Being Smart with $$ -- It's Free to Freeze. Your Credit, That Is.

It’s 80 degrees out and I’m Freezing.  And the best part is that now it’s free to Freeze!

As of last Friday, we will no longer pay a fee to freeze or unfreeze our credit at the three major credit bureaus.  Freezing your credit may provide the highest level of protection against identity theft and should prevent anyone from accessing new credit in your name.  It may be inconvenient when you need to apply for new credit but the protection this action offers may be worth it.  Compare the inconvenience of freezing your credit to that of having your identity stolen.  And did I mention it’s now free?

1. Equifax            https://www.freeze.equifax.com

2. Experian          https://www.experian.com/freeze/center.html

3. TransUnion     https://freeze.transunion.com

Larry Pike, CFA

Client Priority Financial Advisors LLC
www.clientpriority.com 

Being Smart With $$ -- Your Choice: Smoke or Have $1,000,000

I saw someone spend $1,000,000 on cigarettes yesterday!!  Well, more correctly, yesterday I saw someone buy cigarettes and over their lifetime it will probably cost them about $1,000,000.  This 20-something smoker paid $11 for the pack.  If they smoke a pack daily between now and retirement, that is $11 per day not going into their long-term stock market account.  That cigarette money would likely be worth over $1,000,000 for them in retirement even at below historical, stock-market returns.  I hope that cigarette tastes REALLY good! Isn’t it time to make a plan for spending and saving?

Larry Pike, CFA

Client Priority Financial Advisors LLC
www.clientpriority.com 

Being Smart with $$ -- Does Talent Get You Higher Mutual Fund Returns?

When choosing a mutual fund, it is often said that you should pick a manager with talent who has proven that he or she can stand above the pack and give you superior returns.  It is said that talented managers can beat an unmanaged low-cost index fund even if most managers in a category cannot.  Investors may have followed this rule when choosing Janus Henderson Global Unconstrained Bond Fund managed by legendary bond manager Bill Gross.  Some argue that talent is worth the extra fee paid to the fund manager (about 0.68% extra versus a 75%/25% mix of a US bond index fund and an international bond index fund, a similar mix to how Mr. Gross’s fund is invested.)  But that extra fee is a hurdle an active manager must overcome before his fund can outperform.  You may already have guessed that you would have done better by buying the low-cost, unmanaged index-tracking funds.  Buying the Janus fund instead of the index funds cost you about 3/4% of performance annually over the last 3 years, a loss surprisingly close to the extra fee paid to the fund manager.  It was much worse in the last year where you lost over 4% of performance in the Janus fund vs. the index funds.  Additionally, Mr. Gross’s fund was more volatile. When choosing a mutual fund, perhaps your better bet is to opt for the low-cost, index fund that has a head start right out of the gate because it takes less of your money out of the fund.  That advantage has allowed index funds to outperform more often than not, and even talented fund managers know that index funds are hard to beat.

Larry Pike, CFA

Client Priority Financial Advisors LLC
www.clientpriority.com