What I'm just going to do quickly before we continue is just go through the mutual fund checklist again, just as we went through the terms go through the checklist go through one fun and they were just going to roll up our sleeves and go through some of your investments and actually somebody had emailed and, um, on the chat room given us some really great numbers, but their retirement forecast there saved to spend how much they should charge. And so those are some really powerful numbers that were going to go through also, so hopefully you could do that at the same time with us or send in your numbers so again, the checklist when you're looking at the investments you own, you want to look at the category you want to look at the expense ratio, what you're paying on an annual basis was it a loader? No load? What did you pay up front? How many stars is is that out of five stars? What are the returns for the last five years? But then also, what are the annualized numbers on a three year in...
five year basis? And then, finally, how did it perform compared to an index or to the category average, just by answering those questions you pretty much get should you keep it? Should you sell it or should you buy it? And somebody actually asked me a question that break heavy air why don't you actually you're the one who asked me that why don't you quickly share your question? My question was session my question was was after you've set up your um say set ira um with three thousand dollars do you have to keep putting money into it every month or you can just yes you have to because I want you to know that you don't have to it's a great great question and that what I thought first what was interesting about how you asked me how the areas you're a little bit like? Is this a good question and it's an excellent question I get that question a lot so as you see here for most of funds though just there the regular minimum is going to be twenty five hundred to three thousand there are a lot of funds that do five hundred or a thousand they way that they change it on the whole most sponsor in twenty five hundred to three thousand to open minimum you could put the three thousand in there and never at another penny and it will just grow hopefully again let's talk about think about what we talked about yesterday how much you need to save every year for retirement but logistically you could just put the three thousand in there and let it said absolutely so it's a great great question so if we just quickly look at this vanguard five hundred index, which is an index fund, which is a mutual fund, that's, just copying an independent basket of security is an independent tracking record. It's a large cap large blend the expense ratio annually is point one seven percent. It's, no load so there's. No upfront fee. The holdings are apple eggs on google, microsoft g and then in terms of the performance you can see here, the actual fund has done last year thirty percent last three years, seventeen percent a year. Whoa! Thirty percent I don't think I realized that that's really good last five years, seventeen and a half percent a year that's phenomenal. And then how is it doing compared to the category? So this is a large blend on the whole it's doing better than the category there's no right or wrong, but I think once you get to know these numbers, you figure out really quickly should you keep it, or should you sell it, or should you hold it? So that's our mutual fund checklist? So I'm going to switch to my computer here and go through. This is to people who called, and we're going to do some retirement forecast, so this is really exciting, so this is el who called and first of all, this is what she sent, which I just called I feel like I'm on a radio show she called over the chat room and she sent us these numbers and she asked if we could do just a little more of an extensive sort of check up and forecast on her and I was thrilled to do it because he or she has taken what she has learned from this course and really applied it and by the way she is a comm keep freelancer and then we have b and just out of their respect we're not sharing their names but they have shared this information so the first thing they sent was this this is their thirty seconds snapshot own oh urn spent and she looked at it both ways personal and business so business this is what our business has she has a little bit of credit card dead she earns I guess um business earns sixteen thousand a year and the business spends fourteen thousand much or how that works on a personal note her total assets are one hundred and seventeen thousand and a big chunk of that is her mortgage, so she put her home and they're the total equity and then her mortgages seventy seven thousand so she doesn't have any credit card debt so that's on lee her mortgage she earns thirty six thousand and she spends thirty nine thousand so this is pretty freeing I was impressed with these numbers, so what she asked me, which I think is so powerful is she looked at this and said based on these numbers, how much do I need to earn and she right away said ike I need to charge more I need to earn more money don't own so the first thing she said these were my fixed expenses but then she said, this is what I want to do I want to eat out once a month once a week and spend this money I want to spend three hundred dollars a month on beauty and clothing I want to go on one great vacation a year which cost about four thousand dollars she owns a house so she knows it's about ten thousand dollars a year is an old house and repairs I put in she saved more for rainy day she has a rainy day fund but I wanted her to do a little bit more and then in a few minutes you'll see I came up with her retirement so this is what she needs to do to take care of herself and by the way she already owns her own home, which is amazing so she needs to earn fifty two hundred dollars on average after taxes which thirty per cent tax bracket is a little over seven thousand that's ninety thousand a year when I showed this number to some people, most people were like I could do it. I can do that number that's