The Monday Morning Millionaire Program will show you how to outperform more than 90% of professionally actively managed funds, guaranteed. At the same time, over an investing lifetime, you can save a year’s income by avoiding adviser fees. Investors can do that by buying and holding a US market index-tracking exchange traded fund (ETF). For a detailed step by step description, join the Monday Morning Millionaire Program.
Step 1. Open a brokerage account.
There are many stock brokers who would be glad for your business. Adam Smith’s “unseen hand” operates among them; their services and fees are similar. Choosing one at random would hardly make a difference in the long run.
Step 2. Save and invest.
Starting early in life, deposit 10% of your annual income regularly (say monthly) and buy board lots (100 shares) of a very low-cost S&P 500 index exchange traded fund (ETF). If you start saving later in life, you will need to save a larger percentage. Donald Trump would be richer today had he taken his inheritance, invested it this way and sat in a rocking chair.
There are thousands of ETFs. The key wording here is to buy an ETF which represents the US economy such as a broadly-based index fund. Review Chapter 4 in Monday Morning Millionaire.
The best ETFs to track the S&P 500 are:
- iShares Core S&P 500 ETF (IVV)
- Vanguard S&P 500 ETF (VOO)
- SPDR S&P 500 ETF Trust (SPY)
- Schwab U.S. Large-Cap ETF (SCHX)
- iShares S&P 500 Growth ETF (IVW)
- Guggenheim S&P 500 Equal Weight ETF (symbol RSP)
Each is an excellent approximation of the U.S. economy, the strongest economy in history.
Keep buying board lots regularly. Over a working lifetime, this approach will produce a fund large enough to maintain you in comfortable retirement. Furthermore, you will be dollar cost averaging, the only guaranteed way to beat the market. Follow
This core portfolio will allow you to outperform over 90% of professionally managed funds, guaranteed, in addition to saving you a year’s income in fees.
Divide your ETF holdings and cash savings in a ratio that is in line your risk tolerance.
A 50/50 ratio works well for most investors, however, market/cash ratios needs to be individualized.
In retirement, withdraw 1% quarterly from your core portfolio or 2% semiannually or 4% annually and live happily ever after and your portfolio will likely grow. You will never run out of money but you will have to accept a smaller income during the guaranteed occasional market drops.