Speaker 1: Welcome to How the Money. I'm Joel, I'm Matt, and
Speaker 1: today we're discussing how fees will kill your retirement savings.
Speaker 1: That's right, Joel, my Norwegian hill host. I'm Padre. We're
Speaker 1: talking about investing fees, right, fees associated with investing. We're
Speaker 1: gonna talk about the different types of fees, how to
Speaker 1: look for those, uh, and then where to go where
Speaker 1: you can keep those fees. Loo. I think last week
Speaker 1: on an episode, Matt, you said that I had an
Speaker 1: interesting kind of gravelly voice because I was slightly under
Speaker 1: the weather. Oh yeah, I do recall, all right, So
Speaker 1: it turned out we did have sickness ravaging R ended
Speaker 1: up being pretty rough. Yea. So my girls they both
Speaker 1: had strap throat and then on top of it, my
Speaker 1: three year old had the flu as well. So kind
Speaker 1: of like double dose of terrible sickness going through and
Speaker 1: so I'm sure I caught a touch of that and
Speaker 1: my voice was a little bit off. Um, but I
Speaker 1: want you guys get the flu shot. I got the
Speaker 1: flu shot, but I because I get it for free
Speaker 1: of work, and I don't think the rest of my
Speaker 1: family did. And I probably should have like drugged them
Speaker 1: into a Kroger or something like that in order to
Speaker 1: get the flu shot. But we we just didn't. But
Speaker 1: at least at the end of the season. And it's
Speaker 1: too bad right now. Well, when we heard that, that
Speaker 1: was my first thought. I was like, the freaking flu crap.
Speaker 1: Did we get the flu shot? Because I figured they
Speaker 1: would have already caught it, to be honest, But I
Speaker 1: guess we nearly avoided that one because of the flu shot.
Speaker 1: I guess it was that same strain because most of
Speaker 1: the time, isn't it like slightly off, Like you get
Speaker 1: the flu shot and then it ends up being a
Speaker 1: different variety of flu that goes around. Yeah, sometimes the
Speaker 1: flu shot is only a certain percentage effective because they
Speaker 1: can't quite accurately predict the strains that are going to
Speaker 1: have to guess which he is going to be the
Speaker 1: one that yeah, the ones that's popular exactly exactly, Oh
Speaker 1: you're the cool string this year. But I wanted to
Speaker 1: mention to people in the case of strep throat, at
Speaker 1: least when we went to the doctor, we were able
Speaker 1: to you know, we got a prescription friend of my
Speaker 1: honor to fight the strip throat, And I wanted to
Speaker 1: let folks know about free and cheap medications, and in particular,
Speaker 1: there are certain places that offer much cheaper basic medication
Speaker 1: than others. And if you, uh, if you have a
Speaker 1: Publix near you, they're kind of the Southeast Regional grocery chain.
Speaker 1: You can get free antibiotics, which is really nice. So
Speaker 1: both girls were able to load up on antibotics for free. Yeah, Julian,
Speaker 1: you can get those antibotics all the time, right, It's
Speaker 1: not like it was just a special promotion that they're running.
Speaker 1: I mean they you can go there pretty much anytime
Speaker 1: get the antibotics you need. And you can get pet
Speaker 1: antibiotics there for free as well, so not just human
Speaker 1: stuff but stuff for your your your dogs. Yeah, so
Speaker 1: that's really cool. And there are lists online and we'll
Speaker 1: link to one of kind of where you can find
Speaker 1: cheap and and free prescriptions, like I know, Walmart has
Speaker 1: a four dollar list of prescriptions that they make available
Speaker 1: for for four dollars. And then you know, there's also
Speaker 1: a great app that you can use called good r
Speaker 1: X and you plug in the prescription that you want
Speaker 1: to find, and it essentially maps out your town and
Speaker 1: it says, well, it's eight dollars here and it's thirty
Speaker 1: two dollars here. You'll be amazed at the disparity in prices.
Speaker 1: So if you're loyal to one place to get your
Speaker 1: prescriptions filled, then in all likelihood you're paying too much.
Speaker 1: The only caveat is if you're getting your prescriptions filled
Speaker 1: at Costco, you're probably getting the lowest price almost every time.
Speaker 1: If that's where you're getting your prescriptions filled. Nice. The
Speaker 1: only other trick then if you're gonna do publics is
Speaker 1: to make sure that you don't end up kind of
Speaker 1: shopping around a little bit because your prescription is not filled.
Speaker 1: Because they're one of like the nicer grocery stores around us, right,
Speaker 1: they're a lot nicer than Aldi. Uh. I know that
Speaker 1: you can't get the same deals they got, all those
Speaker 1: buy one, get one deals, But as far as the
Speaker 1: the general stuff that we normally get, we've got suckered
Speaker 1: into kind of walk in the aisles a little bit
Speaker 1: because it hadn't quite unfilled. And I don't know, maybe
Speaker 1: we spent a little more money on groceries than we
Speaker 1: would have, but hey, we got the free antibiotics, so yeah, yeah,
Speaker 1: you're gonna pay a little more for groceries at publics.