manageable. So the question is, how did I get to the retirement? So I looked at here, so here is the forecast. I'm going to change that. So she was forty three. Let's just put seventy five thousand and charity has eleven thousand saved so you can actually go through the calculator. So for her to live on seventy five thousand a year, she needs to save I think she's living unless so be it. But sixty five four fifty so roughly we came up with that eight hundred dollars a month which she thinks she could d'oh it's a real motivator for her to learn more. And that'll let her live on about fifty thousand year, which is more than she's living on now. But the idea is her mortgage will be paid off so she won't have any housing costs. So this is a retirement forecast. Is this it's not a static exercise? That something you do every year? So, do you see how we just did a really, really quick financial snapshot analysis for her? We went through her thirty seconds snapshot, so she did, too. Business and personal. We went through her budget, and then she did put some dreams on there. I love it. I loved seeing those dreams. I'm not judging. Oh, you cannot spend three hundred dollars a month on beauty and clothing and eat out. I'm like good. Put it in there. Live your life. You're working your butt off. Can you earn ninety thousand year? Maybe you can maybe you can, but it's an incentive. I just have a quick question about the plan snapshot in it and the small print below. It says this represents eighty five percent. So should you be putting a larger number? And there are the calculations eighty five percent of fifty thousand a year. So it is a five percent of fifty thousand. So that's where? Take social security and such into account? Absolutely, yeah. So it's a little bit more aggressive than I would like. So one of the things that I sometimes do is I will change the performance and I'll make it perform less than I think it might might change her mouth. It's a great question. Yeah, so you should put more. I'm also working with that. I'm trying not to set in her case up to have to save too much etcetera for failure in that sense. Clearly, she's got to save more, but if I put, you know, eighty five percent of one hundred thousand is if I put one hundred thousand she's going to save to three thousand a month, which she might not be able to do that, I don't want her to get discouraged. So this is one retirement forecast that I did so let's do another. So this is b who gave us his information, so first he gave us his thirty second snapshot. This was mind blowing for me because we went through the numbers and they initially were eighty, five hundred and he went through and he was telling me eighty, five hundred, I said, well, don't you have a retirement and he's like, oh, should I include that? Yeah, so we found five thousand dollars just talking, he didn't realize that he should. Clues include that is something he owns, so he doesn't have a mortgage, but he has student loans and he has camera equipment for a lot of you photographers out there, this is what he earns, and this is what he spends. So this was a real revelation, and then one of the things that we talked about the owing is playing around a little bit with the debt because he has is camera equipment, credit card and student loan debt. So and he seemed real motivated to pay off the student thie camera equipment in the credit card debt. So I said maybe you can call the student loan company and say, can I just change my payment for the next year too? So I can pay a little bit less? I'm still paying, but that way even that extra fifty, eighty dollars a month, I can really just put towards the camera equipment he's like that's a great idea going to do that right now, so we just found some money there and then his budget so he's thirty years old, these air his fixed expenses? He is saying for saving for retirement through his for one k because he works some part time and some freelance, but I'm going to push him to save a little bit mohr into a roth ira in addition, so plus I'm going to find another five hundred for him to really pay off his debt, giving him two hundred fifty dollars a month to put towards savings and I'm giving him you know, we're dreaming I'm giving him five hundred dollars a week for spending what he wants, he wants to go toe concerts and things like that so he needs to earn a little over five thousand dollars or seven thousand dollars he pays about twenty five percent so that's eighty six thousand dollars a year he looked at that he's like I could do that I can tell you do that I mean, have you ever gotten so clear in your numbers like this, right? So let's do his retirement forecast so he's thirty years old, he has now we know thirteen thousand saved some of it is the camera equipment, but you know, maybe I'll sell it when he's sixty and he's saving so right now he's saving about five hundred a month, so for him to live on fifty thousand it's not enough so that's why? I said, come on, save a little bit more you can do it, so if we could get him to eight hundred a month, which if he just opens a roth ira, he could retire at age sixty two or sixty five even, you know, later earlier, I mean, this is on me the advantage of time, so sweet but you're not you can play around with it. I'm not thirty and a lot of us are but that's just to kind of play around with those numbers and you see how, even though I put in the numbers, I'm playing around with him a little bit so let's just say he wants to live on seventy five loops, you can't go that high, he wants to live on seventy five he needs to save morand when we were going through these numbers he's like putting one hundred fifty thousand I want to see that I want to live on that like good for you god bless you here's what you need to save so we'll pump it up to sixty five and and who knows maybe whole sell a movie or have like a huge payday and hill people to put a few million in the bank and I hope he does we just can't count on that, but the idea is that if you want to live on one hundred fifty thousand a year, he needs to have about seven million dollars in the bank, so maybe