Retire early, love every minute

There is a lot of focus on the FIRE movement (Financial Independence, Retire Early). Lots of ink spilled on homemade cleaning supplies, tin foiling windows and clipping coupons whilst whilst living in a nano house. All in an effort to mass up cash, exit the rodent race and find freedom. Does the math add up? And if you get there, is there happiness? And, of course, will you run out of money? I think yes, possibly and done right, your cash keeps growing. Retire early, love every minute. Let’s take the pieces one by one:

How to retire early

Financial wellness isn’t complicated. In fact, it’s dead simple. Forget the get rich schemes, the lottery tickets and the hot stock tip. Find work that meets these criteria:

  • Something you love
  • A skill you are good at
  • An offering the world needs and values

If you add a dash of hard work and innovation, you will be successful. Stay with it for a while. Think twice before you email your boss angry. Smile a lot. Befriend your HR team. Along the way, be sure to squirrel away at least 10% of what you earn, invest it well and you will retire eventually. Up the savings to 20% or 30% and you can retire a lot sooner. How much sooner or wealthier?

Let’s take a look using the example of someone who earns $150,000 for their entire career. A long plateau, granted. Let’s assume they want to retire with an annual budget of $100,000. The usual rule is that they can draw down 4% of their retirement account. This implies a saved stash of $2,500,000. How long does it take to get there if they can earn 6% after inflation?

retire early

Assuming they started working at 23, a 15% savings rate would have them retired at 58, while a 30% savings rate would have them on the golf course at just 48. Not bad.

Is it possible to actually save 30%? I think that it is. Simple changes like shopping your car insurance, saving on pharmaceuticals or slashing housing costs can make this a reality. Heck, even buying vodka smarter can help. But it raises a more important question in this race to retirement. Namely, what’s the rush?

How to love every minute of it

I had an interesting conversation with my eldest son a couple of weeks back. Kind of a future-musing session. It was nice. He mentioned that it would be cool to retire early. I asked what he would do if he was retired. He painted a picture of doing some writing and speaking, playing music, doing some biking and skiing and finding ways to help others. We both laughed. A lot like the lifestyle of the old man.

Many people idolize early retirement since they see it as a way of escaping a working life they hate. They are running from their current career. How big is the issue? A Gallup poll indicated that 85% of the full time working population are unhappy with their toil. With 1 Billion people working full time, that is 850,000,000 sad souls dragging their sad butts off to the office, plant or field. No wonder everyone is trying to retire.

But rather than running from something you hate, might it make more sense to run to something you love? A possibility is to change your existing career to something that offers you more meaning. A cause that you can embrace. Could you crunch numbers for a group whose mission inspires you? Or craft code for a company that is solving a massive human issue? Or switch to a new line of work where the work itself is more meaningful?

After retirement, you are still you

It’s just an arbitrary date. A mostly North American concept of a finite end of a career. Followed by an abyss of non-work. Sure we can advance the date, but meaning, joy and fulfillment don’t just arrive. They need you to invite them. Find them while you are still “working in your career” or look them up “after you retire” But they won’t crash your retirement party to save you. There is no “work”, then “post-work”. It’s just a continuum of life along which we all need to craft our personal ribbon of joy.

What brings us joy? Certainly the triumph of learning new things. There is happiness in accomplishments, particularly the more impossible ones. Stretching ourselves in multiple ways adds some intrigue. And nothing unlocks fulfillment more than the key of helping others. And let’s tack on completing whatever bucket list items are left.

Financial wellness opens the possibilities

Perhaps it’s not the surly bonds of our jobs we hate, its the perception of limited choice. Without financial security, it’s harder to take risks. How will we service our debts? Whither our families if we fail? Maybe the real quest is to get to a point of financial freedom, of living below our means, so that our capital rises whether we work or not. The joy of choice.

I joined a retirement session on Zoom recently. The group leader began by saying that we are all in a period of physical and cognitive decline. The curse of the post-50 set. Inspiring! Heck of an opening. I see the opposite. With some financial freedom and advanced years, we have new tools that we didn’t have when we were younger:

  • The choice to chase a dream
  • Money to invest in ideas and in ourselves
  • Kids that are now self sufficient
  • More patience to stick with things
  • Lots  of connections who can help
  • Endless online information to learn anything
  • Deep wisdom from years of wins and failures
  • The freedom to surround ourselves with those who inspire us

An absent quest is a recipe for a bad movie and a sad retirement. There is no value in winning the financial race to retirement, only to wallow in aimlessness. Craft a life that brings you meaning, challenge, beauty and joy. Start a small business – it doesn’t need to make money. Learn an instrument – no one else needs to hear you. Tackle a challenge that scares you – cheer the win or the attempt. Help a group that really needs you – you’ll matter to them. Bask in fulfillment. Grin at the win. Enjoy.