Speaker 1: But uh, it is truly a nice place to shop,
Speaker 1: that's for sure. Um. All right, so let's get to
Speaker 1: the beer that we're having on the show real quick, Matt.
Speaker 1: Today we're drinking Mint to Guard. It's a beer to
Speaker 1: Guard agent red Wine Barrels from Brain Dead Brewing Company. Yeah,
Speaker 1: this one was sent to us by Jared. He sent
Speaker 1: us a several beers a couple of months ago. We
Speaker 1: had a Jester king on that you are a huge
Speaker 1: fan of Yeah, I fell in love with it, all right.
Speaker 1: So we'll get into our thoughts on this beer at
Speaker 1: the end of the show. But now, Matt, onto the
Speaker 1: topic of hand. We're talking about why fees are a
Speaker 1: retirement savings killer. And just a fee of like one
Speaker 1: percent in your retirement account that doesn't sound all that bad.
Speaker 1: One percent, right, Like that's that's almost negligible, it seems like,
Speaker 1: But it turns out that a fee of even just
Speaker 1: one percent could cost you, potentially depending on how much
Speaker 1: you're investing, over half a million dollars in actual money
Speaker 1: back to you over your investing lifetime. Fees not only
Speaker 1: a road how much money you have to invest now,
Speaker 1: but they've lessened the amount of money that's compounding in
Speaker 1: your account for all of the years that you're saving
Speaker 1: and investing. And it turns out that almost three quarters
Speaker 1: of folks have no idea what sort of fees are
Speaker 1: being charged inside of their investment accounts. And we have
Speaker 1: to change that, Matt. So let's putting up the subject
Speaker 1: of fees. Let's kind of get into it and help
Speaker 1: people learn what sort of fees are they're paying currently
Speaker 1: and then how to avoid them schedule. Nerd Wallet actually
Speaker 1: has a fantastic article that we're gonna link to in
Speaker 1: the show notes that breaks down all of this information
Speaker 1: and they've got some very helpful charts. But we're gonna
Speaker 1: share a quick example where as an investor, if you
Speaker 1: put five dollars a month into a brokerage account each
Speaker 1: year for thirty years, so that's a total of a
Speaker 1: hundred and eighty thousand dollars right say, over your working career,
Speaker 1: and during that time, say you're earning seven percent well
Speaker 1: with a one percent fee, that entire time, the value
Speaker 1: of your account will have grown to four hundred and
Speaker 1: eighty nine thousand dollars roughly. But get this, man, you
Speaker 1: would have lost nine eight thousand dollars to fees close
Speaker 1: to a hundred k just because of that one percent feet,
Speaker 1: which is massive. Yeah, that's messed up, man. And it
Speaker 1: just goes to show you that even and if the
Speaker 1: fees are higher, some people might be looking at like
Speaker 1: a one and a half or two percent feet And
Speaker 1: if that's the case, over your thirty year investing lifetime,
Speaker 1: you're talking about almost a hundred and eighty thousand dollars
Speaker 1: on a two percent fee. So fees matter greatly. And
Speaker 1: it is something that I think we're becoming a little
Speaker 1: bit more aware of, something that's talked about more and
Speaker 1: that's partly in thanks to the bigger low cost investment
Speaker 1: houses like Vanguard, Fidelity and Schwab. But you just don't
Speaker 1: want to end up in retirement with less money than
Speaker 1: you could have because fees were eating away at it. Yeah.
Speaker 1: The problem is too is it's just not something you
Speaker 1: think about, right, Like you don't look down the road
Speaker 1: and think, cool, how much less money am I gonna
Speaker 1: have because I'm not investing maybe quite as wisely or
Speaker 1: in the funds that I should be. I think a
Speaker 1: lot of times folks think, oh, I'm putting a lot
Speaker 1: of money away it's gonna be okay, right, Like I
Speaker 1: can sort of outsafe and out invests when I'm paying
Speaker 1: and fees, but you're still gonna lose that money if
Speaker 1: you have high fees. And again a small fee doesn't
Speaker 1: seem like a huge deal, but they are the biggest
Speaker 1: problem and a huge differentiator with how much wealth you
Speaker 1: will actually have when you do reach retirement, of course,
Speaker 1: all other factors being equal. Yeah, Matt. So there's this
Speaker 1: company called morning Star, and what they do is they
Speaker 1: track and rank different funds according to their performance. And
Speaker 1: they did a study a few years ago. They have
Speaker 1: these morning Star, these vaunted morning Star ratings, and it's
Speaker 1: a star system and they found out, according to their study,
Speaker 1: that the costs associated with a fund is actually more
Speaker 1: important than having a higher morning Star Star rating had
Speaker 1: a larger impact on how successful that fund was and
Speaker 1: on investor return. So, if you're looking to invest in
Speaker 1: the stock market and you're looking at the morning Star
Speaker 1: Star system, which you should, I mean, I think morning
Speaker 1: Star is helpful. I think they rank funds. Well, should
Speaker 1: you just say morning Star system? You probably should? Yeah, yeah,
Speaker 1: I just get it out quickly. But I just thought
Speaker 1: that was interesting that they basically said that fees are
Speaker 1: more important than the star system that they have so
Speaker 1: much invested in, so much tied up in. And so
Speaker 1: I think morning Star is, you know, a great place
Speaker 1: to research funds, but fees and those matter more than
Speaker 1: than even the star rating. And so that's something that
Speaker 1: many people found shocking when that study was released. And
Speaker 1: I just think it's something that just quantifies exactly how important,
Speaker 1: you know, fees are too individual mom and pop investors
Speaker 1: like us and like you know, people listening to this
Speaker 1: show that that want to just invest inside of their
Speaker 1: four O and K I A. It only accentuates the
Speaker 1: fact that they should be paying even more close attention
Speaker 1: to to the fees that are inside of those investments. Yeah, Joel,
Speaker 1: But the good news, like you're you're saying though, is
Speaker 1: that fees are in decline as low cost brokerage firms,
Speaker 1: they've gotten more popular, they've gained prominence, uh, and they
Speaker 1: are wanting investors to know more and specifically it's it's
Speaker 1: sort of like a race to the bottom as far
Speaker 1: as like what the fees are going to be with
Speaker 1: the different big brokera ch Hosses, I think of Vanguard
Speaker 1: and Fidelity, they're essentially anytime they release something new, it's
Speaker 1: to compete with a specific product. That's like rock and
Speaker 1: socking robots constantly right now between the two of them exactly.