we'll make that from something and that's enough for retirement, but you also think about if I just saved twenty five thousand a year which if I'm really making good money it's easy to do to have them so those are some of the retirement forecast numbers and then the next thing that I wanted to show so this is really powerful. So this is someone had sent in this mutual fund and I thought this was interesting. So this is a I'm a black rock funds, so this is a load fund, which means they paid five percent and then their expense ratios one point oh seven so what I wanted to show is this is a website that I really like it's called you can get it in a lot of places, it's, another fidelity website, called compare funds so you can really look att to mutual funds so what I did here is I pulled up the fund so here's the black rock fund that he owns it's an international fund on what I did is I just pulled up in international fund from vanguard so just to really compare the two so this is another great way to see how is my fun doing compared to an index fund? And so they're essentially both international funds, so if we look at the snapshot and this is just google compare funds fidelity, you don't even have to be a fidelity a customer to use this fight this's free so right away the black rock fund is three stars, the vanguard fund is four stars did you ever think you'd be so riveted looking at mutual funds like this seriously every and I know you have to look at this what everyone in the room and sitting with bated breath, right? So you see how easy we just compared the two star ratings let's look at fees again haven't looked a performance yet I'm just wanting to show apples and apples so the black rock fund costs one point one six percent a year and the vanguard fund is point four one percent a year again like a lot cheaper but don't know drumroll if we look at performance the vanguard fund the last three years did nearly ten percent where the black rock funded a person five years fourteen percent versus eleven percent not that big of a difference really in a big picture basis but thiss one already like so the first year this one cost me five percent so that means I only earned nine percent so that's nine percent versus twenty five percent and then on top of that I'm paying almost two percent on paying about half a percent more in these funds. So the idea is that it's probably not that much of a difference on a real big picture basis because if you look at it on a ten year basis they've actually done about the same but this one's costing more so why pay for that that's my whole point and if I look at the star rating and that's where the star rating comes into account this is three stars versus four stars so the star rating khun sometime summit oppa's well s o here's just some other funds that have been sent in um we show this one so here's a target date fund and I thought this was kind of interesting because so this is a fairly aggressive target date fund um and the reason it is is so you can see two thousand sixty so how many stars does it have? No now so the reason why is that the fund has to be around for at least three years to get stars so that means it doesn't have a three year track record so it's done really well for the last two years but it hasn't even been around again I'm market invest in something that doesn't have a history sorry this is where age matter sorry so it has done well it's a good fun but yeah, the market's been amazing the last two years everyone's done well, so that's just I thought this was kind of an interesting fun to show that it just doesn't have a star rating because it hasn't been around. So what vanguard did said oh let's come up with another new products it's I mean it's it's all a business um so that was kind of an interesting fun to show and then I wanted to show this to because I did talk a little bit about bond funds and hopefully in the next six months when you're watching this video bond funds will have come back so you couldn't talk about this. So this is the pimco total return this is actually the largest bond fund in the country two hundred and forty four billion dollars of assets are in this fun huge bill gross, who manages that is like in just a total guru has been managing this fund since nineteen, eighty seven factum it. When I was a bon analyst, he was even a rock star back then. So this is my geekiness coming out because he's a really smart guy he's, actually, based right here on the west coast in orange county. It stands for pacific investment management company it's an amazing, amazing company. And they really do mostly institutional money in the sense that they manage money for pension funds and things like that. So I knew him when I worked in or I need the firm when I worked in corporate institutional, but they offer funds for individuals, and this is amazing bond fund. But just to show you it's losing a little bit of money so like, sir, it lost one and a half percent, but on a ten year basis, it's done about six to seven percent and this will come back. I'm confident of that, so I still own it even though I'm losing a little bit. But this is a great, great long term part of a conservative portfolio. What kind of periodic als? What kind of things do you read that? You know? Let you know who the star players are, what to look for yeah, yeah, yeah. I let it go yeah, yeah, yeah, I signed up for my newsletter because I always do. You talk about that? Absolutely. I have to say I have gotten so when you signed up so last three days, it's crazy I've gotten probably thousand so that's been really exciting? Yeah, I am going to talk about resource is and again, probably my favorite blogger on a big picture basis is the new york times has the bucks blogged, buc ks and that's they have the saturday it's called your money and it's it's a great personal finance article. So it's obviously the saturday printed section but it's online and I mean I subscribe to its I don't know if you could get it for free. I don't know if anybody gets the new york times for free but it's worth it. It is an amazing and it's really written for the lay person