Your Money Could Have Done Way Better

I always thought I was doing the right thing managing my finances.  I worked hard (step one) and lived below my means  (step two) and maxed out my 401k and investments (step three).

Turns out I did step three wrong.  Really wrong.

I invested in mutual funds a lot of the time.  I read the summary sheets, saw that they had five-star ratings from Morningstar, and saw the graphs always going up and making big money.  That was the way for me!

Turns out that all mutual funds have four or five star ratings.  The ones that don’t perform well are closed quickly and you never hear about them.  Therefore, all mutual funds are winners…….

At the end of each year, I would usually saw that I made money, but not as much as the overall stock market did.  I thought I was just a bad stock/fund picker, and that was why my returns were less.  I didn’t tell anyone because I felt bad about it.

Turns out I was losing much of my gains to mutual fund fees.  Hidden fees that don’t show up anywhere, except in the fact that your gains are less.

I also noticed that I always did better with my personal stock investment accounts.  This was the “fun” money, where I picked stocks with my son.  We picked stuff like Jack In The Box (his favorite), Disney (both our favorite), and Under Armour (because he wears it all the time).  This “fun” money did wildly, massively better on a percentage basis than the mutual funds.  And I was paying supposed “experts” to manage the mutual funds.

It turns out they aren’t experts.  On average, the fund managers underperform the stock market.

For years, there was a voice in my head and a feeling in my gut trying to tell me that conventional money advice was wrong.  Tax benefits of having a mortgage?  Not really.  I knew better.  Invest in mutual funds ran by someone you’ve never met?  It seemed wrong.

Listen to your gut.  It’s always right.

Read Tony Robbins’ new book “Money – Master The Game” and you’ll learn a whole lot about your money and how to manage it.  It’s probably the best thing you can do for your financial well-being.