How to get rich quicker

Joel and Matt from How to Money share how low cost funds can save you a lot

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:03):
Welcome to Before Breakfast, a production of I Heart Radio.
Good Morning. This is Laura, Welcome to the Before Breakfast podcast.
Today's tip is that little fees on investments can add up.
You want to be sure that your money is working
hard for you and that you get as good of

(00:25):
returns as possible. To help me with this tip, I
invited Joel and Matt from the How to Money podcast
to share strategies. They're with me here now as they
have been for a few episodes this week. So Joel
and Matt please take it away. Thanks Laura, and let's
talk about fees because everyone wants to get rich quick

(00:46):
scheme that might actually work, but the problem is those
schemes never paying out in reality. And yeah, it'd be
great if just one little hack could save you huge
chunks of money in one fell swoop, if just a
little bit of effort could create these massives als. But
the truth is that it's typically a lot of little,
small financial leaks that are sinking our ships, perhaps dozens,

(01:07):
But there is one thing that might be costing you
thousands or potentially hundreds of thousands of dollars over the
course of your life. And the truth is there's there's
something you can do to rectify that situation, and it's
not terribly difficult. What we want you to do is
to swap your high fee funds for their low cost alternatives.
You know it. Yeah, whether you are investing in a

(01:28):
retirement or within a brokerage account, lowering the fees that
you pay could save you a ton of money over
your investing lifetime. So let's dive into some actual numbers
here to illustrate the point. Let's imagine you are investing
five a month, uh, and you're paying a one percent fee. Well,
you might be shocked to hear this, but you are
giving up nearly two hundred and seventy thousand dollars in

(01:51):
fees over the course of forty years. So that means
that instead of retiring with your portfolio sitting at a
cool one point two alien, well you'll only end up
with nine and twenty eight thousand dollars. I know which
one I would rather have. That is a massive difference.
And fees, it's just important to keep in mind that
they really are the silent killer when it comes to

(02:13):
your ability to build wealth. Yeah, it really is incredible
just how much fees can rob us blind and yet
most of us have no idea what we're paying in
fees on the funds that were invested in. It's also
just kind of hard to comprehend how much a small
fee can actually amount to highway robbery of your retirement
account assets over time. Based on the numbers you just

(02:34):
gave Matt those examples, that's great, And even on something
as basic as like an SMP five funded index fund,
which is a great place for lots of investors to turn,
the fees can be vastly different depending on which company
you're using to make that investment. For example, Google Heim
charges more than one and a half percent for their
basic SMP five index fund. Compare that to Fidelity, who

(02:55):
literally charges no fee at all on virtually identical fund.
That's right, Yeah, so let's talk about what you need
to do in order to fix the situation. So much
of it comes down to which company that you opt
to keep your investments with. Are you doing business with
a company that prioritizes low fees or not. Some of
our favorite low cost companies are Vanguard, Fidelity, Charles Schwab.

(03:19):
If your investments are not with one of those companies,
we would suggest that you look at your last account
statement in order to just figure out and assess how
much it is that you're paying. If you can't find
that statement, even just doing a a simple Google search
of the funds that you are invested in can provide
you with that information. You might be in the clear
if you're doing business with the company that isn't feeing

(03:40):
you to death, but just given how much money is
at stake, it is crucial to verify that firsthand. Yeah,
and the good news is that in general, across the board,
fees are coming down. That's largely thanks to index funds
and these giant low cost companies, which is a great
thing for investors everywhere. But like everything else, just because
are coming down on average doesn't mean that every company

(04:03):
got the memo. There's still loads of companies charging fees
that aren't in line with the new normal, and every
day you continue to do business with a company like that,
it's costing you real dollars that your future retired self
would love to have. What great advice, Thank you, Joel
and Matt. Paying attention to fees can help your nest
egg grow faster, and really, who doesn't want that. For

(04:25):
more great financial tips, please listen to Joel and Matt
at the how to Money podcast and in the meantime,
this is Laura. Thanks for listening and here's to making
the most of our time. Hey, everybody, I'd love to

(04:46):
hear from you. You can send me your tips, your questions,
or anything else. Just connect with me on Twitter, Facebook
and Instagram at before Breakfast pop that's b E the
number four than breakfast p o D. You can also
shoot me an email at Before Breakfast podcast at iHeartMedia

(05:06):
dot com that before Breakfast is spelled out with all
the letters. Thanks so much. Should I look forward to
staying in touch. Before Breakfast is a production of I
heart Radio. For more podcasts from my heart Radio, visit
the i heart Radio app, Apple Podcasts, or wherever you

(05:27):
listen to your favorite shows. Ye