How To Invest Like A Professional

Student: “Is it really that easy to improve my retirement plan?”

Frank Cirullo: “Yes.”

Student: “Can you show me how?”

Frank Cirullo: “Yes.”

Student: “What should I do?”

Frank Cirullo: “First, do you really want to know the facts about your plan? For instance, your mix of managed investments have underperformed a diversified mix of no load, low cost, index funds, and your retirement plan costs more than it should.  If you trust facts instead of opinions, you will see how to improve your plan. By the way, how much money will it cost you, long term, not to improve your retirement plan, today?”

Best wishes,

Your teacher, Frank Cirullo

My goal is to teach my students how to choose a diversified, core, mix of no load, low cost index funds for their IRA account, 401(k) plan, or 403(b) plan. 

However, I want you to only invest a few minutes of your time, each day.  Why?  This process is new for you; therefore, it makes sense to slow down, take your time, and not be in a hurry.

By investing a few minutes of your time and choosing just one of the eight funds, per day, you will have a core mix of index funds–soon.  Easy!

During the first four days, you learned how to choose a mix of equity mutual funds for growth so that you can protect yourself from inflation.  Now you are learning how to choose fixed income mutual funds for income and balance.

IMPORTANT NOTE: You need to know something important about fixed income mutual funds that many people don’t realize when they invest in them: I want you to imagine that you are at a city park and you are watching kids play on a teeter-totter.  However, on this day, I want you to get a picture of a cartoon in your mind.  Imagine that interest rates are represented by a “%” sign.  And imagine that bond prices are represented by a “$” sign.  Got it?  Okay, interest rates are on one side of the teeter-totter, and  bond prices are on the opposite side.  If interest rates fall, bond prices rise.  But if interest rates rise, bond prices fall.  See? 

Why is this information important?  Well, if you need your money to live on and you can’t risk losing any of your principal, please do not invest in equity funds and fixed income funds.  Instead, invest in T-Bills and short-term T-Notes.  Why?  T-Bills and T-Notes are the safest investments you can make.  The next safest investment is a FDIC insured Certificate of Deposit. Yes, I know that these financial instruments don’t pay very much in interest, but if you need your money and can’t lose any of your principal, then your goal is safety of principal–not growth.  I hope you understand this important rule, because it will prevent you from foolishly reaching for higher yields and losing some or all of your hard-earned money.

Tomorrow, you will choose the final fund that you need for a core mix of index funds for your IRA account, 401(k) plan, or 403(b) plan.

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

In 2008, how much money can an individual deposit into his or her IRA retirement account?  You are allowed to deposit $6,000.00 if you are 50 or older, and you are allowed to deposit $5,000 if you are not 50, yet.

The first six months of 2008 flew by, and December 31st will be here–soon. 

Are you happy with how much money you have saved for retirement?  It’s wise to automatically send money to your IRA account on payday. Remember, 10% of all you earn is yours to keep, but it makes sense to save more if you can. 

You may be thinking this. How can I save more money?  Easy!  Imagine you are retired.  If you don’t stop buying stuff you don’t need, you will feel the pain of not having enough money for your retirement.  You are smart, which means no one needs to advise you on how to stop spending your hard-earned money.  If you get an urge to spend your money, slow down and ask this question: Whose retirement plan do I want to contribute this money to?  Should I deposit it into my IRA account or give it away, forever, to the person I am buying this item, product, or service from?

Important Note: If you participate in a 401(k) plan or 403(b) plan, please ask your tax preparer how much money you can  contribute to a Roth IRA? traditional IRA?  A Roth IRA has different rules than a traditional IRA; therefore, you must do the math to determine which one is best for you.

Best wishes,

Your teacher, Frank Cirullo

Would you like to ask me a question about your retirement plan? 

Would you like to interview me about retirement plans so that you have a recording for a resource? 

