Dare to Change Life Coaching & Mentoring

Tag: financial independence

  • 🎯TIPS for MAKING BETTER DECISIONS

    🎯TIPS for MAKING BETTER DECISIONS

    While I was communicating with a friend recently, she asked me a question that I think many people can relate to:

    “So, I need to spend money to learn about money?”

    I found her question fascinating, considering that she mentioned to me previously that she probably wasted a lot of money because she hasn’t managed it well….

    That the fear of wasting her savings is huge for her (she is a self-employed single mom)….

    That she knows that she needs to confront this fear.Yet her fear of making a “money mistake” keeps her feeling stuck in doubts, indecisions, and money worries.

    This experience reminded me that many people have difficult time with making financial decisions.

    So, in this article I’m going to share with you my top 3 tips for making better financial decisions.

    ✅ Develop a habit to see everything through the lens of an investor.

    When you spend money, by definition, it’s lost – there is no increased value for you, whether it’s monetary value or value in a form of better health, reduced stress, or elevated self-confidence.

    What if you look at your decisions to pay for something as an investor?

    “Will buying XYZ help me improve my health?”

    “Will paying for an XYZ program help me get clarity, become more knowledgeable and confident, propel me toward my goals?”

    “Will investing in XYZ potentially provide additional income and/or appreciate in value overtime?”

    If you answer YES to any of the above, paying for XYZ is investing, not spending.

    ✅ Focus on Solutions instead of dwelling on your Problems.

    Life tends to through a curveball when we least expect it and our response to challenging situations is crucial.

    While it’s important to acknowledge problems and to understand what is causing them, it’s essential to focus on possible solutions.

    During my recent Greek islands’ cruise, I met a widow, who lost her husband unexpectedly and was devastated not only by losing the love of her life but also by suddenly becoming solely responsible for making financial decisions.

    She took time to grieve… then made a decision to focus on solutions to her problem, which was her fear of dealing with money and making bad financial decisions.

    She bought books about managing and investing money.

    Then attended some free trainings online…

    And finally decided to get support and guidance by working with a mentor to help her become financially savvy and confident.

    I am honored to be her guide on this journey.

    Please anchor this statement in your mind:

    🙏You’re More Resilient and Powerful Than You Know.

    And when you choose to focus on solutions instead of dwelling on your problems – you activate your personal power and the forces of the Universe to support you.

    That’s one of the topics I’m going to discuss at my new masterclass “From Worrying to Winning the Money Game.”

    If it’s important for you to uncover and fix the potential problems that hold you back financially, I invite you to come to my new masterclass (see the registration link in the comments).

    ✅ Manage risk.

    To be financially successful, you’ve got to learn how to invest and how to manage investment risk.

    You’ve got to assess potential risk of loss vs potential opportunity for win and decide if this investment worth your while.

    Here’s what’ve realized….

    Everybody wants more money.

    Yet very few are willing to invest their time, efforts, and money to figure out how to make it, keep it and grow it.

    For example, I like to invest in my personal and professional growth and over the years invested hundreds of thousands in myself.

    Some of these investments yielded great results, others… not so much.

    But I am not upset about any of my investments because I know that ALL investments have inherent risk.

    And the trick is to decide if you’re going to be OK with the potential loss because the potential win is worth it.

    🔥If this sounds like something you’d like to dive deeper into and you are eager to develop winning money strategies, you’ve got to come to my new “From Worrying To Winning the Money Game” Masterclass.

    🎯You’ve got to become financially savvy, so that you make better financial decisions.

    And if you feel lingering money worries and fears about your financial future, it’s time to face these fears.

    Because if you don’t face your fears, you’ll never conquer them.

    You’ll never get past the fears.

    And the longer you go without facing it, the more deeply the fears get ingrained in you.