But will I run out of money while self actualizing?

It’s interesting to actually give up the 8-7 (plus commute) life. No matter how many times you do the math, the fear remains. What if I outlive my capital? If you estimate that you can live on 4% of your savings, most financial models will say you are set. Now that I am actually living it, I notice a few things that should give you calm:

  • You will draw down 4% a year, but your investments will likely average more like 8%. That means your money is growing, not shrinking most years. The 4% co era just the worst case. Test this at firecalc. It will run dozens of market scenarios. One will show you exhausting your capital at 90. The rest show it growing two three or four fold. The spray nozzle is crazy wide. A lot depends on Mother Markets.
  • If you stay active and connected, most likely some fun opportunities will come your way. Coaching. Consulting. Investing. They can add income and leave your stash to continue growing like hostas.
  • You will see some extra income from Social Security
  • Your expenses may be much lower than you thought with kids grown, mortgages paid and homes decorated and furnished.

Now is your time. Whether you are 20 or 60, working or “retired”. Go live your best life. Scare and challenge yourself, appreciate all that you have. Help others. You got this.

What are your thoughts on retirement? Let me know in the comments.

Photo credit: the author. Taken mid day on a Tuesday as a cow crossing paused a kayak trip with a buddy. Blissful!

Looking for a way to reduce loan interest?

In a perfect world, we would just pay cash for everything. But sometimes you just need a loan. Maybe you need cash for your business, or Elon wants you to invest on the ground floor of his new company. Perhaps you just need funds for a car or other asset. The compounding effect of borrowed loot is nasty, so it makes sense to look for a way to reduce loan interest.

One obvious approach is to do a bit of haggling. On a mortgage or a car loan you might be able to shave off a quarter or a half a percent of interest. Worth a try. Or you could try shopping the loan between some different lenders, banks or credit unions. For mortgages, working with a licensed mortgage broker can get you a better deal than your own shopping. Sometimes attractive financing can be had from the people trying to sell you the asset – like the Ford dealer at month end, in a blizzard, in January, during a recession. All of these are worthwhile, but for the really big savings, you’ll want to dig into another approach. And it’s one that I didn’t really understand until just recently, even after buying 9 houses and about a dozen cars over the last 40 years or so. How much did I overpay on those loans and mortgages? Ugh.

The power of your credit rating

Sure, we’ve all heard of credit ratings – those numbers that tell lenders how likely we aren’t to pay things back. They run on a scale from 500 to 850. But how much do you really know about them? I don’t think I ever knew my number or what it meant until my recent move to the USA. Back in the old country, I had lots of credit cards and an awesome limit. In other words, a great opportunity to collect points for fabulous cash and prizes. But when I tried to open a Best Buy credit card here in Ohio, my application was rejected. Whoa! What! Bit of a blow to the ego. Turns out credit records don’t cross borders. I was starting from scratch like a new graduate, but with grey locks, wrinkles and a middle aged body. The worst of both worlds. So I was forced to begin with a bank credit card of $300. Wait for it…secured by $300 that I had to keep on deposit! And those cards don’t earn points. Humbling!

After a few months of carefully paying off my junior card, my credit rating went from 520 to 750. Not bad. Soon I will be able to remove my card training wheels and liberate my $300. Now, new credit card offerings arrive almost daily. And now some of them have points. I’m back!

Good to have credit cards with normal limits, but I got curious and started to learn more about credit ratings.

Credit ratings to the rescue to reduce loan interest

Turns out that your credit rating makes a difference on your loan interest rate. Like a very large and massive difference. Over at myFICO they have a nifty calculator to show just how big a difference your credit score makes on your loan interest.

reduce loan interest
Improving credit score can reduce loan interest

As an example, considering someone buying a new F150 pickup truck for $50,000 on a 60 month loan. How much would the payments be? It depends. Looking at the myFICO calculator, they could be as high as $1,209 a month or as low as $909 a month. The total interest cost over the 60 months could be $22,552. Or as little as $4,567. Hard to believe. But true! It all depends on your credit score. Turns out having a great credit score is a key way to reduce loan interest.

