Efficiency
Excess fees / expenses KILL portfolio returns.
THE BIGGEST MYTH about management fees is that they are “only 1%” or so, it's negligible.
Advisors say: “I EARN my fees because it’s great advice” - except we now KNOW that traditional allocation DOES NOT WORK!
NOW, i hear the “unaware” investors say “It’s only 1% I always chuckle. They may actually be 1% for example. But it isn’t 1% of your return, IT’S 1% OF ALL OF YOUR ASSETS - IN UP AND DOWN MARKETS.
Example 1: If your “advisor” recommends a 70/30 allocation, you can expect 69% of the S&P 500 return in an UP year. BUT, when you add that 1% fee to the equation, your return drops to 58% of the S&P 500. If it’s a DOWN year, the expected 87% of the S&P 500 increases to 97% of the S&P 500 return.
So NOW… the fees that your advisor earned have changed your financial dynamics to where you get 58% of the upside and 98% of the downside.
THOSE NUMBERS ARE TERRIBLE. THE STATS PROVE IT CAN NEVER WORK AS THE ODDS ARE AGAINST YOU. THE LONGER YOU PLAY THE MORE YOU FALL BEHIND.
Think about it:
In bad years (and I’ll only show 1 example)
100k * 15% LOSS = $85,000 less fees of 1% $925 = $84,075.
So, it COST you $925 to LOSE $15,000. or INCREASE the LOSS from 15% to 15.93%
YOU CAN'T WIN DOING IT ALONE - YOU REALLY CAN'T WIN PAYING SOMEONE TO HELP YOU DO IT!!
You need SSIM.
We’ll show you the light.