This is a story of how I beat the market.
My name is Grant and I’m a regular guy who for one reason or another became interested in investing money in stocks. I thought it would be a good idea to save money for a nest egg to use when my wife and I retire and also to help pay for my son’s education.
Anyway, some of you may have similar reasons for investing in stocks. So I’m sure you can relate. Since I didn’t know much about investing in stocks, I decided to hire a financial advisor. So I started contacting some local “financial advisors” by using Google and from recommendations of family and Dave Ramsey (a pretty well-known financial and debt advisor). I made a list of questions to ask these advisors that I met.
One of the most important questions for me and seemingly least important for them was “What annualized return have you made in the last 5-10 years of investing your own personal money?” When I asked this question, you should have seen some of the looks I got. Some of the financial advisors got really uncomfortable, others got really vague, and quite a few just flat out ignored the question or beat around the bush until it was clear that they weren’t going to honestly answer it. Call me crazy, but if you’re a personal trainer, I expect you to be fit and if you’re in the business of dishing out financial advice, I expect you to be financially fit. You compare and run numbers all day long; you should at least know what % return your money is making. So, needless to say, I lost a lot of faith in “financial advisors”.
I also found that some of them didn’t seem to care much about me after they found out that I wasn’t a high roller who was ready to place a large lump sum of loot with them to manage. Is it just me, or were these guys just all salesmen shooting the same sales pitch?
I must be really thick-headed, because even after I was fed all this B.S., I still wanted to invest in stocks and make some money. After all, I’ve heard that the average historical return for the market is around 12% and that’s way better than any savings or CD return that my bank offers. So what could I do? I did what any of us would do.
I picked the “financial advisor” that seemed to lie the least and had the nicest smile. After months and years went by, I can tell you that he’s a nice guy. It’s just that he’s not REALLY concerned about my money and if I lost it all tomorrow, it would be no sweat off his back. I guess I can’t really blame him. He just does what all the other financial advisors are doing. They find the lowest-maintenance way to invest your money, collect your overpriced fees, and just hope that you don’t figure out that you can invest on your own for much less money in fees and have the same or better chances of profit by choosing your own stocks.
If you’re not yet convinced that your financial advisor is no stock god, then look at your annual return over the last few years. Compare your return with the average market return or the S&P 500 annual return.
Did you know studies have shown that you have a better chance of profiting in the stock market by flipping a coin to pick stocks rather than letting a financial advisor pick the stocks for you. Likewise, there is a great deal of data that proves just how notoriously bad these financial advisors are at picking winners.
It’s not uncommon to read about consistent results of more than 70% of financial advisors failing to beat the S&P 500’s average return each year. After reading so many articles and financial letters about how financial advisors failed to beat the market, I started to realize that giving my money to a “financial advisor” is like trusting my life’s savings with a stranger whose odds aren’t any better than mine at increasing my money. Add in the fact that I’m paying them extra fees to “gamble” with my money and if they lose it all, they just walk away. In essence, this is what the majority of Americans are doing.
After this realization, I decided to take control of my own money and finances. In the end, if all else fails, I could simply flip a coin and have a better chance of picking winners than my financial advisor. 🙂
Firing my financial advisor turned out to be the best thing for me.
Click here to continue reading and find out why…
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