The high payment and interest figures are for a borrower with a credit score of 500-589. Could be someone new to the country (been there), or someone who missed some payments or is carrying a lot of debt. The low payment and interest numbers would be experienced by someone with a strong credit score of 720-850.

Sounds like it is worthwhile to learn about credit scores.

Credit scores are set by the 3 major reporting agencies: TransUnion, Experian and Equifax. Each of them receive information from lenders about your payment history and credit limits as well as public information about you, such as bankruptcies. They then score your file and make that information available to other lenders and/or sell it to companies who want to present you with things you don’t need (like all of those pre-approved credit card offers that line your iguana’s cage.)

You can get your credit score for free at annual credit report or sometimes from the credit companies themselves. Experian, as an example provides your score if you set up an account with them. Each of them offers more advanced services which they enthusiastically sell you at every chance they get. Your bank may also be willing to provide your score as well. To reduce loan interest you’ll want to find ways to improve your credit score.

My credit score isn’t great. How do I improve it?

There are several factors that the credit companies use to evaluate your score including:

  • Your payment history
  • Credit use
  • How long you’ve had your credit
  • Credit mix (do you have different kinds of credit such as credit cards, mortgage and car loans)
  • Application for new credit (new cards, mortgages, car loans etc)

To improve your credit rating, you need to improve some or all of these factors. Pay the balances in full when they are due, stay under 30% of your total credit limit, cancel cards that you aren’t using, and don’t apply for new credit unless you actually need to. Also check your credit report for errors and get them fixed. Sometimes they will show you as having cards that are long gone, as an example.


Credit scores are easy to ignore. According to a recent GoBankingRates survey, about 40% of Americans don’t know their credit score. It follows that many people don’t realize the effect that it can have on an opportunity to reduce loan interest. Take the time to learn your score and improve it. This is important if you are thinking about a loan, but even important when you aren’t. Good to be ready should you need access to some extra cash for an emergency or a worthy cause.

I should also mention that rushing out to buy a brand new truck with a loan isn’t likely to be the best financial decision. Especially if you’ll only be using it to carry your lunch and not heavy gear like the dudes in the picture. Buy the vehicle that you need for 90% of your driving. Rent something else for the rest. And a 2 year old used vehicle can represent great value. Learn more about how to buy the perfect car.

And of course, the $17,985 in reduced interest could be put to very good use. Over 40 years, invested at 7% it could grow to a tidy $287,760. Not a bad addition to your retirement account. For $13,000 of monthly savings ideas, check out the book.

What tricks do you have to reduce loan costs? Let me know in the comments.

Photo credit Said Al-Olayan

Build wealth like the pros!

If you’re on a slower path to wealth than you would like, this is the post for you. No wealth whatsoever? Even better. Let’s get you started. There are the special hacks that will help a lot: marrying into money, inheriting a bundle, lottery winnings or working somewhere with a juicy stock option plan. If none of those are in the cards, not to worry. Turns out, there are just 4 factors to tweak to build wealth like the pros. Which one is the biggest issue for you? Read on and let’s find out!

Factor 1 – Rate of return

As you save money and invest those funds will grow. How much? That depends on the rate of return. If you want to build wealth like the pros, that is the first place to look. For a quick perspective, the Rule of 72 is a handy way to understand the impact. If you divide your percentage return into 72, the result is the number of years it will take to double your money. As an example, at 7% return, it would take about 10 years to double your money. At 2%, it would take 36 years. Ouch! That’s a big difference. No Lamborghini for you. And if inflation was running at 2%, you would be getting exactly…nowhere. Now you know why having all of your money invested in savings accounts, treasury bills and GICs won’t work.

Compare to the Indexes

How are you doing on your rate of return? Go back and take a look. For business, the rate of return should be quite clear from the business statements. For savings with an investment firm, your rate of return should be available on your statements or online. In the case of equity investments (stocks) the question is whether, after all fees, they exceeded the overall stock index. For the US market the index is usually viewed as the S&P 500. It has averaged about 8% over time. If your investments are trailing that, it’s time for a review with your investment advisor. Investing on your own, maybe it’s time to invest in the overall index. By definition, if you are investing in the index, you can’t be underperforming it. Also, maybe act on fewer “hot” stock tips from your Uber driver.

It’s important to compare like for like investments to the indexes. That is to say, compare your US stock portfolio to the US stock index. Likewise with bonds, European stocks etc. Here are the common indexes to use as benchmarks:

  • US Stocks – S&P index
  • European Stocks – STOXX Europe 600
  • Canadian Stocks – S&P TSX index
  • Global Bonds – Merrill Lynch Global Bond Index

These are just examples of some indexes for comparison. Find one that works and compare your investment returns.

