It is bizarre that many active fund managers and financial professionals are paid so much yet cannot outperform an index fund. The average cost for owning actively managed funds in 2021 was 0.60%. We're going to minimize this fee-taking from your accounts.1 Whether it's stocks, bonds, or real estate, our financial advisors will invest you in low-cost index funds that have historically performed well versus their peers. We also consider other factors, like the liquidity of the index and the bid/ask spreads. There are thousands of index funds to choose from, and slight differences matter over time.
We generally purchase index funds as ETFs, but sometimes use the mutual fund format. Learn more about the difference here.
See our fee chart here.
We want to make this simple for you. Your accounts may include taxable accounts, retirement accounts, educational savings accounts, active and legacy 401k or 403b accounts, etc. We will do the paperwork for you to move them to Charles Schwab, where we hold our clients’ money.2 In that process, we look to simplify your account setup. If you have an active 401k or 403b plan, we can manage it where it resides at your employer as part of your overall asset mix.
Modern investment theory echoes what your parents taught you when you were young: "don't put all your eggs in one basket." As many people learned when the markets crashed in 2008, true diversity can be elusive: they had their eggs in different baskets, but the whole hen house burned down. Your financial advisor will work with you to spread your money across asset classes, including investments like United States Treasury Bonds that generally offer diversification in a financial crisis.
"We all wish we had a little genie who could reliably tell us to 'buy low and sell high.' Systematic rebalancing is the closest analogue we have." ~Burton Malkiel, Princeton University. It's all easy to say, but when there is a financial crisis or a bubble, the human tendency is to do the opposite. Your financial advisor will create a rebalancing plan for you and be disciplined in executing it. At the same time, our methodology helps lower your tax bill.
Warren Buffett and the Waltons didn't get wealthy trading in and out of investments frequently. They hold positions for extremely long periods of time, minimizing the tax effect of capital gains. Index funds have a tremendous advantage in this regard, as in some cases, an investor never needs to sell, deferring capital gains forever! Certain indexes should be held in specific account types for tax reasons. Minimizing the headwind of unnecessary capital gains taxes is critical to your long-term success.
Most people have great difficulty staying the course in an investment strategy over a long period of time. It is almost as if humans are wired to make the wrong financial decisions: our brains constantly seek out the next dopamine hit, activity represents progress in our minds, we like to do what everyone else is doing, and we have emotions like fear and greed. None of this is helpful as an investor. (See research here, here, here, and here). Once we design a suitable investment plan, our job is to prevent you from going astray. Read why most individual investors underperform academic models.
We are not computers, and neither are you. Life is going to throw you curveballs, both good and bad. We need to understand where you are in life and how you got here, your attitude toward risk, your priorities, and long-term goals. Our job is to design a prudent investment plan and financial strategy to help you end up where you want to be in the future, while seeing you through life’s ups and downs, including those of the market. After all, you don't live to make money, you make money to live. In addition to managing your investment accounts, we can also help answer your general financial planning questions. See more on ODIJ’s approach to financial planning here.
The financial industry is skilled at marketing its services with the promise to reduce your stress. Ironically, the way the industry’s excessive fees can eat into your savings can be enough to give you a heart attack. Our financial advisors aim to protect you from unnecessary exorbitant costs, while moderating your fear in a crisis and your euphoria in a bubble. We know it helps to have someone to turn to when everyone is screaming that the world is ending. Everyone needs guidance, reassurance and a helping hand to stay the course.
1 Sources: Bogle Financial Markets Research Center. Circular Graphic Fee Sources: Asset-weighted average expense ratio for active funds - from Morningstar's, "2021 U.S. Fund Fee Study"; One Day In July Index Fund Average Fee represents the weighted average expense ratio for a typical One Day In July client with a 75% Equity / 25% Fixed Income portfolio allocation with no direct international positions as of 3/30/2023; this fee does not include investment advisory fees.
2With the exception of 529s and certain workplace retirement plan accounts, investments accounts are held at Charles Schwab, and clients can view their accounts online through the Charles Schwab portal. We work with Schwab to ensure your account transfers from other financial firms are as seamless as possible. Assets can often be transferred over into your Schwab account in kind.
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Shelburne, VT Financial Advisor
145 Pine Haven Shores Road, Suite 2212
Shelburne, VT 05482
Chesterbrook, PA 19087
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Burlington, VT 05401
Rochester, VT Financial Advisor
Available for meetings in Rochester, VT and surrounding areas.
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