Hey Peoria! Let's Talk Money

What is my overall take on mutual funds? Should you invest in them? Or are they a waste? In this episode of Hey Peoria! Let’s Talk Money, I wrap up the series on mutual funds and share my assessment. I’ll talk about some research from the SPIVA US Scorecard that will shed some light on how different mutual fund sectors perform. After we walk through the numbers and get the big picture, I’ll share my hot take on this type of investment. What’ll my answer be? Listen to find out!

Outline of This Episode

• [3:00] Domestic stock fund performance
• [8:44] International stock fund performance
• [10:20] Bond fund performance 
• [14:30] My overall take on mutual funds as an investment

Domestic stock fund performance

There are over 7,000 mutual funds out there and a large majority are stock funds. Twice a year, the SPIVA US Scorecard comes out. The scorecard is a research report on mutual fund performance. So I’ll be sharing the percentage of mutual funds that did NOT beat or outperform their benchmark. 

In the domestic stock fund category—on a yearly basis—67% of funds underperformed the index. On a three-year basis, 70% lost to the index it was following. At 15 years, 87% underperformed the stock they were tracking. What does that mean? 

In any given calendar year, it’s a coin flip to see if your stock fund will beat the index. The further you go out, the worse it gets. Over a 15-year timespan, only 13% beat the index they were tracking. The longer you own one, the worse your chances get to beat the index. 

International stock fund performance

On a one-year basis, 51% of international funds lost to the index they were tracking. Over 15 years, 84% lose to the index. International small-caps funds seem to perform slightly better. On a one-year basis, it’s a 50/50 shot that they’ll outperform the index. On a 15-year basis, you only have a 67% chance of losing to the index fund. So it goes to show that some categories are a little more positive. 

Bond fund performance 

The long-term government bond fund category is atrocious. It’s a 98% shot of losing to the index. An alternative is the investment-grade intermediate-term funds. They are considered a “safer” bond that is appropriate for the average investor. Why? Because there’s a good likelihood that your investment will get returned to you. 

In the bond world, there are short-term, long-term, and intermediate-term bonds. Long term is a 20+ year maturity, intermediate is a 5–12 year maturity, and short-term can wildly differ. It can be 30 days and upward. 

The intermediate-term category is about a coin-flip on a one-year basis. On a 15-year basis, it’s a 68% chance of losing to the index. With the global income fund category (that includes stocks from the US), 73% lost to the index it was tracking. Over 15 year, it’s 62%.

My overall take on mutual funds as an investment

Mutual funds are usually a diversified option, which is a positive. They’re also fairly easy to understand. They’re simply a bucket that houses a group of investments with a common purpose. The common purpose of a global income fund is to find you a good interest rate on bonds from across the world. The purpose of international funds could be to buy large-cap international companies. They’re also a one-stop-shop. If you like the utility sector, but don’t know what company to pick? A mutual fund may be a good idea. So what’s my hot take? How do they compare to ETFs? Listen to the episode to find out!

NOTE: This is all public research. I’m not sharing a secret research project. You can access the PDF linked below to see the report. 

Resources & People Mentioned

• BOOK: Mutual Funds Are So 1999

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• On Twitter: @AnxiousAdvisor
• On LinkedIn

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I decided to change the name of this show and give it a new look. This episode explains why I decided to do so...

Contact the show:

HeyPeoria.net 

How do you properly analyze mutual fund performance? Does the historical performance of a fund give you the full picture? The short answer is no. I’ll answer the “why” in this episode of Making Finance Fun. I’ll talk about benchmarks and tracking error. I’ll compare actively managed funds, passively managed funds, and bond funds. The goal of this episode is to give you context to be able to judge the performance of any mutual fund. Don’t miss it! 

Outline of This Episode

• [0:42] Mutual Fund Performance
• [3:20] Passively managed/index funds
• [4:18] What is tracking error?
• [7:09] Compare a mutual fund to its proper benchmark
• [10:01] Actively managed domestic (US) stock mutual funds
• [16:35] Bond mutual fund benchmarks

Passively managed funds and tracking error

When people ask me about performance, they’re generally asking about actively managed mutual funds. They don’t exist to surpass or beat an index—but simply to copy it. If you're looking at their performance, it should mirror the underlying index it’s trying to track and copy (i.e. S&P 500 or the Dow Jones). There shouldn’t be much of a performance difference. 