Factor 2 – time

Assuming you are getting a great rate of return, the next big factor is time. Compound interest is the 8th wonder of the world, but time is the magic that really sets it ablaze. To illustrate, let’s go back to the Rule of 72. As we said earlier, at 7%, money doubles every 10 years or so. Cool. But it doesn’t stop there. It keeps doubling every 10 years. Let’s say that you had $100,000 invested at 7%. After 10 years it would double to $200,000. So 10 years later it would be $400,000, then $600,000 and $800,000 after a total of 40 years. Wow! that is a pile of money. OK, now let’s see who was napping during that math! It actually doubles every 10 years. So the real math is $200,000, then $400,000, then $800,000. After 40 years, it hits an astonishing $1,600.000!

Enjoy now or save for later?

Well that is a big pile of money, but who wants to wait 40 years to get rich? Great question. There are three parts to this. First, if you are 20 right now, 40 years from now you will be 60. Which isn’t all that old. Trust me, I’m almost there. I can still run, ski, play the guitar, and bike. And the mortality tables tell me that I still have another 30 years or so to go. So I’m glad that I followed my own advice and earned a good return and let that money grow over time. Second, you aren’t waiting for all of your money to grow like that, just the part that you are saving. The rest you can spend and enjoy through all of those years. Third, let’s go back to that $1,600,000. That means that every dollar you set aside and invest at 7% becomes $16 in 40 years. That is a big difference vs spending that $1 now.

But how much should you save and how much should you spend? That leads us to our next factor in how to build wealth like the pros.

Factor 3 – Savings Rate

Savings rate is just the percentage of your gross income (before deductions for taxes and other things) that you set aside to build wealth. So if you earned, say $100,000 and saved $10,000, your savings rate is 10%. If you saved $15,000 on that same income, your savings rate would be 15%. But how much difference does the savings rate really make? Is it really worth it to increase your savings rate from 10% to, say, 15% or 20%? Let’s take a look:

Build wealth like the pros
Build wealth like the pros

In the graph above, we see the difference that savings rate makes. To provide context, the graph is based on a household income of $150,000 with the savings earning 7% annually. Saving 5% of that would be $7,500 a year, or $625 a month. At a 5% savings rate, after 30 years, we would accumulate $762,000. Not bad! But saving 10%, we would accumulate $1,526,000. Quite the difference. After 40 years, the 5% saver would have $1,640,000 while the 10% saver would have $3,281,000. Of course, someone who enjoyed all of their income and saved nothing would have, well, nothing. Not a great retirement. Or maybe working longer than you had hoped. So savings rate is a key to build wealth like the pros.

And there are other ways to look at this chart. As an example, let’s say you wanted to retire early. At a 5% savings rate, you would accumulate $1,126,000 after 35 years. But with a 10% savings rate, you could gather the same amount after just 27 years. That’s 8 years to whack white balls across the countryside, build a school in Kenya, or just bask in a hammock sampling Pina Coladas.

What counts in savings rate?

Another good question. It’s anything that builds wealth. For instance, contributing to a registered education plan is a great thing to do, since the government helps you save more effectively. But it doesn’t contribute to your long term wealth. Joining the company pension plan does count. If you want a 10% savings rate and your pension plan contribution is 6% of your gross, then you would need to save another 4% elsewhere. If you had a high interest mortgage or other debt, applying accelerated payments would count since the “return” is guaranteed and eliminating that debt would help build your long term wealth. Just make sure that you aren’t living beyond your means, continuously racking up debt, then paying it off. That doesn’t count! Nice try though!

What if you can’t scrape together a decent savings rate?

There are tons of ways to save on just about every category of spend. I spent 2 years finding the best ideas, in fact, $13,000 of monthly savings ideas. Check it out here. And be sure to subscribe to this blog so you don’t miss anything. No spam, no passing your information to foreign hackers. Just you and me building your wealth!

One more trick to build wealth like the pros

Saving any amount might seem daunting. But 4% is better than 2% and 2% is better than nothing. Build the savings habit, establish some sort of automatic savings plan that snatches the money before you can. A company stock purchase plan, an automatic monthly  transfer to an investment account or a government registered plan. Start with a small percentage and step it up a bit at a time. If you do it just as you get a raise, you literally won’t notice the difference. Maybe enjoy half the raise and use the rest to crank your savings rate up an extra 2 or 3%. Then do it again next raise. It’s worth it.

