Fees can do serious damage to your retirement
Yesterday I mentioned that focusing on fees can be a mistake; if a product charges a fee, but has better terms, it might be a better option for you. Granted, but that’s not always the case. More often than not, fees can be a huge problem. Higher fees depress returns and can increase your chance of running short of money in retirement.
1% over 30 years is $250,000
Some funds have minuscule expense ratios — such fees on index funds can be as low as a few basis points — while fees on managed funds can exceed one full percent. Think one percent isn’t all that substantial? If you invested $10,000 a year for 30 years and received an annualized average return of 8%, you would have $1.223 million. If your returns were 7%, you’d have $1.0 million. That extra one percent could cost you almost $250,000. Still think fees don’t matter?
That said, it there was one fund which was returning 20 percent annually and has been doing so steadily for decades, you might be willing to pay that one percent fee for substantially better returns, but since 80% of professional money managers under-perform their associated indices, you are likely better off putting your money in an index fund.
The 13 places with the fastest growing property prices in the world
Think property values are expensive where you live? Sure prices and values have been increasing in most part of the U.S. in recent years; most parts of the country have long since regained the declines which took place when the financial/real estate crisis hit in 2008.
While the cost of housing in many cities typically increases by a couple of percentage points a year, there are several cities which have witnessed double-digit growth of late. Most of the these cities are outside the U.S. Three cities on the list are in China. The two biggest cities in China — Beijing and Shanghai — have had the largest percent increases, both roughly 27 percent! Here’s the entire list.
How to buy a house (told in under 350 words)
If you’ve been thinking about joining the homeownership club but you have no clue where to start, this crash course in Home Buying 101 is for you. It’s to the point, succinct, and will get help you get started on your path to homeownership. If only the actual homebuying process was as quick and easy as this guide.
Real-Life Experience Cutting Cable
I, for one, am unable to get myself to cut the cord. Why? Live sports; for me, it’s pro football. While I used to subscribe to DirecTV in order to receive the NFL Sunday Ticket package. It allowed me to watch all of my team – the New York Giants. (I live in LA and can’t see all of the Giants’ games without this package.) Recently, I scaled back to just receiving the Red Zone Channel. This allows me to watch, what I call “ADD football.” You get to watch all the scoring plays, mostly as they happen. So while I don’t get to see every Giants game live, I see all their scoring plays. I can watch whatever games my local affiliates air, which sometimes includes the Giants games.
That’s me. I want live football. How about you? Are you willing to live without live sports? Cutting the cord will save you money, but you will have to give up something, and that something is usually sporting events.
Party like it’s 1949
Jon Gorey of The Simple Dollar elected to cut the cable cord, but in doing so had to make a choice: save money or what his favorite team. He elected to give up watching his beloved Boston Red Sox and instead, he parties like it’s 1949; he listens to Red Sox’ games on the radio. Here’s the whole story on how much he saves each month.
As mentioned recent, YouTube has joined the alternative TV option market. With viewership on YouTube about to exceed that of live television, changes are continuing. I suspect it won’t be long before there are acceptable options for live sports beyond cable and satellite and I too will join the ranks of the cord cutters.
Chart of the Day
From a financial perspective, literature is a worthwhile degree? Who knew?! If I had kids, I’d do what my friend does. He tells his kid, “you can major in anything that you want… as long as it ends in ‘engineering’.”
You will find more statistics at Statista
Image credit:Flickr/Australian Broadcasting Corporation