Speaker 1: And most recently, I guess was last year Fidelity they
Speaker 1: dropped the expense ratios on a certain line of funds
Speaker 1: down to zero, like completely zero, where there is no
Speaker 1: cost associated with maintaining those funds at all. So after
Speaker 1: the break, we're gonna talk about the different types of
Speaker 1: fees associated with investing, as well as how to find
Speaker 1: those fees that are hiding in your investments. Stick around
Speaker 1: for that, all right, Matt, we're back from the break
Speaker 1: and let's get into the types of fees. But before
Speaker 1: we get to that, I didn't want to just say,
Speaker 1: just to give a little bit more of a mental picture.
Speaker 1: When I think about fees, I think of termites. And
Speaker 1: it turns out that termites can be eating away at
Speaker 1: the wood in your house for years before you even
Speaker 1: notice that they're there, before you notice that they're having
Speaker 1: an impact, and all of a sudden, you know, your
Speaker 1: foot goes through the floorboard and it's like boom. Instantly
Speaker 1: you know the you have a problem and that the
Speaker 1: termites are are eating through your house and you've got
Speaker 1: to get an exterminator out there. And fees can be
Speaker 1: like that. They can be kind of this silent killer
Speaker 1: that you don't see, and that's out of sight, out
Speaker 1: of mind, and you don't even realize that it is
Speaker 1: ruining your retirement savings because of like the examples we
Speaker 1: mentioned just above, it can be costing you fifty a
Speaker 1: hundred thousand or more over the life of your investment.
Speaker 1: So let's get into the specific types of fees that
Speaker 1: are common and the and we'll talk about how to
Speaker 1: look for fees inside of your retirement account so that
Speaker 1: you can figure out how to eliminate them. Yes, Joe,
Speaker 1: let's dive into it. Just keep in mind that this
Speaker 1: is not going to be an exhaustive list where we
Speaker 1: name every single fee. We're gonna kind of cover some
Speaker 1: of the more prominent ones, some of the ones that
Speaker 1: take the biggest bite out of your investments. So on
Speaker 1: that note, let's start with brokerage fees. These are the
Speaker 1: fees charged by the broker that holds your investment accounts.
Speaker 1: We have talked about this recently, but just think of
Speaker 1: them as the custodian of that account. To take for example,
Speaker 1: of Vanguard, they have a twenty dollar a year fee,
Speaker 1: which isn't huge at all unless you meet certain investing
Speaker 1: thresholds and then they eliminate it. Yeah, or I mean,
Speaker 1: and you can meet those thresholds as well by just
Speaker 1: receiving your statements via email, so it's not difficult at all.