But tracking error might creep in. What is tracking error? Let’s say—hypothetically—that this year the Dow Jones averaged a 10% annual return. Your mutual fund that’s copying the index only returned 9%. That’s a 1% tracking error. Tracking error should be very small—almost completely unnoticeable. But a passive fund won’t perform exactly the same as the index they’re tracking. Just keep this in mind as you’re analyzing passive mutual funds.

You need to compare a mutual fund to its proper benchmark

If there’s one thing that you take away from this episode, let it be this: as you’re analyzing actively managed mutual funds, do not analyze them on a standalone basis. You HAVE to compare them to the proper benchmark (for this discussion, I use “benchmark” and “index” interchangeably). You can’t compare a large-cap stock fund to a small-cap index. You can’t compare a bond mutual fund to the Dow Jones. They are two completely different things. It’s like comparing gas mileage in a Toyota Prius to a Dodge Ram. It won’t help you. 

Actively managed domestic (US) stock mutual funds

You can look at the average annual return to gain some perspective—but don’t put too much weight into it. Why? Because they ALL say “Past performance does not guarantee future results.” They’re not lying to you. You can look at historical performance, but it doesn’t mean it will be indicative of the future.

What should you look at? The “style box.” According to Investopedia, “A style box is a graphical representation of a mutual fund's characteristics.” It’s a box with smaller boxes inside it. Each box represents a type of stock in one of three categories: Value stocks (under-valued, like Dollar Tree) and growth stocks (a company that’s growing like Tesla, Netflix, etc.). In the middle, you have a blend of both (i.e. Caterpillar). 

It’s a simple tool that tells you where the mutual fund fits into the style box to analyze against the proper benchmark. If you buy a large-cap value mutual fund, you don’t want to compare it against a large-cap growth index. You want to compare it against a large-cap value index. It gives you the proper perspective and helps you look at the “style” of your mutual fund.

The whole point? If you’re looking for a pure growth mutual fund, compare it to a pure growth index. The style box can help you do that. 

Bond mutual fund benchmarks

People are often really confused by bonds. The most popular bond index is the US Aggregate Bond Index from Barclays. There are also corporate bonds, municipal bonds, government bonds, etc. There are high-yield, triple-A rated, etc. If you’re looking at a high-yield bond fund, don’t compare it against the Barclays AGG index—compare it to a high-yield index. If you’re looking at a short-term index, don’t compare it to a long-term index. It won’t give you any relevant information.

You can’t just look at whatever mutual fund you want and say, “Oh, it averaged 8% annually for the last 30 years.” That doesn’t tell you the risk you're taking. It doesn’t tell you what performance you can expect in the future. You need more perspective to find out how it will perform in changing market cycles. It’s just like how you need to listen to the whole episode to understand the full depth of the information I’m sharing! 

Resources & People Mentioned

• Tracking Error
• Style Box
• Vanguard ETFs
• Vanguard S&P 500 ETF
• Bond benchmarks

Connect With Rockie

• Website
• On Twitter: @AnxiousAdvisor
• On LinkedIn

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Today is part II of my latest Making Finance Fun series: mutual fund FUNdamentals. In this episode, I’m going to talk about US stock fund fees. Believe it or not, there is generally more than one fee involved. We will talk about active and passive domestic stock mutual funds, the two main types you can purchase, and the four kinds of fees that you may pay to own a mutual fund. Don’t miss it!

Outline of This Episode

• [3:23] The two main types of stock funds
• [5:09] Fee #1: the expense ratio
• [9:00] Fee#2: Transaction Cost
• [12:55] Fee #3: Cash Drag
• [15:50] Fee #4: Taxes
• [19:38] Interesting nuggets of information
• [26:05] Check out my book!

Fee #1: The Expense Ratio

The expense ratio is basically a management fee. If you go online and type in the name of the mutual fund, you’ll find the expense ratio easily. So what is it? An expense ratio measures the operational costs of the mutual fund relative to the fund’s average net assets. It’s usually a percentage. It pays for the costs the fund incurs, fund managers’ salaries, advertising, and promotional activities, etc. 

