First Year of Fund Management Experience

I, the family in general, don’t do resolutions. We just never follow through with them for whatever reason. So instead of resolutions, we have little goals. I say little because we like to do baby steps with everything and if it works out great, then we do more the next month, quarter, year, etc.

Up to last year we were a bit careless with our food purchasing and we ate out quite a bit. In the US, it’s not that bad financially. Still more expensive than cooking but a bit reasonable for our pocket book. In the UK, not only are we on just one income, there is an exchange rate difference. When we were in America over the summer break, our eating out total was about $20 for lunch. We are water drinkers and so $20 is for three meals. Jovie doesn’t eat much and the girls would either get an adult meal to share or two kid’s meals. In the UK, a similar lunch would cost £20 or, due to the exchange rate, $30! Imagine how much a dinner out would be!!

That’s why I started to seriously meal plan and amazingly, meal planning has now become a part of my weekly routine. We love it and it has saved us a lot of cash!

Last year I also started to look into our personal finances. We’ve always been good at saving money and like most Americans who have/had a full-time job with benefits, we have 401Ks. But besides our statements, I have no idea what all were involved in it.

So I got to researching. And after a lot of reading, I realized that instead of Edward Jones, I can manage the funds and save the 5.75% upfront cost (front-load) every time we put new money into a fund. Example, if you invest $10,000, $575 of it would go towards fees.

Now, I have nothing bad to say about the Edward Jones guys I have worked with. They both have been lovely lovely people and I highly recommend the Warrensburg, MO office. Without my first Ed Jones man, I wouldn’t have an idea how much to invest and in what. But, after some learning, I decided that I can do it and save the 5.75%.

I don’t want to say I wasn’t afraid, I mean crap, what if we end up losing it all? But I figured that since I’ve always been good in math and there were so many lovely people in different forums that were helpful and successful that I should be ok. I did learn quite a bit and these are the tips I want to share with you in case you want to look into your 401 better or doing it yourself.

    1. Look to see how much fees each fund is costing you. You can see that there is a load of 5.75% (this is one time but it will be charged each time you put new money in) and the yearly expense to own this account is 0.70%. The later expense is the money you’re paying the fund managers to manage this fund. Last year AMCPX’s return was 8.87%. If last year was your first year of investing and you put $10,000 into this fund, your investment return was only 2.42% (8.87-5.75-0.70) for 2014.mutual_fund_fees
      Let’s compare the above to the below fund. FSTMX has no load and the yearly cost to own this account is 0.10%. The fund is an index fund. It basically means you are investing in every big company on the stock market. There is nobody picking and choosing a select few stocks and watching over their development. That’s why the expense is low.NOTE: To learn more about these two types of funds, Google active and/vs passive funds.Last year this fund returned 12.49% and so after fees, last year you would have made 12.34%!! According to Marketwatch’s fees calculator, AMCPX’s fees in 10 years time will cost you around $1,586 vs $157 for FSTMX. If you’re confused why the fee’s not $100 (being 10%), it’s because the fees are based on how much money is in the account and we can only hope that your investment will grow every year 🙂fund_fees
    2. Read. A LOT! Read the prospectus too. I know it’s all boring looking but from it you can see where the fund is going, what companies you’re investing in and decide if it’s something you want to keep investing in.There are many many books, websites and online forums. Some books recommended to me and that I’ve read are:
      1. The Boglehead’s Guide to Investing
      2. The Four Pillars of Investing
      3. The Intelligent Asset Allocator Portfolio

      And a few forums that I stalk and sometimes post in:

      1. Boglehead
      2. Morningstar
      3. Mr Money Mustache
      4. Early Retirement

      There are also many tools and resources that you can read online:

      1. Boglehead Wiki
      2. Fidelity’s Learning Center
      3. FIRECalc (FIRE: Financially Independent Retire Early)
    3. Don’t check your investment very often. It can be stressful watching the market go down. The stock market goes up and down every second, it’s just how it rolls, but if you’re still like us and have years to go until retirement, just let the market do its thing.
    4. Don’t time the market. Don’t just want for the market to plunge before buying. Invest regularly and your portfolio will be just fine! BUT, if you happen to be there when the market plunges and you have some extra cash, go for it. We did in 2008 and the handful of stocks that we purchased are doing quite well.
    5. The last tip is for those who have not saved yet for retirement. Even if you’re 40-years-old, start now! Let’s say you have $1,000. With $500/mo, in 25 years, aka age 65, you’ll have about $400k in your account at a 7% return.savings_retirementGive up coffee, soda and lunch, you can save even more!


Last year I learned quite a bit on how to read our investments, moved funds to a different companies and made big decisions on fund allocations. This year I want to read more book and just be a bit more clever with the whole thing so that I can participate and understand what some of those folks are talking about in forums. Despite my lack of knowledge, I feel confident that I made the right decision for us and except for the first month where I moved from Edward Jones to Fidelity and Vanguard, it’s not that time consuming. I use Personal Capital to keep track of everything (online and iPhone app), it’s similar to Mint. I like Mint for banking and Personal Capital for Investments. Another great website and app is SigFig. I really like the user interface but SigFig wasn’t being friendly with TSP, the government 401k managers, and so I abandoned it.

If you are still paying off debt or not very good at managing your money, I highly recommend this software called You Need a Budget. It’s not a cheap software but they do go on sale a few times a year and usually a 10% discount year round. But even at full price, it’s worth the money! Give the software a go and see what you think!

Take care!!

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