There are two ways of investing in the stock
First, there’s the direct way—which is what
you’re doing (or if you’re new here, what you’re about
to do) through COL Financial or another online broker.
You choose what stocks to buy and sell, based on our
Truly Rich Club recommendations.
Second, there’s the indirect way—through mutual
fund companies. Yes, it’s easier because you just give
your money to them, and they have a fund manager
that invests the money for you. You don’t have to know
what specific stock to buy. For this service they provide
you, they charge a service fee of two percent a year.
I’ve opened both ways to you.
Which of the two ways do I prefer? Obviously, I
prefer the first way—to do it directly. Why? One of the
major reasons is this: Those service fees of mutual fund
companies build up over time and make your profits
I think Financial Guru John Bogle explains it best
when he says, “What seems inconsequential over the
short term becomes profoundly important over the long
term. Let’s assume we have a market return of eight
percent, and you reinvest all of your earnings. At the
end of 50 years, the dollar you invested is worth $46.90.
Now, let’s assume we take 2.5 percent in fees out of the
eight percent return. Your return drops to 5.5 percent.
At the end of 50 years that dollar grows to $14.54.”
In other words, that two percent fees a year is
small today but huge tomorrow. The difference between
$46.90 vs. $14.54 is not small.
At the end of the day, it’s really a question on the
kind of person you are. If you’re the person who wants to
MAXIMIZE your returns and are willing to do a little bit
of work yourself, invest directly. Follow SAM (Strategic
But if you want to do ZERO work and just entrust
your money to a fund manager, in exchange for the lesser
profits, then invest indirectly through a mutual fund
Different strokes for different folks. I know of some
people who want to delegate everything to a fund manager.
That’s fine. (I started there too.)
Pick the journey that fits you.
And whatever journey you choose, I’m here for you.
I’m praying for you, encouraging you, and cheering
Have an outrageously prosperous 2014.
May your dreams come true,
To join the Truly Rich Club, click Here