Some things should be left in your own hands: choosing your home, raising your kids, and managing your health. No matter how skilled an expert might be, you’d never completely delegate these responsibilities and walk away.
The same goes for financial planning and investing for your future. Handing over your finances to someone else adds more risk to your investments. Here’s why.
First, you have to find a trustworthy professional—a broker, money manager, or financial planner. But how can you be sure you’ve chosen the right one until it’s too late?
Most brokers and money managers are paid based on the commissions they generate, not the quality of their advice or service. Bad advice, conflicts of interest, and even fraud are not uncommon.
Even if you find a highly qualified and honest advisor, they will never understand or care about your needs as much as you do. Plus, you’ll be paying them 1.5-3% of your money in fees and commissions, including hidden fees you might not be aware of. For instance, if a 1% fee is deducted from a 9% annual return, it will take an extra year for your money to double.
There’s a fundamental conflict of interest: your goal is to maximize your investment returns, while the professional’s goal is to maximize their fees and commissions. This may be why brokers and fund managers tend to sell more often than individual investors, generating commissions for themselves and tax consequences for you. Short-term gains are taxed as ordinary income, which can be as much as 40% or more.
You can avoid these issues and do better by investing directly in Dividend Reinvestment Plans (DRIPs) offered by top U.S. companies. Although unfamiliar to many, Direct Investing Plans have been around since the 1960s. The SEC initially allowed employees to purchase stock in their own companies cheaply and efficiently, and these companies then extended the option to individual investors, albeit without advertising.
I’ve been teaching small investors about direct investing since 1981. With a background in the financial industry since 1960, my passion is enabling small investors to take advantage of opportunities traditionally reserved for the wealthy.
Dividend reinvestment plans level the playing field for small investors by eliminating fees, allowing them to build diversified portfolios and invest small amounts efficiently. Strategies like dollar-cost averaging are accessible to everyone through DRIPs.
Hundreds of thousands of investors prove the success of these plans daily. Take Eileen and Gerard Connolly from Jupiter, Florida, who started with a single share of stock in Kellogg, Coca-Cola, and Johnson & Johnson. By making small investments over 15 years, their accounts are now worth over $64,000.
Your financial security is too important to leave to the “experts.” Surprisingly, managing your investments can take less time than you might think. You owe it to yourself to find out more. Visit www.drp.com and get your complimentary report for more information.