I often get asked “What is a good expense ratio?” Well, here’s my answer! Anything under 0.2% is great. Optimizing below that won’t move the needle much. 0.5% is OK but now you can expect a meaningful dent in your returns. 1% and above starts to get ugly. If you invest a lump sum for 40 years, a 2% expense ratio erodes over HALF of the total investment. Ouch!

I just had a question about paying an advisor a 1.5% annual fee to manage money. This investor looked at it as a reasonable cost to avoid having to do the work of managing investments themself. I like that line of thinking in general, but with money it’s a little different. No one will ever care about growing and protecting your money as much as you do.

So if taking a few hours to learn about self managing your investments will save you MILLIONS OF DOLLARS over the course of your career, you likely won’t find a more important use of your time in this life. Spend less than you make. Invest the difference. Dump it into low cost index funds. Learning how money and investing works will serve you for decades to come.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy