Dropping Edward Jones and moving my money to Vanguard

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Vanguard investment strategies are all over the personal finance blogs. Automated dollar cost averaging into passive index mutual funds has a certain sexiness to it that I didn’t appreciate until after I did it. And once I did, dang it felt sexy.

Basically,  “lower fees, from computerized passive index investing versus active management, leaves more wealth for yourself, and in 97% of the cases, gives you better portfolio performance as well”.

For 8 years I invested with Edward Jones active mutual funds. And they did okay.

Beginning in college I read books and blog posts about personal finance, including I Will Teach you to be Rich.

I mainly changed my spending habits.

I was reluctant to change investment strategies.

After running my own analysis, I realized that excessive fees were costing me lots of money.

And I don’t want that to happen to you.

I was paying 5% load fees, 1.5% expense ratios, 2% dividend reinvestment fees, and account maintenance fees.

What I didn’t know was really hurting my investment portfolio.

But, I didn’t switch over because I believed I was paying for solid performance.

I had my reasons.

-I didn’t want to upset my broker at Edward Jones

-I didn’t want to lose money in taxes and fees

-I didn’t have any experience with Vanguard.

But when I read Money: Master the Game by Tony Robbins, and his chapter on fees, I realized I had to do something.

In 2015, I opened a Traditional IRA with Vanguard.

Then I tracked performance for 2 years and saw better performance in vanguard along with less fees.

Once I had that information I knew I needed to make a change.

I had wasted 3 years and hundreds in fees telling myself that I needed to switch.

But once you have momentum it’s hard to stop it. It’s why 2.1 million people still pay for AOL internet from a CD they got in the mail in 1998.

I Finally did an in-kind transfer from EJ to Vanguard. .

For a disclaimer: I am not an investment professional, and this is not investment advice. Past performance does not predict future performance. This is purely entertainment writing.

With that out of the way. Here are my takeaways.

The end of excessive fees

EJ Roth ira was $100/year. Bullshit.

Vanguard has no loads, and some of the smallest expense ratios in the business. With a minimum 3,000k to invest.

Processing fees to change over

$100 per account to roll them over. Bullshit but worth it to be rid of their loaded funds.

Forms to fill out

You only need a form from Vanguard.

I filled it out, signed it, and within 2 weeks my account was fully moved over to vanguard from Edward Jones.

I got a call from Edward Jones asking about canceling the auto draft from my bank. I told them to cancel it, said thank you, and got off the phone.

That was it from Edward Jones.

I spent 3 years procrastinating on it.

All it took was $200 to EJ, a 10 minute form, and a 1 minute phone call.

Finally high fees were a thing of the past.

Current management ratios

My current ratios range from 0.20% to 0.06% in the Vanguard funds I am invested in. 0.43% ratio for gold ETF’s.

Passive investment

Each month I have set amount of money taken from my bank account and processed without loads into buying Vanguard shares.

I did this before. But it’s still important to build that money machine as a young man. Time is on my and your side.

Warren Buffet wrote an Op-ed piece in 2008 during the tumultuous Financial Crisis. “Buy American. I am.”

The S&P 500 was a roller coaster that month. The largest percentage swings in history.

The day his article was published the S&P was at 909.53. His critics slammed him. But a 9 year Bull market vindicated him. Today the S&P stands at 2,500.03.

Linking up banking information

Takes a few minutes, but all they need is a banking account number and routing number. Set up an auto-investment and then lay back in a hammock.

Better Website

Easy to find portfolio breakdown and performance. Really good infographics and tools on the vanguard website for a passive investor. The Edward Jones site was clunky and hard to find real numbers.

That’s what I’ve noticed. I’m glad a made that change at an early age. I now I want to take a calculated risk.

Future investment plans

I turned 18 on the day of the largest point swing in S&P 500 history, -106.95.  This current 9 year long bull market will end. Everything that goes up will come back down. I’m preparing for it in the same way Mr Money Mustache has.

Recent books I read on Personal Finance and investing that were good.

