Last week I wrote about firing our investment advisor and moving our IRAs to Vanguard. This wasn’t a decision made on a whim or taken lightly. It took years to conquer my fear of DIY investing.
I first stumbled across personal finance blogs (some of my favorites are here, here and here) a few years ago. I’ve always had an interest in investing, but did (and sometimes still do) find it to be a little overwhelming. We first started with an advisor mostly out of convenience. I didn’t want to spend the time figuring out asset allocation or researching investments so I did what most people do; paid someone else to do it for me.
I started reading blog posts about how investment fees can cost you millions. I was naive. I thought maybe somebody else, sure, but not me. We were in solid, actively managed mutual funds and we were going to beat the market year after year after year. So in my mind, paying someone to invest for me was worth it.
But I soon started noticing that my returns were lagging. We were consistently down several percent compared to the market. That’s ok though, I told myself. We were going into class A shares with a high front load and once we hit the breakpoints the loads would drop. Convinced that we were in it for the long haul, I believed that 30-40 years into the future those loads would be negligible.
Then in 2015 our accounts changed so that instead of going into class A shares of one fund family, we would be charged an asset management fee and we could go into different share classes and not pay the front load.
The price? Only 1.35% of assets.
*insert sarcasm* What a bargain! And it’s great, see, because now we get to hand pick all the best funds from different fund families.
It was at this point where I had my out. I could have changed at that moment and said thanks, but no thanks. I had a bad feeling that I was somehow getting screwed. Instead I rationalized staying with the advisor.
“It’s your future. Let someone more qualified handle this.”
“You have two kids and no free time. How can you possibly dedicate enough time to this?”
I knew in my gut that I should be doing investing on my own. But I rationalized the fees and didn’t change.
Change is hard. Staying put was the easy choice and that’s what I did.
But I still couldn’t shake the feeling. I kept reading blogs, kept picturing all the millions of dollars that we were missing out on. I prayed about it. Stay or go? What was in our best interest? I eventually went in to our advisor’s office and told him I was thinking about changing to index funds and saving myself some money. A few weeks later I went back into his office for a sales pitch. He showed me all the inherent flaws in index funds and poked holes in their makeup. He had graphs and charts and data all supporting his claims.
I was convinced. I drank the kook-aid. I stayed.
A year later…
I couldn’t do it. I still had that nagging feeling in my gut. Then I read John Bogle’s book and I saw the light. I could and SHOULD invest on my own!
Since I had already had the tough conversation last year I didn’t feel the need to do this in person. I made a phone call.
“I still can’t get over the fact that I’m not getting my money’s worth here. I’m moving our accounts to Vanguard. Thanks for all of your help over the past few years.”
It was that easy. All of the fears I had about investing without the help of an advisor were fabricated in my mind. Taking the initiative was the hard part. The rest, you will find, is the easy part.
It’s not too late!
All together we invested with an advisor for six years. It’s hard not to look back and ask yourself the “what if” questions about returns and costs and wonder what our account balance would look like today had we made a change earlier. Ultimately there’s no point in dwelling on the past. Just know this:
With investing you cannot control the past or the future. But you can control how much you are paying.
If you are having the same fears that I had it’s ok. That’s normal. But know that you can do it. You can manage your own investments and it’s not difficult. It’s not too late to make a change. Read some blogs. Reads some books. Ask questions. Do your own research. Teach yourself and gain the confidence that you need. Then get on the path to saving yourself millions.