Speaker 1: But then you've got Fidelity as well, and they've decided
Speaker 1: that they're not going to have any fees at all. Again,
Speaker 1: Rock and Stock and robots, they're trying to take each
Speaker 1: other down. Yeah, it's actually interesting pouring over the fees
Speaker 1: like brokerage fees and and the other fees that that
Speaker 1: investment firms charge. I was looking at Vanguards and Fidelities specifically,
Speaker 1: and honestly, Fidelity is not only doing better on some
Speaker 1: of the specific fund fees now, but they're doing better
Speaker 1: on pretty much every single other fee associated with investing
Speaker 1: if you go with them. And so, yeah, Fidelity has
Speaker 1: just really picked up the pace in the last year
Speaker 1: and a half two years. And I love Vanguard. Yeah,
Speaker 1: you and I both are a huge trans vant guard,
Speaker 1: but Fidelity, man, it's like winning my heart. It's uh
Speaker 1: they're doing a really impressive thing. So those are still
Speaker 1: both just great companies with with low fees, and we'll
Speaker 1: talk more about that in a little bit. So other
Speaker 1: types of fees that you might encounter when investing is
Speaker 1: something called a load, and there can be front end loads,
Speaker 1: there can be back end loads. These are charges or
Speaker 1: commissions paid to the salesperson who sells you the fund
Speaker 1: or like a broker if you're going like going through
Speaker 1: a broker with your investments as well. Yeah, and so
Speaker 1: these are things that you need to watch out for
Speaker 1: because let's say you're putting in a thousand dollars, well,
Speaker 1: they might take out a certain percentage you're right off
Speaker 1: the front end or off the back end when you
Speaker 1: sell that investment, and and those loads can massively impact
Speaker 1: the returns that you see because that's just an other
Speaker 1: fee that's hanging out. Another fee. Trade commissions. These are
Speaker 1: the costs association with buying and selling stocks or e
Speaker 1: t f s. So if you're with a company like
Speaker 1: e Trade, the minimum that you're looking at spending with
Speaker 1: a purchase or a sale is five bucks, and that's
Speaker 1: only if you meet the threshold of something like thirty
Speaker 1: transactions per quarter or something like that, and it could
Speaker 1: be even more depending on who you're with. That is
Speaker 1: not a fee that you need to be paying when
Speaker 1: you can buy and sell for free. So just keep
Speaker 1: in mind that the more often that you buy and sell,
Speaker 1: that's gonna impact how much money you have to actually
Speaker 1: invest in actual funds or stocks. So you do not
Speaker 1: want to be buying and selling constantly, uh, and you
Speaker 1: do not want to be with a provider who charges
Speaker 1: you for trade commissions. And the most talked about type
Speaker 1: of fee now, Matt, I feel like it's expense ratios
Speaker 1: because this is where the Rockham stock on robots is
Speaker 1: hitting like full bore, and we've just seen expense ratios
Speaker 1: fall massively over the last few years. So typically, especially
Speaker 1: with the low cost providers, it's that fee that you'll
Speaker 1: see touted the most frequently, and especially with Fidelity right
Speaker 1: now because they have those zero percent funds and will
Speaker 1: link to those in the show notes. But there's a
Speaker 1: few funds in particular that they offer that don't have
Speaker 1: any expense ratio on top of not having any of
Speaker 1: these other fees that we're talking about, So really it
Speaker 1: is like you're investing for free. Yeah, it's Scott Clean
Speaker 1: costing you nothing exactly, And so expense ratios are something
Speaker 1: you want to look at. And it's really hard to
Speaker 1: say what a good expense ratio is. Now when you
Speaker 1: think about the fact that you can invest for free,
Speaker 1: it kind of makes anything else look expensive, right honestly, yeah,
Speaker 1: it does. Yeah, But I think if you're interested in
Speaker 1: funds that have an expense ratio of point to five,
Speaker 1: maybe point three oh or or less, then those are,
Speaker 1: in all likelihood funds that at least aren't runaway with fees.
Speaker 1: You want to be cognizant of your fees. But it's
Speaker 1: also okay to realize that even though fidelities offering it
Speaker 1: for free, there are a lot of other great institutions
Speaker 1: that you can do business with that don't have free
Speaker 1: expense ratios, but they do provide low cost expense ratios,
Speaker 1: and that's what you want to prioritize. And then lastly, Joe,
Speaker 1: we're gonna touch on the management fee. And typically this
Speaker 1: is an annual fee from an investment advisor that can
Speaker 1: also be from a robo advisor, like if it's not
Speaker 1: an actual human being, but if it's a person, typically
Speaker 1: they charge by the percentage of assets under management, or
Speaker 1: you know, sometimes there's a flat rate as well. But
Speaker 1: think of it. Maybe it's sort of like the cost
Speaker 1: of admission, right like just to be seen by that
Speaker 1: advisor or just to be able to use that robo advisor,
Speaker 1: there's a price you gotta pay. Sometimes it's an expense
Speaker 1: or a feed that might be worth it depending on
Speaker 1: your personal situation. Yeah, there's some great robo advisors to right,
Speaker 1: and we talked about that in a recent Listener Question
Speaker 1: episode that you know, robo advisors have a lot to offer,
Speaker 1: especially for investors that just don't feel comfortable going to
Speaker 1: d I Y route. Um. We we we like a
Speaker 1: lot of robo investors. But the thing is you're gonna
Speaker 1: pay a little bit higher of a fee. But I
Speaker 1: think you're right, like a little bit higher of a
Speaker 1: fee as long as it's not astronomical, which most robo
Speaker 1: advisors it's point to five point three oh something like that,
Speaker 1: which which is within the realm of normalcy, and and
Speaker 1: it's okay. I think those are decent options for a
Speaker 1: lot of investors. Yeah, it's just good to know that
Speaker 1: those are being taken out right, Like you need to
Speaker 1: be aware are these fees, and that's what we're gonna
Speaker 1: talk about next, actually, is how to look for those fees.