According to Morningstar, the average expense ratio is 1.1% annually for an actively managed fund. You are paying roughly 1.1% of whatever is in your mutual fund to the mutual fund company for their services. Yours may charge more or less. For an index fund, the average expense ratio cost is 0.49% per year. 

Fee #2: Transaction Cost

I’ve found that most people aren’t aware they’re being charged transaction costs. You generally see them in actively managed funds. Why? Mutual funds cannot buy or sell stocks themselves, they have to go through a broker. No one on wall street is running a nonprofit—so the broker charges fees. It’s really difficult to find what the transaction costs are. I’ve only found one average number (study done in 2007 linked below). The average cost is 1.44% per year. Woof. Transaction costs are likely lower on an index fund because they aren’t doing as much trading. Why? Because they’re copying other indexes.

Fee #3: Cash Drag

According to another study, cash drag costs you 0.15% a year. What is it? Whatever mutual fund you own keeps a certain amount of cash in the fund itself. Why? If they feel like the market is too high, they might put half the mutual fund in cash and wait for the stock market to drop. I’ve seen less than 1% all the way up to 80% in cash. They do this if they feel like there’s a pullback coming. If you’ve got $100 invested in the mutual fund and $5 is cash, you’re paying the fee on the whole $100—not just the $5. There is also cash drag in passively managed funds. But again, it depends on your specific mutual fund(s).

Fee #4: Taxes

We aren’t talking about ordinary income tax. I’m talking about capital gains tax. If you buy something for $50 and you sell it for $70, you might have to pay the capital gains tax on the $20. 

The average tax that you’ll pay for an active fund is 1% per year. If you have $100 in a mutual fund, you can expect to pay $1 worth of capital gains each year. The fund manager might be buying and selling throughout the time you own the mutual fund. Most years—all of the buying end selling—generates capital gains for you. You may or may not have to pay capital gains taxes, but it varies depending on your situation and even the tax bracket that you’re in. 

Index funds are well-known for being very tax efficient. They can pass on capital gains but it is rare. I don’t have an average cost. NOTE: If you have mutual funds in a 401k or a Roth IRA, this doesn’t apply.

I share a few other interesting nuggets of information you’ll WANT to know if you’re going to invest in mutual funds. Listen to learn more!

Resources & People Mentioned

• What are Transaction Costs?
• The Mutual Fund Fees We Don't Talk About
• 4 Lessons From Another Year of Falling Fund Fees
• Top 10 S&P 500 Stocks by Index Weight
• Why Do Indices Need to Be Rebalanced?
• How Mutual Fund Expense Ratios Work

Connect With Rockie

• Website
• On Twitter: @AnxiousAdvisor
• On LinkedIn

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On this episode, I have a very special guest on the show: WMBD TV Anchor & Television Producer Rebecca Brumfield! 

We discuss her recent wedding, her day to day life as a local news anchor/producer, as well as a look behind the scenes on what it's like to be a news anchor. 

Connect With Rockie

 

• Website
• On Twitter: @AnxiousAdvisor
• On LinkedIn

Subscribe to the show on the app of your choice

What are mutual funds? Why would you want to buy them? How can you buy them? These are just a few of the questions I’m going to answer in—drumroll please—a whole series about mutual funds. In this episode of Making Finance Fun, I’ll cover the mutual fund fundamentals: what they are, their history, why they were created, and more. If you’re interested in investing in mutual funds, do not miss this series!

Outline of This Episode

• [3:11] What are mutual funds?
• [8:52] The history of mutual funds
• [11:02] Why mutual funds were created
• [15:13] The lowdown on modern Mutual Funds

What are mutual funds? 

According to Fidelity, Mutual Funds are “Investment strategies that allow you to pool your money together with other investors to purchase a collection of stocks, bonds, or other securities that might be difficult to recreate on your own.” It’s often referred to as a portfolio. The decisions to buy or sell funds are made by managers. It’s a gigantic pot of investments that someone manages that you can purchase. Why would you want to do this? 

