This site is for entertainment purposes only. Nothing I write here or in the comments can be considered advice or guidance for investment decisions or, for that matter, any other decisions.
For professional advice, you should always consult an investment advisor (who will charge you a >1% AUM fee) and/or accountant (who will charge you a many times what TurboTax will).
The financial world is a scary place. Unless you’ve gone through the rigorous Certified Financial Planner (CFP) requirements of finishing undergrad with any major and eventually passing an exam with a 69% pass rate, there is no way you would be able to do something as complicated as buy an index fund, hold it for 40 years, and retire. That is crazy talk! Further, financial planners bring to the table years of invaluable experience with high-cost investing, a proven strategy for producing negative alpha. What’s alpha? I have no idea what I’m talking about! Sometimes I just start referring to Greek letters at random. You’d have to be crazy to take investment or tax advice from a random internet stranger!
The reason why you can trust investment professionals such as CFP’s is because they are held to a high standard known as the “Fiduciary Standard”. Here’s a quote explaining this standard from the CFP’s own website (link):
“The fiduciary standard of care requires that a financial adviser act solely in the client’s best interest when offering personalized financial advice.”
Financial planners are legally obliged to put the client’s best interests first, which is precisely why they generally charge 1% assets under management fee for the services rendered. With a 5% expected gross return on investments and a 2% rate of inflation, that 1% fee is equal to 1/3 of the investor’s real return of 3%. On a $1M portfolio, the 1% AUM fee equates to a $10,000 annual fee in exchange for value added services such as rebalancing (a process which takes 30 seconds/year) and allocating your money in high cost mutual funds (a process guaranteed to produce negative alpha). Given the legal protections that investors have with this “Fiduciary Standard” law, it makes sense to trust everything that financial advisors tell you!
Let me repeat, you are incapable of doing any of this yourself. I am making a grievous mistake for not using investment professionals to manage my finances. DO NOT REPEAT MY SAME MISTAKES. As you can tell from my blog, the cumulative effects of being frugal, strategically thinking about my taxes, and choosing investments that cost me less than 0.065% in total asset management fees is proving to be a disastrous recipe. By exposing my own finances, I’m providing hilarious entertainment to you on how to best NOT manage your finances and investments and taxes.
While we’re on the topic of full disclosure, in April of 2017 I signed up for an affiliate account with Amazon (http://amzn.to/2oydeJr) to defray some of the cost of running this blog ($9/month for hosting + domain). I’d honestly prefer you to borrow books from the library rather than fill up landfills, but if you are going to buy crap anyway, if you use this link I get cash. And if you sign up for Personal Capital (which charges a 1% fee to invest your money but 0% to use their software) both you and I get $20. If you don’t like the idea of the 1% fee proposed by Personal Capital, politely decline their management services and continue to use their free software.
3 thoughts on “Disclaimers”
Professor – Love the disclaimer section of your site. You had me rolling this morning. I will do my best NOT TO REPEAT YOUR MISTAKES of frugal living, optimizing taxes, saving, methodical low cost investing and patience.
If you come to your senses and want the name of a good CFP, let me know. 🙂
An appearance from the legendary Mr Zero! Happy to provide comedic relief occasionally.
This comment is not about your disclaimers (which are hilarious), but rather an attempt to contact you since I couldn’t find another way. If there is another way, I’m sorry for not looking hard enough!
My name is Joey, and I co-blog with my roommate at moneyandmegabytes.com, a blog about personal finance and computers. I also recently commented on your phones post, so thanks again for your responses!
I was wondering if you would be willing to write a guest post for us. We’re a relatively young blog, so the celebrity appearance would really help us out. The topic can be anything of your choosing (tax optimization, investing, frugality, philosophy behind your approach, etc), or even an excerpt/preview of your upcoming book! Our target audience is grad students/young professionals, but really a lot of our readers are just family and friends. If you’re interested, please send me an email. We would be honored to have you guest post! Thanks for your time.