Speaker 1: And Joel, you're gonna kick that off. Yeah, we just
Speaker 1: mentioned robo advisors, but then also you might have a
Speaker 1: financial advisor down the street who who you work with,
Speaker 1: and their fees are just going to be higher than
Speaker 1: a robo advisor fees are. And their fees typically if
Speaker 1: they are a fee only advisor, are going to be
Speaker 1: a percentage of assets under management. One percent is kind
Speaker 1: of an average amount. They might charge you a flat
Speaker 1: rate to sit down with them every year. But then
Speaker 1: there are other advisors who might take advantage of you
Speaker 1: with loads and commissions and brokers fees. And so the
Speaker 1: quickest way to look out for fees in your own
Speaker 1: retirement account is to ask the question, especially if you're
Speaker 1: working with an individual who manages your assets. If you
Speaker 1: have a financial advisor, do you know how they get paid?
Speaker 1: And if you don't ask, there was a rule called
Speaker 1: the fiduciary rule that was supposed to go into place
Speaker 1: last summer and then it kind of got slapped down.
Speaker 1: So slap down by the courts. Yes, So it's a
Speaker 1: huge bummer because that is a standard that I think
Speaker 1: all investment professionals should be required to meet, which means
Speaker 1: that when they have you as a client, everything they
Speaker 1: do is in your best interest. And now they don't
Speaker 1: have to meet that standard, certain investment professionals still hold
Speaker 1: themselves to that fiduciary standard, and if they do, they
Speaker 1: will typically put that wording on their website or or
Speaker 1: let you know up front. Just make sure you ask
Speaker 1: that question, because if they are, there's a greater chance
Speaker 1: that the fees aren't going to be as outrageous and
Speaker 1: they're not gonna be as hidden. But you want to
Speaker 1: ask about the fees that you're being charged to your
Speaker 1: investment professional if you have one. So if you aren't
Speaker 1: sure what fees are are being taken out of your account,
Speaker 1: it's best to ask the question of whoever you're working with,
Speaker 1: And if you don't have a financial advisor and you
Speaker 1: just have like a four one K or an I RA, Matt,
Speaker 1: how can you figure out what fees are paying inside
Speaker 1: of you know, one of those vehicles. First of all,
Speaker 1: if you are with a big bank, or even worse,
Speaker 1: maybe if you're with an insurance company, it's likely that
Speaker 1: you are paying higher than average and potentially ridiculous fees
Speaker 1: could be catastrophic, yeah, really really bad. So what you
Speaker 1: want to do in those situations are to ask for
Speaker 1: the disclosures. And chances are I think a lot of
Speaker 1: don't actually know what their fees are because in those
Speaker 1: situations where you have your retirement or you have account
Speaker 1: set up through your work, it's it's hands off, right like,
Speaker 1: that's sort of one of the benefits is that you've
Speaker 1: got HR. That's something that they've done for you, and
Speaker 1: you think, cool, I can get back. We're all in
Speaker 1: this together, me and all the employees here. You know,
Speaker 1: we're all investing and doing what we're supposed to do.
Speaker 1: But what you may not realize is that you all
Speaker 1: might be paying way too much. So ask for that disclosure.
Speaker 1: If the fees are high, go to HR and then
Speaker 1: ask them to shop around to other providers um or
Speaker 1: at least to include lower cost index funds inside of
Speaker 1: the plan that you're offered. You can also use a
Speaker 1: site like bloom and that's actually it's spelled b l
Speaker 1: o o oh um. There's three oh three oh oh,
Speaker 1: and they can perform a free analysis of your four
Speaker 1: one K in five minutes. And it's totally free. Yeah,
Speaker 1: I love that. And there's another website fee x f
Speaker 1: e x uh it's all peak. Yeah, it's also another
Speaker 1: great spot. Until both of these companies can kind of
Speaker 1: review your investments and they take a specific look at
Speaker 1: the fees are inside of them. So if you're having
Speaker 1: trouble pinpointing the fees within your own retirement plan, it's
Speaker 1: worth checking out one of these sites and kind of
Speaker 1: and kind of getting an analysis and seeing, like for free,
Speaker 1: you know, how bad is the picture we're looking at
Speaker 1: when it comes to the fees. And once you know
Speaker 1: exactly the fees that you're paying, it gives you the
Speaker 1: ability to make some changes and and to opt out
Speaker 1: of being in funds or doing business with companies that
Speaker 1: just charge outrageous fees that are ultimately going to hinder
Speaker 1: your ability to save for the future. So, Joel, your
Speaker 1: example earlier about the termites made me think of another example. Right, So,
Speaker 1: like in your example, the termites are more of a
Speaker 1: hidden fee. But I think sometimes we might even realize
Speaker 1: that there's a fee there and people just kind of
Speaker 1: coast along with it. So do we have another animal
Speaker 1: reference to give? Not animal, but I'm thinking of like
Speaker 1: taxi cabs, like taxis, they cost a good chunk of money.