I don’t know how many publicly traded stocks are out there—but there are a lot. Trying to own a chunk to get a diversified portfolio is difficult. Even deciding what qualifies as “diversified” is difficult. Then you have to manage that portfolio. That’s a lot of time and mental energy. Mutual funds are a one-stop-shop for stocks, bonds, and other types of investments. You can buy one investment that does the work for you. 

Think of your mutual fund as a public pool with lifeguards monitoring the pool. The people swimming in the pool are your investments. The lifeguards are the mutual fund portfolio managers. They watch over the investments and decide what to buy and sell. 

What is their common purpose? And what is a prospectus? Listen to learn more!

The history of mutual funds

The first mutual fund was invented in 1924 and is still around today: the Massachusetts Investors Trust. It’s a stock mutual fund with 71 holdings in it (things like Microsoft, Google, Medtronic, J.P. Morgan, Apple, etc.) that includes a broad range of investments. It’s 26% technology, 18% healthcare companies, 11% communication, and 10% financials with a few other smaller categories. There are just under $6 billion in the fund with 3 portfolio managers. 

WHY were mutual funds created?

There are a few different reasons mutual funds were created: 

1. It’s an easy way to diversify your investments in one fell swoop. You can get everything you’re interested in buying in one order. It’s convenient. 
2. They offer professional management. They’re the lifeguards at the pool. They have access to resources and research to make decisions on what to buy, hold, or sell. You unload the decision-making to someone else.
3. A mutual fund offers liquidity and convenience. It’s easy to buy and sell online. I haven’t heard of anyone who couldn’t sell their mutual funds. 

What Modern Mutual Funds look like

As of right now, there are approximately 7,945 mutual funds to choose from in the United States alone. The total investment in mutual funds in the US is over $21 trillion (as of the end of 2019). To put that into perspective, the entire US economy is somewhere around $20 trillion. There’s more money sitting in mutual funds than the US economy. It’s mind-boggling. 

What can a mutual fund look like? There are stock mutual funds, bond mutual funds, real estate mutual funds, alternative investment funds, sector mutual funds (i.e. technology or consumer staples), and much more. There’s probably a mutual fund for any sector you can think of. 

Should you buy mutual funds? How do you choose a mutual fund? Which one is best for you? What are the common fees? To learn more, listen to the whole episode. You can also learn more by subscribing and follow along through this special series on mutual fund fundamentals. 

Resources & People Mentioned

• Episode #31: Choosing Between Mutual Funds And ETFs
• Number of mutual funds in the United States
• What are Mutual Funds?
• Massachusetts Investors Trust
• Total net assets of US-based mutual funds

Connect With Rockie

• Website
• On Twitter: @AnxiousAdvisor
• On LinkedIn

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Are you new to the investment game? Do you know how to get started? If you’re a beginner looking for a simple guide to get on your feet, this episode of Making Finance Fun is for you. I’ll help you define why you’re investing, how you’re going to invest, and what you’re going to invest in. My 3-step guide to get started is so easy, a caveman could do it. (But really, who else remembers those hilarious commercials?)

Outline of This Episode

• [3:23] #1: WHY are you investing? 
• [7:09] #2: HOW are you going to invest? 
• [8:58] Pros and cons of the Roth IRA
• [12:52] Pros and cons of the Traditional IRA
• [16:27] The lowdown on the 529 account
• [20:27] All about your 401k options
• [23:55] #3: WHAT could you invest in?

#1: WHY are you investing? 

You need to define why you’re investing. Here are some reasons I often come across:

• You’re investing for retirement
• Saving for your kid’s college fund
• You’re focused on wealth-building
• You want to increase your net worth
• To fulfill some short-term goals (i.e. a new car)

Why do you need to define your why you’re investing? To determine how you’re going to invest. 

#2: HOW are you going to invest? 

What vehicle are you going to use for your investment? If your goal is to save for retirement you can open a Roth IRA, Traditional IRA, 401k, 403B, a Simple IRA, or a SEP IRA. If you’re saving for college for a child, you can open a 529 account. But what do I get asked about the most? Roth IRAs, Traditional IRAs, 401ks, and 529 accounts. So I’ll briefly talk about each of these options.