    Look forward to seeing you with us at my masterclass‼

    To your Health, Wealth, and Freedom!🙏

    Millen Livis 💖

  • 💪4 STAGES OF FINANCIAL FITNESS SPIRAL

    💪4 STAGES OF FINANCIAL FITNESS SPIRAL

    When it comes to financial success, common people like you and I, who were not born into wealth and didn’t marry a wealthy partner, experience 4 stages of financial fitness.

    In this article I want to share these 4 stages with you, so that you get clarity about your current financial fitness and the one you’re aspired to achieve.

    💰4 Stages of Financial Fitness Spiral

    1️⃣ “Not Enough”: This is the stage when I < E (Income is less than Expenses)

    Typical characteristics of this stage:

    • People spend more on their lifestyle than they earn, whether they have a job or a business, and whether they are high-income earners or low-income earners

    • Have high-interest consumer debt is often used to make ends meet

    • There are No Savings• People need to work for their money

    • People spend everything that they earn to cover their lifestyle

    • High- and Low-interest Debt is often used to maintain a desired lifestyle

    • There are usually No Savings

    • People need to work for their money

    3️⃣ “More than Enough”: This is the stage when I > E (Income is more than Expenses)

    Typical characteristics of this stage:

    • People spend less on their lifestyle that they earn

    • Low-interest Debt is occasionally used to maintain the desired lifestyle

    • There are often multiple sources of income established (active and passive)

    • There are usually Savings and Investments

    • Philanthropy is fairly common• People need to work for their money

    4️⃣ “Financial Independence/Freedom/Affluence”:‼This is the stage when I > E (Income is more than Expenses)

    Typical characteristics of this stage:

    • People spend less on their lifestyle than they earn

    • There is No High-interest Debt or Low-interest Debt; credit cards are paid off monthly

    • There are multiple sources of passive income established

    • There are significant amounts of Savings and Investments

    • Philanthropy becomes part of lifestyle

    • People don’t need to work for their money

    What stage of Financial Fitness do you think you are at? (no need to share it in the comments unless you want to.😂)

    By the way, it’s not uncommon to see “Financial Fitness Spiral” jumpers – people who jump as oppose to evolve from one stage of financial fitness to another.

    Yes, people can ‘jump’ in both directions of financial fitness range – from lower financial fitness stages to higher and back!

    🛑💰Yes, it’s not always the upward spiral; the regression back to the lower financial fitness level is not uncommon.

    Also, if you’re one of those people who are tired of living with constant stress caused by money worries and are aspired to upgrade your level of financial fitness, I want to GIFT you my new powerful Masterclass – 🎯💰From Worrying To Winning the Money Game.

    Not only you’ll uncover potential problems that might be causing your money problems, but you’ll also discover how to fix them and how to develop winning money strategies, not just another failed budget!

    ✅BTW, your journey to financial freedom starts with absolute CLARITY about your current financial situation, which requires fearless and honest look at EVERYTHING, whether it’s scary, boring, embarrassing, or simply unpleasant.😉

    So, acknowledging your current level of financial fitness is important.However, it’s just the first step.

    ✅The next best step would be strategically map your money flow based on the level of financial fitness you’re aspired to achieve next.

    ✅And when you join my upcoming 🎯💰FROM WORRYING TO WINNING the Money Game Masterclass, you’ll also discover the Money Mapping protocol that I share only with my clients!

    Millen Livis 💕

    P.S. 🔥Put “ME” in the comment if you still don’t know how to reserve your spot for this NO COST TO YOU Masterclass!😉🔥

  • 🔥FINANCIAL IGNORANCE IS EXPENSIVE

    🔥FINANCIAL IGNORANCE IS EXPENSIVE

    Money worries and financial stress are “the elephant in a room” for many people right now.

    The official inflation rate, without food and energy, is 3.7% right now….

    So, if you don’t need to eat and don’t need to drive or heat your home, you are fine…. 🙃

    And you don’t need me to tell you that groceries, gas, housing, car prices are much higher now than just a couple of years ago…

    Although the U.S. government spends your tax money without any constraints (U.S. Debt now is over $33.5 Trillion!!), you, the tax payer, are limited with your financial resources.This leads to feeling financial uncertainty….