Bachelor Pad Economics: Funny, engaging, actionable.

https://www.youtube.com/watch?v=jAf7I5gl72A

Money: Master the Game: Great All-Weather portfolio allocation strategy.

 

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Exploring the Basilica of Saint-Denis in Paris while reading “Pillars of the Earth” by Ken Follet

I found Saint-Denis while stumbling through Paris on my off-day from oilfield training. I explored a-lot of the city but my favorite by far was the Basilica of Saint-Denis. This was largely due to a friend who gave me Pillars of the Earth to read. The book does a fine job of mixing a love story with royal intrigue and the incredible task of building a cathedral in the 12th century.

Saint-Denis was built early in the transition from Romanesque architecture to Gothic architecture. Saint-Denis was the first Bishop of Paris and was beheaded on Montmarte. The legend goes that he walked headless until he reached this spot and the church was built over him. In Pillars of the Earth the protaganist, Jack Jackson travels to find work at Saint-Denis and is marveled by the revolutionary new techniques in cathedral building, ie. flying buttresses, pointed arches, and ribbed vaulting.

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http://www.francethisway.com/paris/saint-denis-basilica.php

Pillars does a great job pitting the dark triad royalty against the pious Prior Philip, the leader of Kingsbridge Priory, who wants to bring prosperity to a decaying and insignificant monastery and township. Philips efforts are thwarted and resisted along the way by a machiavellian Bishop Waleran Bigod and psychotic Lord William Hamleigh.

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Philip is aided in his quest by the hero of the book, Jack Jackson, a skeptic of the church but intelligent, hard-working, and of high character.

He leaves England and makes his way to Paris while Abbot Suger is constructing the Basilica of Saint-Denis. The new design incorporates ribbed vaulting and point arches, replacing the Romanesque groin vaulting and rounded arches.

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One thing I took away from the book was an appreciation for cathedral architecture.

 “To someone standing in the nave, looking down the length of the church toward the east, the round window would seem like a huge sun exploding into innumerable shards of gorgeous color.”
-Ken Follet

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“I’ve worked with volunteers before,” he began. “It’s important not to… not to treat them like servants. We may feel that they are laboring to obtain a heavenly reward, and should therefore work harder than they would for money; but they don’t necessarily take that attitude. They feel they’re working for nothing, and doing a great kindness to us thereby; and if we seem ungrateful they will work slowly and make mistakes. It will be best to rule them with a light touch.”
― Ken Follet

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https://traveltoeat.com/saint-denis-basilica-paris/

Saint-Denis is also the final resting place of 800 years of French Royalty. One of the more interesting memorials include the remains of Louis XVI and Marie Antoinette. I am currently reading about Alexander Hamilton and the Reign of Terror. Hamilton is loathe to intervene in European wars even though they are bound to France. Hamilton argues that the US should remain neutral because the Treaty of Alliance signed in 1778 with King XVI was voided when he was beheaded in 1793.

“The cathedral is God’s shadow over history, Father. We… we live in a world that is striving for order, which is art, which is learning, which is people creating something that will bring God’s heart into their community, that will survive wars and famine, that will survive history.” -Ken Follet

Book Review “I Will Teach you to Be Rich” by Ramit Sethi: Frontload the Work and Relax

This book is great for young professionals that want power over their finances. Ramit is a smart bachelor whose mission is to maximize his utility and manage his limited willpower. I’ve put his systems into action and I’ve saved thousands. We also agree on how to eat chicken wings.

I read this in college after hearing Ramit on the Art of Charm (back when it was pickup podcast, RIP). After 2 years in the oilfield, I know this book laid a solid foundation. Last month I put his negotiation tactics to work while shopping for car insurance and got a 30% reduction by switching to Allstate. His tactics paid for the book 20 times over. Besides that he makes financial literacy interesting and has a biting dry wit.

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Ramit sets 6 weeks to put in his systems. By the end all of your finances will be automated. Your credit card, online savings and investment accounts will be connected. They will all be low-fee, high-interest, and minimal maintenance. The last section is about saving for weddings, negotiating for cars, and creating a rich life for yourself.

