The power of 1%!

1% may sound like “no big deal” but in the world of investing, it is mammoth!  Many people today are looking for the magic formula to help them retire or retire early.  Unfortunately, there are no “get rich quick” fixes for retirement.  Strong portfolios come from intentional planning, focus and time.  The best time to plant a tree was many years ago, the next best time is today.  I encourage you to take action now!

We understand your challenges, prior to starting my independent financial business, I worked in corporate America for 20+ years.  I was in the trenches, side by side, with extremely talented, smart and hard-working individuals.  At IntegrityIA, know that you are busy, over-scheduled and over-worked.  We also know it’s a relentless battle and you aren’t finding the time for many of the “important but not urgent things” in your lives.  Schedules are dominated by the “crisis of the day or week”. You don’t have enough time to do what you need to do never mind what you want to do!  You work hard for your money and you want your money to work hard for you.  We can help!

Here are some key items to get you back on track:

1) Have a fee-only fiduciary advisor working for you (not fee-based or commissions).  Most Wall Street firms, banks, and insurance companies do not have this fiduciary legal obligation.  Get it in writing.

2) Most people need a financial coach and advisor.  Poor investing behavior is one of the greatest avoidable risks to your retirement.  Your plan needs to be tailored to your risk tolerance and in alignment with how much risk you need to take to hit your goals.  Get a coach to help you.

3) Use low-cost passive investments. Costs & fees make a HUGE difference.  Our fees are .6% on the first $1M of assets under management and decline to .25% over $1M.

4) Focus on asset class investing. Diversify!  Many investors are missing key asset classes like value companies, small cap on a global basis, international investing, REITs and other asset classes.

5) Focus on the Academic Approach to investing.

What if any of the above 5 actions could help you get 1% or 2% more out of your portfolio per year?  What if you had a plan, a strategy and a coach to help you?  The DALBAR Study suggests that bad investing behavior costs active investors more than 1% or 2% per year.  It’s astounding.  See previous blog.

We don’t believe in market timing or active management.  This chart from JP Morgan funds suggests that if you try to time the market and miss the best days, your return dramatically drops.  In this 20 year period (1993 to 2012), the S&P 500 had an annual return of 8.14% per year and $10,000 would have grown to $47,863.  If you missed just the best 30 days (out of over 4,800 trading days), your return would have been -.16% per year over the 20 year period.  Your $10,000 would have been worth only $9,828!  After you account for fees, “there has been no evidence of the ability to persistently generate outperformance beyond what would be randomly expected” (p. 32 Larry Swedroe- “Think, Act, and Invest like Warren Buffett”)  See previous blog for a 10 year comparison of active management vs. passive management.

Because of the power of compounding, an incremental 1% to 2% return per year is substantial.  What if you could reduce your total investing fees by 1%?  What if you could have better structure to your portfolio?  What if you could minimize bad investing behavior, active management and market timing?

*** Key assumptions: 45 year old couple, investing for 20 years, invest 12% of household income per year.

If you could add the numbers in these last two columns to your portfolio at the end of 20 years, would you think “No big deal”?  Take action now, your retirement depends on it.

Who we are:

Integrity Investment Advisors, LLC is a fee-only Registered Investment Advisory Firm.  We are headquartered in Colorado and serve clients on a national basis.  If you know anyone who may benefit from our services, please contact us.  2013 Press Release: Integrity Investment Advisors, LLC and Managing Partner Todd Moerman are pleased to have recently joined an exclusive group of wealth managers offering the low cost mutual funds of Dimensional Fund Advisors (DFA) to its clients.

*** Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product will be profitable.