Simplifying Our Retirement Accounts

Last updated on May 22nd, 2019 at 04:52 pm

Disclaimer: I am not in any way a financial advisor. I am simply sharing what we are doing as a family to become financially independent.

If you have been following our journey to financial independence. You know that we are taking steps to FIRE (Financially Independent Retire Early)

{You can catch up here.}

We are One Step Closer to FIRE

One of the latest steps we have taken was to simplify our investment accounts. If you are anything like us, you probably have several retirement accounts all in different companies. This can be difficult to keep track of everything not to mention the FEES… We will be talking about that a little later.

We decided to ditch our financial advisor and take control of our own retirement accounts.

When Ryan got his current job the whole office was using this independent financial guy. We combined our 401k and other investment accounts from Ryans previous companies, over to this new financial advisor. We did this in good faith thinking he knew how to handle our accounts and to set us up for a great retirement. At the time we thought this was the right decision putting everything in the hands of this financial guy. Ryan and I continued to contribute to these accounts but they just stayed pretty flat with pretty much no gains at all.

We started to do our research looking into our accounts and start to realize that these accounts were just stagnant and the fees the financial guy was taking to be “in charge” of these accounts that were going NOWHERE!

We opened up a Vanguard account and started to invest our selves. After listening to several podcasts we decided to go all in and move everything over to Vanguard. Besides the fact we wanted to simplify our investment accounts and realized that we were paying way to high fees for accounts that had no real potential. We ditched our Financial Advisor and moved everything to Vanguard. We know currently have a joint account as well as we both have our own ROTH IRA. Accounts simplified PLUS we went from 1-2% fees to 0.04%. Yay!!

Our Advisor was nice enough guy and but he didn’t really give us any real guidance on what to do with our accounts. Even after setting up a meeting with him we left feeling lost and confused.

I challenge you to go look at the fees you are paying it may seem small at first glance. 1-2% may seem like no big deal but when you start to look at the effects it has on your compounding interest over the life of the investment is crazy!

On the ChooseFI blog which I totally recommend you read and listen to their podcast!! Ryan and I have been binge-listening to their podcast!! Anyway, they have an excellent podcast explaining how much fees cost us in the long run.

Here is a small sample from their blog talking about fees.

Imagine we started with a $100,000 initial investment and each month, we put $1,000 additional dollars into the pot for the bulk of a person’s working life–let’s say, 30 years. We will assume the market is providing 9% average annual returns for both the VTSAX investor with Vanguard and the person who decided to use an advisor. 

Here’s how the math shakes out:

WITH a starting investment of $100,000 and a $1,000 CASH INVESTED EACH MONTH WITH AN AVERAGE 9% RETURN:

The person who invested with Vanguard VTSAX with only 0.05% in fees paid $37,087. The fund grew to $2,991,794.
The person who invested with an advisor with 2% in fees paid $1,159,257. The fund grew to $1,869,624.
The difference is staggering. That 1.95% difference amounted to over $1,122,170 more in your pocket.

You can read their full article here.

Note: Vanguard is now only a .04% fee instead of the .05% as shown in the example for the savings are even greater! =)

What!? To me, that is just so very crazy! In the short month that we have moved everything over to Vanguard it has already gained!

Here is a fun compounding interest calculator to check out how much your fees are actual casting you!

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

Another great resource is Tony Robbins book Unshakable: your Financial Freedom Playbook talked about Fees. I haven’t personally read this book yet but my husband is currently reading and has read a few chapters out loud together.

Now, I’m not sponsored or affiliated with Vanguard but I highly recommend them. Their customer service is just amazing and will gladly help you with any issues or questions you have.

I challenge you to take a look at your investment accounts and see what fees they are charging you!

What have you done to simplify your accounts?

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