truly low cost plan, free. 

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

For a moment, pretend that you and an old friend and associate are discussing retirement and retirement plans. 

You say: “I think the real question is not where we will find time to improve our plan, rather, it’s how much is it going to cost us and the participants (employees) if we don’t cut our plan’s cost, today, right now.” 

Your associate says: ”I know. I read that it’s more likely than not that our retirement plan is probably more expensive than it should be.  And whose money is being wasted?  Mostly, it’s the participants’ (employees’) money, but our money is being wasted, too. I, too, agree that we should improve our plan, so let’s cut its unnecessary costs, today.”

Okay, you can stop laughing.  Let’s get back to the real world. 

I would like to communicate something important to you. Do I have your permission?

If not, please stop reading now.

Well, the truth is this. The conversation you just read probably never takes place at any for profit business or not-for-profit organization. Why? It is because most employers don’t think it is urgent to cut their retirement plan’s cost.  Instead, most employers give themselves reasons to delay improving their plan. 

By the way, if you are an employee, your employer has time to do whatever he or she wants to do, so even though it is true that he or she is busy, don’t worry about him or her not having time to improve your 401(k) or 403(b) plan.  In fact, it is his or her fiduciary duty to cut your plan’s cost now, not next week, next month, or next year when he she may have more time. 

A fiduciary (employer) must always act in the particpants’ best interests.  And procrastinating on cutting unnecessary costs, for even one week, is guaranteed to cost participants more money than you and your employer can imagine–long term!

What employers don’t have time for is the consequences of not doing anything to cut unnecessary costs.  An employer is expected to know better than to have a plan that is loaded with fat (high costs) and ignorance is probably not a defense that he or she can win with in a court of law.

You can do yourself and your employer a favor by asking your employer to visit http://fcmstudents.com/wordpress/ (that’s the Web site you are on now) so that he or she can learn how to improve your 401(k) or 403(b) plan, free. 

I always welcome your comments, because I hope they will help others do the right thing with their 401(k) or 403(b) plan.

Best wishes,

Your teacher, Frank Cirullo

The most successful business owners know when they have a problem.  And if they can pinpoint the problem, at that very moment, they will see the solution.

But it’s not like that with 401(k) or 403(b) plans that successful businesses and organizations set up.  Congress will tell you that many successful businesses and organizations have an awful plan (high cost with a core mix of investments that underperforms index funds) and those employers don’t even know it.  

The problem is this.  Many employers don’t know that their plan’s structure has created the illusion of low cost.  And the new laws, rules, and regulations that Congress wants to pass won’t force employers to finally set up truly low cost plans. 

Why? 

How can you fix problems that you don’t even see?  For instance, if three of the industry’s biggest vendors (they have the most clients) disclose a plan’s cost to you, and that cost is high relative to truly low cost plans, then a high cost plan will almost look normal to you–right?  

Congress can’t tell vendors how much to charge for their services and investments, and I like it that way because I like having a free market.  My point is this. Employers need the right kind of education–not the kind of eduction that they get from vendors who have conflicts of interest.  See?

There is only one way that you can see that your plan is not as low cost: Always compare your plan to a truly low cost plan.  Never compare your plan to the myriad of high cost plans that the vendors recommend. 

If you compare your 401k or 403b plan to a truly low cost plan it will only require a few minutes of your time, and you will see the major problems that your plan has, instantly. 

You can learn how to compare your plan to a truly low cost plan, right here, free.

First, you must be in the right frame of mind.  That way you will consider the possibility that your plan is not low cost. 

Remember, you have a fiduciary duty to always act the the best interests of the participants (employees) and their beneficiaries. And a high cost 401(k) or 403(b) plan does not serve the participants or you (the employer), at all.

Best wishes,

Your teacher, Frank Cirullo

A few months ago I published an article, “Cut 401(k) Expenses So That You Keep More of YOUR Money.”  In my article, in cost cutting Ideas #3 and #5, I exposed the fatal flaw that every asset-allocation calculator has. 

Cost Cutting Idea #3 - Beware the high cost of “free.”

Watch out for the myriad of bells and whistles that vendors provide “free.” If you look just below the surface you will quickly see that “free” comes with a considerable cost!

For example, financial calculators will waste your time and not provide any real value at all. The reason is simple. First, they cannot predict which asset-classes will outperform going forward. Second, they cannot predict how much you will earn on your investments. They simply can’t predict the future!

But take heart, because you can do a great job of planning your own investments without using financial calculators and without using the financial planning software that may only confuse you more.

Always keep it simple.

Cost Cutting Idea #5 - Stop trying to beat the market.

Let me ask you this. Can you hit a moving target blindfolded?

Here is what I’m talking about. Many people are trying to beat the market (hit a moving target) blindfolded. They are blindfolded because no one can predict which asset classes will outperform the others going forward. They are just guessing where the target is. That’s why they miss the mark.

Instead, why not invest in a diversified mix of low cost index funds so that you can match the market’s performance? That way you’ll have more money for retirement and beat the picks of most experts.

Did you know it’s a myth that you can predict the future by studying past performance?

No one has ever done it!

In my article, I revealed the truth about asset-allocation calculators so that poeple would stop wasting their time and money on foolish software and programs that try to predict the future. 

Tomorrow, I will show you how to use the classic asset-allocation model.  It can’t predict the future either, but it is fast, free, and it works as well as the most sophisticated asset-allocation programs.

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