Speaker 1: Now that we have Uber and lift to people still
Speaker 1: take taxic cab, Yes they do, but then they cost
Speaker 1: a lot of money. And that's the thing I think.
Speaker 1: Sometimes folks are just so used to doing what they've
Speaker 1: always done. Or if you're in like a big city
Speaker 1: like New York, you order a car right like, I
Speaker 1: don't know, a black car or something like that. I've
Speaker 1: heard it said before. I've ever done that. But if
Speaker 1: you're fancy fancy people, But why would you continue to
Speaker 1: do that when there's technology, uh and companies that have
Speaker 1: lowered the price and have made it easier and way
Speaker 1: more affordable to get what you need done while saving
Speaker 1: a lot of money. So that's what I think of.
Speaker 1: I guess when it comes to feast, like, yeah, you
Speaker 1: can continue to go to your local advisor who's going
Speaker 1: to charge you every time you know, he sells you
Speaker 1: a certain fund and then on top of that, those
Speaker 1: funds are going to have high expense ratios. Oh and
Speaker 1: by the way, there's gonna be an assets under management
Speaker 1: fee as well. That's kind of the old school model, right,
Speaker 1: It's sort of like a taxi cab you're gonna pay
Speaker 1: a little a little bit more for like the for
Speaker 1: the yellow checkered cab. Or you can just whip out
Speaker 1: your phone, go to that app and hail a ride
Speaker 1: and it's gonna show up. And then you're not gonna
Speaker 1: waste a lot of money on fees that you didn't
Speaker 1: need to spend. Okay, now that you've given that, Yes,
Speaker 1: there's one more that I've got and this hit me
Speaker 1: with it. This one has another animal reference. So it
Speaker 1: makes me think too if you said doing things that
Speaker 1: what you've always done it, And it makes me think
Speaker 1: of that that example of a bull frog in a
Speaker 1: pot of boiling water. Yes, if you start the bullfrog
Speaker 1: off and he's in a pot of cold water and
Speaker 1: you turn up the heat gradually all the way to boiling,
Speaker 1: he will stay in that pot of water and he
Speaker 1: will just die. But if a bullfrog is plopped into
Speaker 1: a pot of boiling water, he'll jump out and he'll live.
Speaker 1: So I think, if you're someone who's been investing for
Speaker 1: years and years and years, and maybe you have an
Speaker 1: investment professional that you work with, but you might feel
Speaker 1: comfortable doing it on your own. You just haven't made
Speaker 1: the plunge. Well, you're like that bullfrog that is eventually
Speaker 1: getting boiled to death because of those fees are are
Speaker 1: are crushing you and crushing your returns over time. So
Speaker 1: all right, I like it. Another good example. I think
Speaker 1: I think your metaphor might win in this case. That's
Speaker 1: really good. But doesn't have to be a bull frog,
Speaker 1: and it'll be like a tree frog. The tree frogs
Speaker 1: are the cute ones. They're like the like the neon
Speaker 1: green with a little web. They got all the cool colors.
Speaker 1: That's true. I don't know if they all have the
Speaker 1: same reaction. That's a good question. But but yeah, that
Speaker 1: actually don't even know if that's true. But it's a
Speaker 1: story that you hear and it makes sense in your minds,
Speaker 1: and that's all that matters, exactly exactly. So if you're
Speaker 1: someone who has been suffering these fees and you know
Speaker 1: that they're there, well maybe this is kind of the
Speaker 1: kick in the pants because you realize now that fees
Speaker 1: are actually a huge drag on your returns and you
Speaker 1: don't want that to be the case any longer. That's right, man.
Speaker 1: So next we're gonna talk about where to go in
Speaker 1: order to keep your fees and costs low. We're gonna
Speaker 1: talk about that right after the break. All right, Matt,
Speaker 1: we're back from the break, and now we have to
Speaker 1: talk about where you actually go in order to keep
Speaker 1: fees and costs low. I like that, go go. That's
Speaker 1: perfect interesting annunciation on my part, that's for sure. So
Speaker 1: there are a few companies in particular who seem just
Speaker 1: wholly dedicated to low costs investing, and of course that
Speaker 1: means that we're fans of them, right, So, Vanguard Fidelity
Speaker 1: and in One those are our favorites, and I think
Speaker 1: those are the ones worth checking out in particular. And Matt,
Speaker 1: you actually just switched to m one because you love
Speaker 1: their platform and their lack of fees so much, and
Speaker 1: you wrote an article about it on our site. Right yeah,
Speaker 1: Joel m One Finance, I'm a I'm a huge fan
Speaker 1: of them now. I mean, we've believed in them for
Speaker 1: a while now, but neither of us have actually given
Speaker 1: them a shot. I finally bit the bullet and switched over. Obviously,
Speaker 1: we're talking about fees. They don't have any fees associated
Speaker 1: with using their platform, associated with any trading at all.
Speaker 1: They also have those pie charts that allow you to
Speaker 1: sort of pick a like a predetermined default approach to
Speaker 1: how you want to invest. It allows you to keep
Speaker 1: your assets, you know, allocated properly like you want to.