taurus eagle bernard is one of the journalist ron lieber who's on leave because he's writing a book is back in january and they bring in financial planners. They bring an analyst and they I feel like you know they'll talk about warren buffett. They'll talk about bill gross, but they also talk about paying off her student loans I mean, they're really written for the everyday person, so that to me is a must read I'll definitely talk more about that this afternoon. The other thing is within the your money section of the new york times they have this blogged the bucks block which is a daily blawg you know, they might things how to find cheap travel insurance how to find a credit card with benefits so I mean, I feel like from a consumer finance site is a personal finance I think it's one of the best written blog's out there so that's those are mine favorites for now I still read the wall street journal you know, I it's probably the premier newspaper for finances it sze dry you like it you don't like it but you can really read the front page if you really want to get up on it on the front page has the left hand column with just the sound bites and if nothing else if you just read that and first you're gonna look pretty smart sitting on the subway reading it are sitting in the coffee shop but you just start to get to know the names and this is a little bit contradictory to my own advice. But when I was in business school, one of my finance professors actually said one benefit of owning individual stocks is it's a reason to read the financial papers because when you do own individuals talk of a company you're looking for it like when you're owning a mutual fund you're not necessarily looking for the stocks because you don't own them but if you own g e and you read about jean paper you're like wait I want to know what's going on because she's not doing well so just my own personal investing is that I have a handful of stocks I own I think of them is by and hold so I own I mean it's really probably five percent of my portfolio some very large names or names of companies I know if nothing else I like reading about them in the papers that's a reason to read the paper because you know you own the company and you want to follow it another reason to be simplified is a few on ly owned five to seven mutual funds you start to get to the know the names of the funds that you own and who manages them but this is also my experience I've been in this industry for twenty years nearly so I just know some of the names um I don't know if that answers your question um okay do we have any funds or just overall I know there's so many people have been calling in way have simon okay so much we do what do you want to do funds yeah I'm a fun year we could do some funds the funds our fun can we do one general kind of way general smr says I love this course love it's a long way on and has a few questions what do we do with our money if we do have a big day a big payday like sell a movie for example in terms of our different investments and online savings how can we put the most away in a safe, responsible way you still enjoy it? Okay that's a great question so this is first of all I have to go because I have worked with some people who've inherited some money that never had money in office and they got caught no, they're big payday and I would probably a be nervous if I just often got a pot of money whether through a big sale or through inheritance to necessarily invested on what day because I think you are going to be timing the market none of us contend the market so I'd say from an investing strategy if you're going to invest the money, spread it out over a year maybe just say here's the five funds I like I'm going to do twenty I'm going to take the money and invest twenty five percent over the next year so that way if the market goes down it's kind of like our dollar cost averaging principal so I think that's number one if you are gonna invest some money spread it out because who khun timed the market and we are in a really high market I mean, look the s and p five hundred we saw his thirty percent it's crazy that's a great number so number one market timing second put as much away in a tax deferred vehicles possible, so if they truly made a lot of money they could hopefully open this year an individual for one k which lets him put away sixty eight thousand that they don't pay taxes on today and it grows tax free and then they can take it out when they're in a low tax bracket year after age fifty nine and a half so that's number two number three if they don't own something which we'll talk about this afternoon by home definitely I think a home is a great it's not an investment it's not speculative it's an investment in yourself which we'll talk about so calogero wonders is the expense ratio annual and his advice on all the assets you having that fun? Yeah, yes it is. So basically how and it's a great question so how it would work so this expense ratio is a nice easy expense ratio it's point nine nine percent so just a way to look at it so last year this fund to thirty three point one percent a year you only got thirty two percent so they take the percentage out before you get your performance so it's not like you get a bill, you have to pay this. So if you thought you earned thirty three percent, so if you have one hundred dollars, the next to you at one hundred thirty three dollars, you actually would only have one hundred thirty two dollars. That makes sense. I write that out wondering, yeah, let me write that out. S so say you have one hundred dollars, in the fund and they charge one percent and say the find zero. Next year you have ninety nine dollars, because they took one person out. So say the fund did ten percent, so one hundred, you think you'd have ten percent one hundred and ten dollars, but because they're taking one percent out, you only have one hundred nine dollars. So that's, why you want this number to be a slow as possible, because that directly affects the money that you're gonna have the next year and, yes, that's based on total assets. So it's, the total amount you have in that fund.