To ask your question, click here: Ask Frank A Question 

To set up an interview, click here: I want To Interview Frank 

Or pick one of the following questions to ask me:

1. Which investments make sense for my plan?
2. Which index funds are truly low cost?
3. Which vendors offer truly low cost recordkeeping and administration?
4. When should I ask for proposals from vendors?  Note: Almost every employer gets this step wrong, and it’s costing their company and its workers a small fortune. Congress proved that most retirement plan’s are unnecessarily expensive, and doing this step out of order is the culprit.  That’s why you need to learn my five step process.
5. Can I really use your five step process to set up a new, optimal, retirement plan–fast?  (Fast means in not more than one hour.)
6. Can I really use your five step process to optimize my current plan–fast? 
7. Can I really save time by using your five step process? How much time can I save per month?
8. Can I really save money by using your five step process? How much money can I save per month?
9. Cam I really get your five step process, free?  How can I get it today?

Do you see how asking the right questions can save you time?  save you money? make your life easier?

Ask Frank A Question, NOW! 

Best wishes,

Your teacher, Frank Cirullo

Note:

You don’t need to be a student to ask me a question.  Visitors can ask questions, too.

Nor do you have to be a student to tell me about a problem you want to solve. 

Yes, even if you are visitor you can ask me for help anytime you want my help.

My e-mail is: fcirullo@fcmstudents.com

Regarding your IRA account, 401(k) plan, or 403(b) plan, do you want help with one of the following issues?

1. Save time on monitoring your investments.
2. Save time on selecting a mix of investments for your plan.
3. Set up an automatic asset-allocation and re-balanciing program, free.
4. Save time on choosing a plan.
5. Save time on setting up a plan.
6. Save time on managing your plan.
7. Save time on monitoring your plan.
8. Other: Tell me what you want help with.

I’ll be happy to show you one or more proven solutions to any problem you may ask me for help with. 

Note: Proven means the idea or solution will will work every time it is tried.  You’ll see the result instantly.

Yes, you can use my proven ideas that can save you time and money–free.  After you read the idea or solution, you can use it fast. 

Send your e-mail to: fcirullo@fcmstudents.com 

Best wishes,

Your teacher, Frank Cirullo

If you have read my blog posts and/or you have completed the free lessons I give to students on their IRA account, 401(k) Plan, or 403(b) plan, you know that each idea is profitable if you implement it   

By taking one simple step today, you really can have more money.

Going forward, in each post I will show you a profitable step you can take.  Easy!

For instance, here is a step you can take today to have more money tomorrow.

1. IRA account: If you have an IRA account, invest in a core mix of index funds that cost not more than 0.07% to 0.20% per year. 
2. If you have a 401(k) Plan, ask your employer to add a core mix of index funds that cost not more than 0.07% to 0.10% per year.
3. If you have a 403(b) plan, ask you employer to  get some providers who have low cost index funds such as Vanguard or Fidelity.

You may be wondering, “Why should I take time to do this now?”  

Well, look at it this way.  You’ll have more money if you match the market’s performance with low cost index funds than if you pick investments that underperform it.  And. compounded, you’ll have more money for retirement if you take this easy step today rather than do the same old, same old and procrastinate.

NOTE:  I know you may want to beat the market.  But you need to be honest about your your chances of beating it.  Did you know that not one expert has ever picked a mix of funds that beat a core mix of low cost index funds–long term?  It only looks like they may have done it to amateurs.  Ask for a long term track record and you will see the truth.  For instance, have you ever picked a mix of funds that beat a core mix of low cost index funds in performance?  No!  Has your investment adviser?  No!  So are you paying him or her a fee to recommend mutual funds such as asset-allocation, target date, lifecycle, or balance funds that have never beaten a core mix of index funds?  Did you know that many funds are so new that they don’t even have a long term track record at all?  Think about it. By trying to beat the market, are you not gambling with you retirement money?

Let’s say that I have convinced you to match the market by investing in a core mix of low cost index funds instead of trying to beat it.  Where can you get the lowest cost index funds?  Well, you can do a search, online, fast. 

The secret to being successful at anything you do is to take the first step.  That way the next step will always be revealed to you–you just need to be focused, relaxed and have an open mind–never argue with the facts you will see.  You can use these two phrases, “Lowest cost index funds” and “Low cost index funds” to do a search.  And do this search without thinking if you have time for it!  You do want more money tomorrow, right?  Always act in your own best interests.  See?

Best wishes,

Your teacher,  Frank Cirullo