Roth IRA vs a Traditional IRA

The Roth IRA is a great account for saving for retirement. If you’re under 50, you can contribute up to $6,000 per year (as of 2020). If you’re over 50, you can contribute $7,000 a year. You do not get federal or state tax deductions. The plus side? You don’t owe taxes on the gains. Whatever you withdraw after turning 59 ½ will be withdrawn tax-free and penalty-free. However, if you withdraw the gains before 59 ½ you can be assessed taxes AND a 10% penalty.

With a Traditional IRA, you DO get a federal income tax deduction for what you do contribute. You also get tax-deferred growth. But you have to pay taxes when you withdraw money. If you need an immediate tax deduction, this may be the way to go. 

What are your options if you make above the tax-deduction threshold? Listen to learn more!

The lowdown on the 529 account

A 529 account is the first thing people think of when they want to save money for a child or grandchild for college. Some states even give you a tax deduction. For example, Illinois allows you to receive a deduction for up to $10,000 individually or $20,000 in a joint account. To find out which state does (or doesn’t) offer deductions, see the chart linked in the resources. 

What if your kid doesn’t go to college? What if they want to start a business instead? The worst case scenario is that you pay income taxes and a 10% penalty on the earnings if the child decides not to go to college. Or, you can transfer the ownership. Are there other college savings options? Listen to find out! Plus, I share some details on 401k plans. 

#3: What could you invest in?

There are many investment options: ETFs, stocks, mutual funds, bonds, money market funds, CDs, brokerage CDs, bank CD’s, hedge funds, etc. That isn’t even an exhaustive list. However, inside a 401k you are limited to the choices they give you. 

Sometimes, a brokerage window can open up that allows you to invest in whatever you want (not just the options they normally allow). But this can be dangerous if you aren’t an experienced investor.

Within an IRA you can virtually invest in anything you’d like. The only three things you can’t own includes life insurance, collectibles, or—generally speaking—physical precious metals. You can even own real estate in an IRA. 

To hear more information about my 3-step guide to investing, listen to the whole episode!

Resources & People Mentioned

• Maximum 529 Plan Contribution Limits by State
• 529 Tax Benefits by State
• A Penalty-Free Way to Get 529 Money Back
• Hardship Distributions
• What Are Salary Deferrals?
• 5 Investments You Can't Hold in an IRA/Qualified Plan

Connect With Rockie

• Website
• On Twitter: @AnxiousAdvisor
• On LinkedIn

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It seems like it’s been an insanely nasty election season, doesn’t it? Many people are left wondering how it’s impacting the stock market—and your investments. An election season riding the wake of the Coronavirus pandemic leaves everyone with a lot of uncertainty. So what should you do with your current investments? 

In this episode of Making Finance Fun, I talk about the historical impact of elections on the stock markets. I also share a few things I’d recommend NOT doing with your investments, along with  a few things you might consider. Check it out!

Outline of This Episode

• [3:35] The average election-year stock market return 
• [5:29] The misconception that stocks get volatile
• [9:00] How stocks perform during election years
• [11:27] The market performs well under both parties
• [14:49] The economy is never radically changed
• [17:47] The historical narrative is not how you remember it
• [21:00] Why it’s okay if you don’t like the president
• [23:25] This isn’t the nastiest election cycle that we’ve had
• [26:20] Market predictions tend to be wrong
• [28:32] What should you do with your money?

The misconception: stock market volatility

Vanguard wrote a piece called “Elections matter, but not so much to clients' investments.” In the article, they share some research starting from the 1860s. They found that the average return during election years has been 8.9% (of a 60/40 stock/bond portfolio). The average return during non-election years? 8.1%. Stocks—historically—do better during election years. 

According to the same article, from 1/1/1964 to 12/31/2019 the S&P 500’s annualized volatility was 13.8% the 100 days before and after the presidential election. That’s lower than normal volatility levels. Plus, volatility doesn’t always have negative connotations. It can simply mean a move up or a move down. 

Since 1980—in my lifetime—we’ve had 10 election years. 8 out of the 10 years, The S&P 500 went up. On average, it’s averaged a 7.89% return during elections. The 2008 global crisis likely even skews the average a little.

