Independent Fiduciary With Over 25 Years of Managing Client Investments
Anthony B. Carr, CPA, CFP®, MBA is the principal of Carr Wealth Management, LLC. His experience and expertise in helping clients with financial advice and investment management provide client value by assisting them to make the right decisions and also helping them avoid the wrong ones. Please review our website and contact us for more information or to schedule a no-charge consultation and portfolio review.
Investing is about risk and return. The more risk you take, the greater the expected return. Period.
Speculation is a zero-sum game: the 50% chance of being right matches the odds of being wrong.
The more complicated an investment is, the less it benefits the investor.
Wall Street makes money by investor’s trading, not by investors being disciplined.
Every transaction has a buyer and seller who both believe they are doing the right thing.
If everybody has access to the same information, it is unlikely an investment can be mispriced (long-term).
For the past 99 years, the U.S. Stock Market has produced positive returns 74 times (75%). On average, the U.S. market produced positive returns every three out of four years. Of the 74 positive years, forty-one of those years earned a return of over 20%. Of the 25 years of loss in the U.S. market since 1926, only six times has the loss been greater than 20%.
Example:
You invest $500K for 20 years and earn an annualized 8% gross (before fees) return. If your annual fees and costs are 3% (5% net), you would accumulate approximately $1.326 million at the end of 20 years. If your fees and costs are only 1%, you would accumulate roughly $3.81 million over the same period. - a 46% increase.
Fees Matter
Please look at the chart to the right, which illustrates the impact of annual fees on investment growth. The difference in costs may be minor year-to-year, but the long-term effect can be substantial. One problem is that many investors do not know the total fees for managing their investments, with or without an advisor. In addition, different types of investments have unique costs (e.g., mutual funds, annuities).
Higher fees applied to your investment strategy usually result in lower returns unless your investments produce above-average returns to compensate for the additional costs. An overwhelming body of academic evidence supports that earning above-average returns is difficult enough, let alone earning an excess amount to cover the extra costs.
My philosophy has always centered around straightforward, common-sense principles that ensure my clients have efficient access to the public capital markets. I use institutional, low-cost investments, the same type that large pension plans and endowment funds use.
We are a fee-only registered investment advisor firm. Our annual fees are, on average, 1.0%, with lower rates available on larger balances. Please see our website for more information.