    While you may be diligently saving up for “someday” retirement – when you can suddenly do the things you want to do – in a meantime, you are not living your life fully… because of financial concerns.

    Even if you save up enough money to retire, by this “someday” you may be too old for adventures, or too tired to learn, or don’t have as much time as you thought…..

    And, unfortunately, your education, your high income in previous years, even your strict budget cannot guarantee you financial success.

    Kelly, a former private client, who was highly educated and was making multiple six figures in business profits, was ridden by financial stress and worries….

    Apparently, having money doesn’t mean you know what to do with it… how to manage it….

    It’s really important to be strategic with you money and to develop winning money strategies, not just another [often] failed budget.

    Budget is a good start because it makes you look at your cash flow “close and personal.

    But it’s not enough‼

    You want to enjoy your life and your money now, while also strategically plan your money for the “golden years.”

    It’s called balancing your financial priorities.

    And Money Mapping protocol – intentional and strategic management of your money according to your short term and long term priorities – is a great tool to win the money game.

    Some of my family members, who used to make more money than me but were not strategic about managing their money, are now HAVE to work (in their 60s) while I became financially free in my early 50s…

    Look… Road to Financial Success is messy.

    There’re no guarantees and no shortcuts.

    However, if you want to enjoy your life now and in the future – learn how to win the money game.

    Start exactly where you are and with what you have, even if it means taking baby steps (e.g. tracking your cash flow).

    “Direction is more important than speed.”

    And speaking of direction…

    The 2024 is just around the corner and you can set yourself up for a successful year by discovering

    ✅ What problems might be causing your money concerns

    ✅ How to fix the money problems

    ✅ How to map your money in a way that you will be balancing all your financial priorities and have more money with less stress and less risk

    If this sounds like something you’d like to discover and you are eager to develop winning money strategies, you’ve got to come to my new “From Worrying To Winning the Money Game” Masterclass.

    Living with constant financial stress and worries is NOT the way to live a happy and healthy life.

    As I’m sure you know, financial stress affects EVERY aspect of your life – your health, relationships, self-confidence, self-image.…

    Fortunately, money stress is one of few things you can control.

    Please note: I have no idea when (if at all) I’ll be guiding this Masterclass again…

    But this time you can receive a GIFT to attend this powerful training (retail ticket value is $297), so that you don’t have to worry about investing money to participate in it.

    Bottom Line:

    Do NOT normalize living with financial stress!

    It is possible to feel good when you think about your money.

    And that’s my intention for you.

    What’s yours?Millen 💕

    P.S. The link to register for this Masterclass is in the comments.

  • Navigating the AI Megatrend – PART 1: The Impacts of AI on Our Lives and Jobs

    Navigating the AI Megatrend – PART 1: The Impacts of AI on Our Lives and Jobs

    AI (Artificial Intelligence) is the newest Megatrend that is bursting into our lives, our job markets, and financial markets.

    It’s no longer a science fiction – AI is a reality that’s transforming our lives, work, investments, and all industries in many unprecedented ways.

    Before ChatGPT, almost no one understood what AI was and what it could do.

    For most folks, AI was either an abstract concept or science fiction like… space travel… and would never become a reality.

    But ChatGPT changed all of that!

    For the first time ever, people can now interact with AI right from their computers… and see that AI is generating its own articles, its own answers, and its own ideas.

    I believe that AI is the Megatrend of our lifetime!

    In this article I’ll talk about the impacts of the AI on our lives and jobs.

    The Impacts of AI on Our Lives and Jobs

    The AI Revolution has arrived.  

    Let’s talk about its effects  – the good, the bad, and the ugly…  

    Let’s explore specific examples of how the AI Revolution is shaping our present AND our future.