10 Truths No Matter Who Wins

In the article, “10 Truths No Matter Who Wins” Brian Levitt shares 10 points related to elections. I think a few of them were on-point and needed to be shared with you:

1. Markets perform well under both parties. Since 1860, a 60/40 portfolio has averaged 8.2% under Republican presidents and 8.4% under Democrat presidents. 
2. No matter who wins the economy isn’t radically changed. While presidents can have signature pieces of legislation pass, they haven’t significantly impacted the stock market. 
3. The historical narrative is never how you remember it. I’ve heard “this is the most important election of our lifetime” every election. It’s ridiculous. Listen to hear why. 
4. Markets don’t care if you don’t like the president. Some of the best returns came with low presidential approval ratings (36-50%). Stocks still averaged over 15% during that time. 
5. This isn’t the nastiest election cycle that we’ve had. I share an insane story you’ve probably never heard about political candidates—listen to hear what it is. 
6. Market predictions are usually wrong. No one knows when the market will tank. So don’t pay attention to predictions and take them with a grain of salt. 

I discuss each one of these points in-depth and share some supporting information that you’ll definitely find interesting. Listen to learn more!

What should you do with your money?

Election years are tricky for investors, especially as you edge closer to election day. Politics are emotional and it’s hard not to make some emotional decisions with your money. That being said, there are some things you shouldn’t do:

• Don’t try to time the market. You might get lucky but then you have to decide when to buy back in—and most people don’t do it at the right time.
• Don’t panic sell. For example, the Dow Jones dropped 400 points when Trump said he wouldn't approve a stimulus deal before the election. The next day, the Dow Jones went up 420 points. Had you sold, you’d never think the market would snap back that quickly. 
• Don’t panic-purchase. Some folks panic buy because they’re worried they’ll miss out on an upswing. 

So what are some things you could do? If you have stocks or ETFs that you’ve made gains on, sell some of it so you can sleep at night. You don’t keep your investments forever, right? Secondly, if you have some extra cash, you can hang on to it. You could pay off some debt, put a down payment on a house, buy a car, fix your roof, and so forth. If you want to buy some investments, use the extra money to purchase some while they’re low. 

This episode is an interesting discussion centered around the upcoming election and how I (and other researchers) think it will impact the stock market. Some of the research might not be what you expect! Give it a listen. 

Resources & People Mentioned

• Elections matter, but not so much to clients' investments
• 10 Truths No Matter Who Wins by Brian Levitt
• What U.S. Elections Mean for Investors
• Stock Market Performance in Presidential Election Years

Connect With Rockie

• Website
• On Twitter: @AnxiousAdvisor
• On LinkedIn

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In honor of my upcoming 40th birthday (which may or may not be on October 3rd), this episode of Making Finance Fun is a special edition. In this episode, I share my top 40 investment tips, personal finance tips, and observations from my 13-year career as a financial advisor. I share ten tips in this post. But if you want to hear ALL of the wisdom I’ve learned throughout the years, give the whole episode a listen!

Outline of This Episode

• [1:56] My top 40 investment tips
• [2:29] Investment tips #1–10
• [14:24] Investment tips #11–20
• [23:31] Investment tips #21–30
• [30:38] Investment tips #30–40

Tip #2: Have a reason you’re investing

Too many people buy an investment without thinking through the WHY. Is it for a short-term gain? Do you want to own it for the long-haul? Do you want to make 25% and move on? Do you like what the company is doing? It doesn’t necessarily matter the reason—but you NEED to have one.

Tip #5: Turn OFF the financial media

2020 has been hard on everyone. The market took a steep drop but has steadily come back to new highs. But the worst thing you can do is bombard yourself with the financial networks that speculate 24/7. They rotate guests who all have different opinions on the market. It’s all about driving dear, and fear leads to poor decision-making. 

Tip #8: Remove as much emotion as possible

When stocks go up people get crazy excited—but it’s even harder on the downside. I’ve lived through multiple market downturns. It’s HARD not to get emotional. When you have a plan and a strategy for your long-term investments, it’s easier to let go of the emotion and stick to the plan. 

