Six months ago I blogged about my epiphany into taking my retirement savings into my own hands. I realized that I had been brainwashed like 99% of the people out there into believing that investing my own retirement savings was hard and that I wouldn't get the same returns as someone who does it professionally. In reality, investing is quite easy and I'm saving around 5% of every dollar I invest by doing it myself instead of paying someone to do it for me. I decided to do a six month check up and see how my progress has been.
First up, I looked at my account with a professional financial adviser who has invested all of my retirement savings for the last decade. Although I stopped giving him new money six months ago, he still has my original retirement accounts. He is a nice guy and I'm sure is trying to do the best job possible for me but he still believes that he can invest money better than I can by selecting the next hot market sectors and moving money around appropriately. In the last six months, my account grew by 2.4%.
Now lets look at my Vanguard account that I set up in about ten minutes online and had my first chunk of cashed out company stock wired directly to them. I invested in a the Boglehead 3-fund portfolio which is simply index funds that mirror the entire U.S. Stock market, the entire International Stock Market and the entire U.S. Bond market. Because it didn't cost me any management fees, I automatically invest 5% more money than I would have with my professional adviser but for the sake of argument, lets forget about that significant amount of money. In the last six months, my account grew by 4.7% or nearly 100% better than my professionally trained financial adviser. One word of note is that 4.7% is the average of all three indexes I own for an apples to apples comparison. The U.S. stock market index has done way better but in the interest of diversification, I don't have all my apples in that basket though in hindsight, I wish I had over the last six months!
So my conclusion so far is that not only am I doing better than my financial adviser at investing, I am doing better than 80% of all financial advisers in the world who try to beat the market and don't after expenses are figured in. Instead I am just matching the market and right now, my decision to take my retirement savings investing by the horns is paying off. Now the question is how long do I give my financial adviser before I pull out the money he is currently managing and start doing that by myself too?