    Hold onto your seat. It’s going to be an illuminating ride! LOL

    AI is like having a brain in machines, enabling them to think, learn, and make decisions on their own.

    And, as I mentioned earlier, one impressive AI example is ChatGPT, which is a chatbot that uses AI language model and generates its own content.

    ChatGPT is at the forefront of the AI Revolution – it represents the first consumer application of a new kind of technology called “generative” AI. 

    Generative AI — like ChatGPT, for example – is a type of algorithm that generates a new output, like text or images, based on examples on which it’s been ”trained,”  but it’s NOT a linear algorithm that is predictably programed by human beings!!

    Yes, “Generative” AI can “generate” original content, including essays, fine art, software code, convincing educational or political advertising, and so much more.

    Before ChatGPT’s debut in late 2022, researchers from the McKinsey Global Institute predicted that AI would create a $13 trillion uptick in the world economy by 2030 and boost global GDP by 16%.

    But it looks like ChatGPT’s launch accelerated this timeline.

    Now AI capabilities are doubling every three months, which means that breakthroughs in AI over the next six months will be 4X more powerful than everything leading up to today.

    Since ChatGPT going public, numerous experts have come out with warnings about how rapidly AI is disrupting the world. Elon Musk, who has been leading the charge on AI development, stated “we need a 6-month pause in the development of AI.” Warren Buffet compared AI to the atom bomb…. Experts fear that AI is spreading so fast and unchecked – it’s going to lead to the biggest disruption in human history!

    Without a doubt AI Revolution is impacting almost all human functions – from societal, cultural, economic, political, and militaries – and there’re many reasons to be very concerned.

    I Invite you to read a fascinating book by Joe Allen called “Dark Aeon: Transhumanism and the War Against Humanity.”

    Now… I don’t think the world is going to end anytime soon.

    However, I firmly believe that AI will completely disrupt the entire financial markets including millions of savings and retirement accounts.

    The Economic Impact of AI

    The economic impact of AI, which is truly colossal.

    AI-based innovations are boosting productivity, streamlining processes, and creating new revenue streams for businesses.

    For example, in healthcare, AI is diagnosing diseases, discovering new drugs, and improving patient care.

    On the other hand, we must be aware of MANY concerns that adapting AI introduces to our lives…

    AI-powered surveillance, data privacy, information manipulation, and the impact on education – these are just a few concerns that are top-of-mind for many people, including myself.

    And that’s not all…

    While AI offers incredible economic opportunities, it’s also causing potential economic disparities – some professions will have to adapt or vanish entirely.

    Sectors that are heavily dependent on manual labor will likely face challenges as AI drives automation.

    For instance, roles like data entry, repetitive tasks, and even some customer service positions might be replaced by AI-powered systems.

    So, which jobs are AI-proof?..

    In my opinion, those jobs that involve creativity, emotional intelligence, human-to-human communication, and complex decision-making will remain essential.

    Think artists, therapists, teachers, and creative professionals.

    While some jobs will be automated, AI will also create new roles, such as AI trainers, data analysts, and human-machine collaboration experts.

    According to the Goldman Sachs report, 18% of global work could become automated during this AI Revolution.

    More than that, the report anticipates that AI could replace nearly a quarter of all jobs.

    AI can take over a large amount of administrative work, like data entry and bookkeeping….

    However, the good news is that millions of jobs and many sectors of the economy will remain relatively untouched by AI’s reach.

    Jobs that emphasize human touch, empathy, and creativity will remain in demand, but will likely require to embrace AI in their roles.

    I also believe that jobs that require human intuition and emotional connections will be in high demand.

    Here’s the most important thing to understand about the jobs that will be overtaken by AI:

    1.   Professions that revolve around information processing will be the first to become obsolete.

    2.   Jobs that require sophisticated interpersonal relationships should not be at risk of an AI takeover.

    Here’re 3 examples of Vulnerable Jobs That Might Not Survive AI :

    Job No. 1: Software Engineer

    Job No. 2: Paralegal Assistant

    Job No. 3: Customer Service Representative

    Many companies now use online chatbots or automated voice responses on the phone to help answer customer questions or complaints.