And there is one more way to build wealth like the pros:

Factor 4 – Income

On the one hand, this is a bit obvious. Doesn’t everyone who earns a lot end up rich? Well, actually not. Ask Mike Tyson, MC Hammer, Nicolas Cage, Toni Braxton, 50 Cent, Kim Basinger, Michael Jackson or Burt Reynolds. If you spend as much as you earn, or more, you will go broke no matter how much you earn.

But what happens if we keep everything else the same, but increase our household income from, say, $150,000 to $200,000? Let’s take a look at the chart with the new numbers:

build wealth like the pros
More income helps too!

No surprise. All of the numbers get bigger. As an example, a 20% saver earning $150,000 would accumulate $3,049,000 over 30 years, while the 20% saver earning $200,000 would pile up $4,066,000. Whoa! An extra millski. And it shows that increasing your earnings is another key to build wealth like the pros.

What did I miss? What aha’s did you have? Let me know in the comments. If you enjoyed this, please share it with the social buttons.



Why your investments aren’t growing

What an awesome year for investors! The Dow Jones Index is up 58% in the last year. Rank amateurs are striking it rich. Your Uber driver, plumber and urologist are all making zillions! Investing has become a way better fad than the Macarena, the Ice Bucket Challenge and even fidget spinners. And everyone is crushing it except, maybe, you. Let’s look at the 5 reasons why your investments aren’t growing and everyone else’s are:

1. Everyone else’s aren’t growing

It’s a bit like Facebook. Remember Ronnie’s post about getting demoted at work? No? How about the one about Tom getting dumped by his girlfriend? Or maybe the one showing Tammy watching Netflix all alone since she wasn’t invited to the virtual wine and cheese Zoom party? Investing is a lot like that. People do plenty of bragging about their winners. Everyone stays silent about their losers. In other words, don’t listen to the hype, its likely not showing you a clear picture. Maybe you are doing ok and everyone else is just exagerating.  On the other hand, maybe your results really do suck. Let’s fix that. Read on.

2. You are watching your stocks like, well, a watched pot

No wonder they aren’t boiling. Warren Buffett often paints the picture of someone building or buying a business. Do they call in a business valuator every day to get an update on the value of the business? How about 4 times a day? Unlikely. Give your stocks some time. As a stockholder you own a piece of a business, give it time to grow.

For example, look at this stinker of a stock:

why your investments aren't growing
Stock Number 1 – time to sell!

Whoa! A drop of almost 37% and this chart was taken over just 2 1/2 months. Should I sell?

Why can’t it be more like stock Number 2 below?

why your investments are't growing
Stock Number 2 – let’s buy more!

This one went up almost 10X in just 2 years. Love that. And the great news is that the first stock IS a lot like the second stock. In fact they are the same stock. They are both Apple stock (AAPL). Here is a longer term chart:

why your investments aren't growing
Actually they are the same stock! Keep holding!

If you play around with stock charts, you will find that any stock can look like a winner or a loser by just changing the time frame. In conclusion: Buy quality stocks and hold them for the long haul. Don’t buy or sell based on the ups and downs of their charts. Stop watching them at every commercial break, they will do just fine without you. Too much trading could be why your investments aren’t growing.

3. Don’t buy and sell based on news headlines, boredom or tips

The news is there to sell more news. It’s not intended as investment advice. Let’s look at a few headlines that might have made you sell your stocks:

  • North Korea is going to flatten us with their missiles.
    Didn’t happen. The stock market continues to grow. If it does happen, our investment returns won’t be our biggest worry.
  • We are running out of oil, the world is doomed!
    Lots still available! In fact oil prices were negative just a few months back. Couldn’t give the stuff away.
  • The 2008 Financial Crisis will decimate stocks.
    It did for a while. Since then they have grown 292%. Thankfully you didn’t sell and miss all of that. Did you?
  • The volcano in Eyjafjallajökull Iceland will wipe out airline stocks!
    Hard to spell and it did suspend flights, but planes are back and flying.
  • Financial expert says get out of the markets now!
    This is a permanent-headline. Like the sign at a bar that says free beer tomorrow. Ignore it.
  • If Trump gets in, the stock market will implode.
    Actually markets rose 9.6% in his first 4 months.
  • If Biden gets in, the stock market will implode.
    Actually markets rose 13.6% in his first 4 months.

In other words, headlines don’t have a great track record of predicting stock markets. Even if you get out at the right time, how will you know to get back in at the right time? Build a quality portfolio and then let it grow.

Warren Buffett’s quote tells the story

“The stock market is a device to transfer money from the impatient to the patient”. Print this off, cut it down to size and Scotch tape it to the screen of wherever it is that you buy and sell stocks. It’s like taping a picture of either your fat self, or the movie star you want to become, to your fridge door.

A Dalbar Inc study showed that for the twenty years ending in 2015, the S&P 500 averaged growth of 9.85% a year, while the average equity investor earned a market return of just 5.19%. The reason is human emotion. Greed. Fear. The fun of hitting the buy and sell button. The craving to lock in wins. The panic to avoid tragic losses. Resist! Keep a qualified financial advisor in between you and your investments. Or develop the discipline to buy and hold. It works.

If you have dividend stocks with a dividend reinvestment program in place, you may learn to love the dips in stock prices. Sound weird? I wrote about that here.

The conclusion – buy and hold for the long term. Think of that old adage that your investments are like a bar of soap. The more you handle them the smaller they get. It could be a big reason why your investments aren’t growing.

4. Stay properly diversified

Some companies do better when interest rates rise. Others are happier when they fall. Sometimes bonds do better than stocks, other times the reverse is true. The US markets might outperform Europe. or it may be the other way around for a period of time. The same is true of small company stocks vs large company stocks. Returns vary by industry as well.

All of this makes it very hard to consistently pick winners. And even if you pick a great stock in a growing industry in a booming economy with rising productivity and a powerful product advantage and great Super Bowl ads, it may all come crashing down when the CEO gets caught licking quarts of ice cream at the supermarket.

How to prosper? Invest with proper diversification by:

  • Asset classes – stocks, bonds and cash. Maybe some real estate.
  • Geography – exposure to the major economies
  • Duration in the case of bonds. Short, medium and long term
  • Company size – so called large caps and small cap companies
  • Industry type – tech, resources, consumer goods, financials etc

As an example of the first point, many people are terrified of the stock market and instead hold only cash, treasury bills, short term bonds and their wallet. As a result, they see terrible returns of under 1%. After tax they earn well less than inflation. That means that their money buys less every year. They lose by not investing. Here is a post about how to solve that one.

If this sounds complicated, get some help from a qualified financial advisor, or use Exchange Traded Funds to simplify diversification. As an example, part of my holdings are in Vanguard’s VTI Exchange Traded Fund. It holds over 3,600 companies in every industry. Well diversified. It has averaged over 8% annual growth since its inception and even pays a dividend. Combine that with a bond fund and you can build a solid portfolio. This is just an example, readers should do their own research prior to investing.

In short, if you are wondering why your investments aren’t growing, it could be that you aren’t properly diversified.

5. Don’t overpay for investment advice.

Many studies have been done about the ability of investment pros and fund managers ability to consistently outperform the market. The answer is that about 90% don’t. And you might be paying 1.5%, 2% or even more in fees for the privilege of trailing the market. The fees could be a combination of advisor fees, fund fees, commissions and other expenses. It can be a big reason why your investments aren’t growing.

How much does this matter? A lot. Those fees come right out of your returns and the effect compounds over time. Let’s take an example of an investor who invests $100,000, pays 1.75% in total fees and the investments earn 5% per year. Over 25 years, the investment would grow $238,635, but investment fees would add up to $116,176 and the investor would keep $122,460 or about half of the total return. Try some different scenarios on the excellent simulator at Larry Bates’ site here.

While that tool might whip you into a frenzy about investment fees, remember that for many people, an investment advisor can save them from blunders 1 through 4 above. The key is to ensure that you are getting more in value than you are paying in fees. Maybe that financial advisor stops you from selling during the start of the Covid crisis, thus keeping you in the market as it rebounded more than 50% in a year.

In summary, know how much you are paying in investment fees of all kinds and know your investment returns for each year. Compare your after fee returns to the benchmarks for each of your investment types – stocks, bonds etc.

Why your investments aren’t growing – the summary

Saving 10% or more of your income is a powerful step to wealth building. But the magic really happens when you have those savings invested and the results compound over time. If you are saving less than 10% look for ways to save more. There are lots of ideas in my blog on how to do that with minimal effort and sacrifice.

But it is just as important to make those savings grow. Select quality stocks and bonds (or funds) and then give them time to grow. Diversify your portfolio and align it with your risk tolerance. Then track your investment returns and fees for the last several years. If you aren’t growing as fast as the market, take the time to understand why not.

Which of these issues are hampering your investment growth? What are you looking to change? Please let me know in the comments.

Photo credit Pixabay.