Speaker 1: And dude, you know what their app is actually really
Speaker 1: great as well. Vanguard it's pretty archaic. Yeah, it's not
Speaker 1: so great. Fidelity is a little bit better. But M
Speaker 1: one I'm a big fan of it's it just works
Speaker 1: really well. It does everything I wanted to do. So
Speaker 1: because of that, man, I'm a huge fan and would
Speaker 1: recommend it to anyone that is looking to you know,
Speaker 1: cut fees, but also within one you know, you have
Speaker 1: a huge selection of funds that you can choose from.
Speaker 1: So I'm gonna convince you, Joel, to actually switch over
Speaker 1: pretty soon as well. All right, we'll see, we'll see
Speaker 1: what happens. Oh, here's a wager. Well, I get you
Speaker 1: to switch over to M one before you get me
Speaker 1: to switch over and join a warehouse club. That's a
Speaker 1: good question. I have a feeling that in our upcoming
Speaker 1: warehouse club debate, you're gonna make the switch. But we'll see,
Speaker 1: we'll see. I'm pretty subborn though, you know that's true.
Speaker 1: That's true. All right. So uh. Interestingly enough, there was
Speaker 1: an interview recently with the CEO of Vanguard, and he
Speaker 1: stated that active investing, which instead of buying an index fund,
Speaker 1: that means buying and selling stocks that you find valuable.
Speaker 1: And I know most of us, like Matt and I,
Speaker 1: we don't really do that, and and I know most
Speaker 1: of the people that listen to this show don't do
Speaker 1: that either. If you are into doing the research and
Speaker 1: buying and selling stocks that you think makes sense for
Speaker 1: your portfolio, well, the CEO of Vanguard said, active investing
Speaker 1: is actually getting better and easier, and that's because fees
Speaker 1: are starting to lessen, and Vanguard has also been a
Speaker 1: part of the forefront of that push. So if you
Speaker 1: are kind of headed in that direction towards choosing your
Speaker 1: own stocks as opposed to investing mostly in index funds
Speaker 1: like Matt and I do, well, that's good news too
Speaker 1: for you that fees are lessening there, and in particular,
Speaker 1: when you're looking at M one or somebody like Robin
Speaker 1: Hood and your your individually trading stocks, well the fees
Speaker 1: are not non existent. That means that you're getting the
Speaker 1: returns and not some guy in a suit on Wall
Speaker 1: Street which is great, okay, Joe. So we've now discussed
Speaker 1: the low cost investment sort of platforms and the different
Speaker 1: brokerages that you can invest through. But now let's discuss,
Speaker 1: you know, what funds you should choose to ensure that
Speaker 1: you're getting the lowest fees. Let's do it. Yeah, e
Speaker 1: t f s. They are a solid choice essentially, you know,
Speaker 1: they're similar to index funds, but you trade them like stocks.
Speaker 1: They're kind of like little slices of mutual funds. In general,
Speaker 1: index funds are are going to be the best choosing
Speaker 1: a total stock market or SMPI index fund in particular
Speaker 1: with one of the companies we mentioned. That's why you
Speaker 1: can keep costs low if non existence, and it also
Speaker 1: keeps it really easy. It's a way that you can
Speaker 1: just stay widely diversified with minimal effort. Yeah, you know,
Speaker 1: I found it interesting as i as I did a
Speaker 1: little research for this episode to Matt that in X
Speaker 1: funds which track the same thing, even the costs associated
Speaker 1: with an index fund through different companies can vary widely.
Speaker 1: And so let's just take for example, two of the
Speaker 1: top index funds that track the smp five hundred and
Speaker 1: one is from Spider and one is from Vanguard. They
Speaker 1: both have in actuality pretty low fees associated with them,
Speaker 1: but the one from Spider is three times the cost
Speaker 1: of the one from Vanguard. And when you're comparing even
Speaker 1: those two really low cost funds that mirror the same index.
Speaker 1: Take for example, what you mentioned Matt as well, Fidelities
Speaker 1: total stock market index fund is is a zero fee.
Speaker 1: So just make sure you're prioritizing fees even when it
Speaker 1: comes to investing in those low cost options, because the
Speaker 1: fees can vary largely even inside of something that's already
Speaker 1: low cost. Yeah, Juel, you know you should make fees
Speaker 1: a primary reason for what you decide to invest in,
Speaker 1: but not the entire reason. It's still a big part.
Speaker 1: But just don't only consider your fees. You need to
Speaker 1: have a plan when it comes to your approach to investing.