    Multiple banks have made a big switch to AI-driven customer service in recent years, using chatbots to handle customer service requests:

    TD Ameritrade brokerage and Bank of America’s chatbot named Erica now handles hundreds of millions of customer inquiries every year.

    Here’re 3 Jobs That Should Survive AI

    AI-Proof Job No. 1: Lawyer

    AI-Proof Job No. 2: Agriculture

    AI-Proof Job No. 3: Educator & Therapist

    The Bottom line:

    Not the Internet… not the cryptocurrencies boom…and not 5G technologies created the Megatrend effects as big as AI. And the AI revolution is just getting started. The rapid advancements and adoption of AI are changing societies and industries worldwide.

    And, like with any revolution, AI revolution brings BIG changes in the way we live, work, and invest.

    The Labor markets and workplaces will be completely changed.

    A report from Goldman Sachs estimates that around 300 million jobs worldwide could be affected by generative AI…  

    But EVERYTHING has a front and a back – good and bad…

    This new AI megatrend is creating incredible investment opportunities! J

    Next week I’ll publish another article about AI where I’ll share the Effects of AI on Strategic Investing.

    To your Health, Wealth and Freedom!

    Millen Livis , MS, MBA

  • 💰Investing in the Stock Market Using Index Funds – 🎯Pros and Cons – Part 4 🛑4 Potential Warnings About Index Funds

    💰Investing in the Stock Market Using Index Funds – 🎯Pros and Cons – Part 4 🛑4 Potential Warnings About Index Funds

    In this article, the PART 4 of this series, I’ll cover 4 Potential Warnings about Index Funds’ Investing.

    You can read previous articles of this series – PART 1, PART 2, and PART 3 – as a reference for this one.

    You may have noticed that Investing in index mutual funds and ETFs gets a lot of positive press, and rightly so.

    Index funds, at their best, offer a low-cost way for investors to track popular market indexes.

    In many cases, index funds outperform the majority of actively managed mutual funds.

    One might think investing in index products is a no-brainer. LOL

    Not surprisingly, the providers of mutual funds and exchange traded funds (ETFs) have created a bunch of new index products in response to the popularity of index investing.

    With this being said, I want to share with you 4 things you must know about index funds as you plan your investment strategy.

    1.  Not All Index Funds Are Cheap

    People who work for large corporations often have the opportunity to invest in low-cost index funds offered in 401(k) plans that offer institutional shares of certain funds.

    If your 401(k) plan contains index funds from providers such as Vanguard Group or Fidelity Investments, you can be pretty confident that these are low-cost.

    Both funds from these families offer share classes with even lower expense ratios and also offer a full range of index funds across various stock and bond asset classes.

     Unfortunately, 401(k) plans do not always offer index funds that cheap.

    This may be true if your plan provider is an insurance company or brokerage firm that offers its own proprietary funds.

    While the advice to focus on index funds in your 401(k) plan is often sound, make sure that you look at the index funds offered in your plan to ensure that you are making the best choices.

    For 401(k) participants who are fortunate enough to have a selection of several low-cost index funds, the advantage over higher-cost active funds can be significant.

    2.   Not All Indexes Are Created Equal

    There is a wide range of low-cost index mutual funds and ETFs that cover widely used market indexes – domestic and foreign stock indexes.

    However, just because a fund says index fund in its name, doesn’t necessarily mean it tracks the underlying index or sector exactly.

    When screening for an index fund, it’s important to remember that not all index funds labeled “S&P 500” or “Wilshire 5000” follow those indexes.

    Some funds can have divergent management behavior. In other words, a portfolio manager may add stocks to the fund that are similar to what’s in the index.