Tip #9: Rental properties CAN be good investments

Many financial advisors disagree with me, but I believe a rental property can be a good source of income. While real estate can be a good investment, it’s also far more hands-on then buying stocks. I talked about it at length with “Money Honey” Rachel Richards in episode #39. 

#13: The ups and downs are accelerated

High-frequency trading, hedge funds, large banks, etc. trade quickly. This means drops in the market are accelerated—but so are upswings. We had a huge downturn of 35% in three weeks, followed by 6 months of near constant market increase. Things turn quickly.

#18: Don’t put too much stock into savings projections

Everyone has heard financial advisors say “You have to save this much by this age” in order to retire by 65. The truth is, those projections don’t necessarily tell the whole story. Maybe the people that have $2 million saved by 40 invested in a startup. Maybe their grandparents left them money. The amount of money needed for retirement depends on a LOT of variables. Don’t compare yourself to where others are at—and talk to a financial planner who can help you implement realistic goals. 

#27: Performance numbers can be easily manipulated

There are a lot of ways performance data can be manipulated to tell a story. It’s like comparing MPG on a Ford F150 versus a Prius. You can’t compare. They’re two very different things. Time-frames can easily be manipulated to frame it in a way someone wants you to see it. Fees can often be hidden as well—so keep a close watch. 

#29: When someone gives you financial advice, take it in context

The best example I can think of is when the CEO of a bond-mutual fund says the market will drop, take it in context. That dude is selling what people buy when they’re freaking out about stocks. When anyone—from friends and family to trusted businessmen—give financial advice, question their motivations or outside influences.

#35: Evaluate your 401k twice a year

I think you should check out your 401k at least twice a year. How is it performing? How is the allocation? Are you comfortable with how much you have in stocks versus bonds? Are you comfortable with what the stocks are? Do you own real estate? What bond funds do you have? If you want an analysis done by a financial advisor, feel free to reach out!

#38: retirement isn’t the finish line 

If you retire at 67, it’s not the finish line. If you retire at 45, it’s not the finish line. I’ve heard the misconception that you save, invest, and grow your money over and over again. Then—when you retire—you just live off the interest. That’s not how it works. You still have to grow your money, especially if you’re taking an income from your investments. You want to leave money for your family? It needs to keep growing.

To hear the rest of my investment tips and strategies, listen to the whole episode of Making Finance Fun!

Connect With Rockie

• Website
• On Twitter: @AnxiousAdvisor
• On LinkedIn

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How can you retire at any age? What does it require? The “Money Honey” Rachel Richards is my guest on today’s episode of Making Finance Fun. Rachel is a former financial advisor, the best-selling author of two books, a real estate investor—and she retired at 27 with $15,000+ a month of purely passive income. In this episode, she shares what motivated her to build a passive income large enough for her to retire early. She also talks about HOW she made it happen.

Free Gift To All Our Listeners! Passive Income Starter Kit

Money Honey Book On Amazon

Passive Income Aggressive Retirement Book On Amazon

Outline of This Episode

• [0:24] The Money Honey Rachel Richards joins the show!
• [3:53] The backstory of Rachel’s books
• [8:48] Rachel‘s journey in real estate
• [14:07] Rachel’s experience managing properties
• [16:27] What Rachel’s day-to-day life looks like
• [17:38] How did she decide to retire at 27?
• [22:47] Where the desire to be different comes from
• [29:07] Time or money: which is your most valuable resource?
• [32:47] How to start where you are now
• [38:08] Rachel’s four main streams of income
• [40:53] Build a consistent income stream first
• [43:14] How Rachel chose to follow her own path
• [46:55] How to connect with Rachel Richards

Resources & People Mentioned

• Jim Carey motivational Video
• Rachel's 1st book: Money Honey
• Rachel's 2nd book: Passive Income, Aggressive Retirement

Connect with Rachel Richards

• Passive Income Starter Kit
• Follow her on Twitter
• Connect her on Facebook
• Follow her on Instagram

Connect With Rockie

• Website
• On Twitter: @AnxiousAdvisor
• On LinkedIn

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PODCAST FAST TRACK
https://www.podcastfasttrack.com