Speaker 1: And if you're currently with an investment house or a
Speaker 1: broker that charges high fees, just keep in mind that
Speaker 1: it's not that hard to switch. Just go to how
Speaker 1: to money dot com forward slash M one. That's where
Speaker 1: you can find my right up in my experience with
Speaker 1: switching over to M one. Yeah, if you've been listening
Speaker 1: to this episode and you're like, oh, man, I know
Speaker 1: I'm being charged some of those fees. I know that
Speaker 1: I'm not in the lowest cost options, whether it means
Speaker 1: that you're just investing in a slightly higher cost UH
Speaker 1: index fund, or whether that means that you're with a
Speaker 1: full commission stock brokerage and you know that you need
Speaker 1: to get out in order to ensure that more of
Speaker 1: your money stays working for you as opposed to, you know,
Speaker 1: going to align the pockets of of the investment firm
Speaker 1: that you're with. Well, it isn't all that hard to
Speaker 1: go away, and I know sometimes people take into account
Speaker 1: the personal relationship they have with an investment professional that
Speaker 1: they've been working with. Most of the time, you can
Speaker 1: just contact the new platform or provider that you you
Speaker 1: want to go with, let's say it's Vanguard or let's
Speaker 1: say it's in One, and they will help make that
Speaker 1: switch seamless for you and help you answer over to
Speaker 1: something that's going to be way better for you over
Speaker 1: the coming years. And so you don't want to be
Speaker 1: like we mentioned earlier that that frog in the boiling
Speaker 1: water that's just getting accustomed to being feed to death.
Speaker 1: You want to take a proactive approach to the fees
Speaker 1: that you're being charged inside of your retirement account because
Speaker 1: it's your money, and you know what, at least now
Speaker 1: you know how bad fees are and exactly how much
Speaker 1: they're impacting the returns that you're gonna see. That's right, Joel.
Speaker 1: So let's get back to the beer. This is a
Speaker 1: beer from brain Dead Brewing and these guys are out
Speaker 1: of Dallas, Texas. I don't know if we mentioned that
Speaker 1: earlier on but sent to us by Jared and he
Speaker 1: actually works there. What are your thoughts on this? Sper Man? Well,
Speaker 1: first side note, the best barbecue of my life that
Speaker 1: I've ever had came from Dallas, Texas. Yeah, and but
Speaker 1: I need to go to more spots in Texas and
Speaker 1: try more barbecue. That's a goal that I have. But
Speaker 1: this beer, I thought, Man, it was really really good,
Speaker 1: super interesting, unlike anything we've had on the show before.
Speaker 1: Aged in red wine barrels, and I feel like you
Speaker 1: totally got a little bit of of that barrel and
Speaker 1: a little bit of that kind of red wine flavor
Speaker 1: shining through, because this beer is like really like a
Speaker 1: farmhouse beer, and I think Asian red wine barrels. It's
Speaker 1: got this really really nice, harmonious, balanced flavor that was
Speaker 1: imparted to it, and I really enjoyed it. And man,
Speaker 1: these I feel like brain Dead. I've never even heard
Speaker 1: of them until Jared sent us a couple of bottles,
Speaker 1: but I really like what they're doing. Yeah, definitely a
Speaker 1: big fan as well. I'm with you though, like it's
Speaker 1: got that farmhouse flavor but without a lot of funk.
Speaker 1: You know, it's not like a funky farmhouse and the
Speaker 1: flavors I get from like those wine barrels. It's less
Speaker 1: of like the wine flavor. It's more of like the
Speaker 1: dryness that you get out of a red wine with
Speaker 1: sort of like that oak. And I was smelling it
Speaker 1: and it kind of smells like pineapple for whatever reason.
Speaker 1: To me, it smells like kind of almost tropical, like
Speaker 1: it's got this acidity like fruitness to it. But it
Speaker 1: drinks real mellow like a barrel aged farmhouse just like
Speaker 1: it is. So I don't know this. This is a
Speaker 1: fantastic beer. We've had a few of the others as well,
Speaker 1: and they were all really great. So, man, if you
Speaker 1: are in Dallas, need to be checking out brain Dead brewing. Yep,
Speaker 1: let's go to Dallas and uh it up in person.
Speaker 1: I'm totally up for that, all right, so quickly, Matt,
Speaker 1: let's get to our final thoughts. I have one final thought.
Speaker 1: Pay attention to the fees and your retirement Again's all
Speaker 1: you need to do. That's all we got to say.
Speaker 1: Look at what you're paying to invest for your future.
Speaker 1: If you are paying a lot, you're gonna have a
Speaker 1: lot less money in the end. Wake up, pay attention,
Speaker 1: make sure that you know what your fees are, how
Speaker 1: you're being feed and charged, and then make sure you're
Speaker 1: taking the steps to work towards paying less of those fees.
Speaker 1: And it's never been easier to pay less in fees
Speaker 1: than it is now. So many good options and uh yeah,
Speaker 1: so we'll link to those in the show notes, and
Speaker 1: uh to find those show notes, you can check out
Speaker 1: our website how to money dot com. And if you
Speaker 1: enjoy this episode and found it helpful, we would love
Speaker 1: to hear from you our listeners. Head over to Apple
Speaker 1: Podcasts and leave us a review. We'd appreciate it. Yeah.
Speaker 1: If you think we've got work to do, we need
Speaker 1: to get better, go to how the money dot com.
Speaker 1: Slash do better and drop us the line there. We
Speaker 1: appreciate your constructive criticism too, and so joel. Until next time,
Speaker 1: Best friends out, best friends out, best friends out, m
Speaker 1: M m