    It’s important for investors to analyze the holdings of an index fund before investing to determine whether it’s a true index fund or a fund that has an index-like name.

    Also, it’s important to understand the investment manager’s goal for the index fund and what holdings or investments are included in order to reach that goal.

    If the goal is considered aggressive, the fund’s investments might deviate from the underlying index.

    The need to consider fees becomes even more important relative to increased risk factors—fees reduce the amount of return received for the risks taken.

    3.  Index Funds Don’t Necessarily Reduce the Risk of Loss

    Investors in an index fund or ETF tracking the S&P 500 during a bear market in stocks will experience losses just like the index.

    In a broad-based selloff like we experience now, investors in other index products tracking real estate in the form of a real estate investment trust (REIT) or emerging market stocks could suffer large losses as well.

    Index fund investors do, however, eliminate management risk.

    This is the risk of an active manager underperforming the benchmark associated with their investment style due to the investment choices they make in managing the fund.

    While occasional adjustments to the index funds do not impact most buy-and-hold investors, informed investors should stay on top of their index funds’ holdings for changes like this, as mutual fund providers continue to compete on price.

    4.  Index Funds Don’t Ensure Investment Success

    Just investing in an index fund or two doesn’t mean that you’re on your way towards achieving your investment or financial planning goals.

    Index funds are tools just like any other investment product.

    In order to gain the most benefit from using index funds either exclusively or in combination with Stocks and ETFs, you need to have an investing strategy.

    Index funds work quite well as part of an asset allocation plan.

    Many financial advisers put together portfolios of index funds that are allocated in line with their client’s risk tolerance and their financial plan.

    Others may use a “core and explore” approach where index funds make up much of the portfolio (the core) with selected active funds and individula stocks to hopefully enhance returns (the explore portion).

    Bottom Line:

    • Investing in index mutual funds and ETFs can be an excellent low-cost strategy for all or a part of your investment portfolio.
    • Index funds are a popular strategy for investors who seek passive index strategies as opposed to active management.
    • Index funds have several benefits including lower costs, broad-based diversification, and lower taxes.
    • Investors in in dex funds must be discerning since not every fund is low-cost, and some may be better at tracking an index than others.
    • Owning an index does not mean you are immune from risk or losses if the markets take a downturn.
    • Like with any other investment strategy, investing in index funds requires that you understand what you are investing in.
    • Not all index products are the same and investors need to look beyond the “index fund” label to ensure they are truly investing in a low-cost product that tracks a benchmark that fits with their investing strategy.

    That’s the last article in the 4-part series about investing in Index funds.

    Hope this series was helpful & useful for you if you considering investing in Index funds.

    Please post any questions, opinions, insights in the comments to this article.

    Thank you for reading!

    You are blessed – stay in your power….

    To your Health, Wealth, and Freedom.

    Millen Livis

  • Investing in the Stock Market Using Index Funds – Pros and Cons – Part 3: What Is “Inexpensive” When You Use Index Funds?

    Investing in the Stock Market Using Index Funds – Pros and Cons – Part 3: What Is “Inexpensive” When You Use Index Funds?

    In this article I’ll talk about the COST of investing when you use Index Funds.

    But first, a quick review…

    In Part 1 of this articles’ series I talked about some good reasons to invest in the Stock Market using Index Funds.

    In Part 2 I shared with you the 5 reasons for NOT investing with Index Funds.

    Make sure you review the previous articles before diving into this one.

    So, What Is “Inexpensive” When You Use Index Funds?

    One of the main advantages of investing in the stock market using Index Funds is low cost of this type of investing, because Index Funds are not actively managed mutual funds…

    They simply replicate the return on a specific market indexes.

    This type of investing is considered passive.

    Index Funds’ portfolio managers merely buy and hold a sample of the stocks in the target indexes, and then leave them alone… unless the index itself changes.

    In other words, portfolio managers are not actively stock-picking holdings in the Index Funds by buying and selling the securities inside the funds.

    And so, because of the low hands-on management involved, index funds have below-average expense ratios (unlike actively managed mutual funds), and are referred to as a low-cost investing option.

    So, let’s define “low cost” of investing by looking at financial metric like Expense ratio.

    Expense Ratios

    An expense ratio reveals the amount that an investment management companies charge investors for managing an investment portfolio, a mutual fund, or an exchange-traded fund (ETF).

    The Expense ratio represents all of the management fees and operating costs of the fund and shows the percentage of expenses compared to the amount of annual average assets under management in the fund.

    Expense ratios are listed on the prospectus of every fund and on many financial websites.

    BTW, competition has led expense ratios to fall dramatically over the past several years.

    What are the High and the Low Expense Ratios?

    A number of factors determine whether an expense ratio is considered high or low.

    A good expense ratio, from the investors’ viewpoint, is around 0.5% to 0.75% for an actively managed portfolio.

    An expense ratio greater than 1.5% is considered high.

    In other words, the average expense ratio for actively managed mutual funds is between 0.5% and 1.0%, occasionally up to 2.5%.

    For passive index funds, the typical ratio is about 0.2%.

    Besides Index Funds, you can choose to invest in the Stock Market using ETFs (exchange-traded funds), which are NOT mutual funds.

    ETFs are also passively managed funds and trade throughout the day, similar to stocks, while index funds trade once, at the market close.

    In general, the expense ratios for mutual funds, including Index funds, are higher than expense ratios for ETFs

    In other words, ETFs are often cheaper than index funds (if bought commission-free.)

    Also, Index Funds sometimes have higher minimum investment amounts than ETFs.

    However, some fund providers in the U.S., like Fidelity Investments and Vanguard Group, offer minimum investments on their Index mutual funds.

    Understanding the Hidden Differences Between Index Funds

    It might be reasonable to assume that the index funds that track the same indexes should all have the same performance.

    However, there are many disparities across index funds, primarily because of the different operating expenses, and therefore, different Expense ratios.

    Expenses are very important to consider when you invest because they can erode your return on investment.

    Fees

    Index funds with nearly identical portfolio components and investing strategies, can have different Fee structures.

    Some index funds charge front-end loads, which are commissions or sales charges applied upfront when the initial purchase of an investment happens.

    Other funds charge back-end loads, which are charges and commissions that occur when the investment is sold.

    Other fees include 12b-1 fees, which are annual distribution or marketing fees for the fund.

    The fees and expense ratio, when taken cumulatively, can dramatically impact an investor’s return over time.

    So, various fees, along with the expense ratio, should be considered before buying an index fund.

    Typically, larger, more established funds tend to charge lower fees.

    For example, the Vanguard 500 Index Admiral Shares fund, which tracks the stocks of 500 of the largest U.S. companies, charges only 0.04% expense ratio!

    The lower fees could be the result of:

    • management experience in tracking indexes,
    • a larger asset base, which could enhance the ability to use economies of scale in purchasing the securities (Economies of scale are cost savings and advantages gained by large companies when they buy in bulk, therefore, lowering the per-unit cost.)

    The Bottom Line

    A reasonable expense ratio paid to funds’ managers for an actively managed portfolio is about 0.5% to 0.75%, while an expense ratio greater than 1.5% is considered high these days.

    For index funds, the typical ratio is about 0.2% but can be as low as 0.04% or less in some cases.

    Like with most things, you often get what you pay for.

    However, in the world of investing, there is evidence that low-cost passive index funds often outperform actively managed portfolios, especially after accounting for fees, expenses and taxes.

    If you have any questions about this topic, go ahead and post them in the comments.

    Next week I’ll share the Part 4, where I’ll discuss 4 Potential Warnings About Index Funds.

    Stay blessed, stay in your power.

    To your Health, Wealth, and Freedom.

    Millen Livis