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These are the habits I gained and recommend doing:

  • Mint: Probably the best thing I have learned from reading this back in college was getting a Mint account. I have had it for 4 years now and have an awesome data set. I spent the other day running through what I’ve spent over the past 4 years on alcohol, bars, groceries, amazon shopping, and even income.
  • Get rid of all subscriptions: Magazines, cable, Netflix, and linkedin. They are soul sucking. If you want them, buy a la carte.
  • Craigslist: I find its great to buy/sell used items.  I have sold bikes, shoes, furniture and TV’s.
  • Investing: Automation, putting money away for an index fund. It’s like tinder dating for your money. Keep working hard and learning at your job so you deserve the raises that will come your way, and you can invest those. Nothing feels quite like making money while you sleep.

Ramit has a large collection of articles and courses. I almost pulled the trigger on Dream Job but I decided to implement his free stuff first before I moved on to the premium services. This is an entertaining book and I plan on giving it to my nephews and cousins when they are in college.

For 2 great interviews of Ramit:

http://theartofcharm.com/podcast-episodes/ramit-sethi-will-teach-you-to-be-rich/

http://theartofcharm.com/podcast-episodes/episode-172-ramit-sethi-iwillteachyoutoberich-com-dream-job/

For another good book review of IWTTBR. Look to Mr Money Mustache’s Book Review.  He calls the title into question, “At best, it should be called I Will Teach You to Stay Out Of Trouble”. MMM is more of a stoic frugalist. Ramit is more of a measured hedonist.

Ramit’s main message is to set up the financial system so you CAN live a rich life. Whatever that means to you.

Buy the book here

 

How Red Lerille Mr. America 1960, started Red’s Gym: The biggest and best gym in the South

Reds Gym Pic

Reds started in 1963. His goal is to make an improvement every month. There have been 624 improvements since 1963. Today Red’s is over 185,000 square feet. Every time I get onshore I go here 4-5 times a week. Red has built a world class gym in the 214th largest city in the US. It’s an amazing place and an good story.

“This place started off like Red Lerille’s Health Studio, then it became Red Lerille’s Health Club, then Red Lerille’s Health and Racket Club, and eventually people dropped all that shit and called it Red’s.”

Red’s Keys to Success

1. Arrive on time, ready to work

From Red Lerille: Painting the town Red,

“Every day, Lerille rises at 2:30 a.m. and rides one of his six bikes to the club to open it at 3 a.m. He works out for about 90 minutes before he hops on his bike for about 45 minutes of cardio and then pedals home. He takes a shower, shaves, eats breakfast and then heads to the 7 a.m. mass at St. Mary’s Catholic Church, down the street from his home. After mass, he heads to the private airport where he hangars the antique airplanes he restores and flies one for about a half-hour. Then, he drives back to Red’s, usually arriving by 8:30 a.m.—about the time many people are grabbing their first cup of coffee for the day.”

Credit Lara Hale

      2. Say hello and goodbye

  Red’s has 250 employees. Guess who opens up the gym every morning at 3:00 am. Red.  He usually stays until 7pm, even on Sundays.        

         3. Make a change every month

“You gotta have a board, with some goals written down, you have to write your goals down.”

        4. Learn as much as you can

When I joined the gym he gave me the tour personally. He handed me a book One Summer by Bill Bryson. It was fun read and chronicled the crazy events of 1927; from Lou Gehrig and the Yankees to Charles Lindbergh. Not just into fitness, his hobbies are building airplanes and motorcycles.

       5. Stay in shape

He works out everyday. One of the pillar habits in The Power of Habit by Charles Duhigg is exercising. Exercise has ancillary effects in your life that moves you to accomplish all other goals.

 Tour of the facility and history of Reds.

 

Red’s is an anchor for Lafayette. It has

  • a basketball court
  • 4 large swimming pools
  • boxing ring
  • racketball courts
  • cafeteria
  • coffee shop
  • 2 yoga studios
  • Pilates stuio
  • Cycling studio
  • Outdoor obstacle course
  • Day Care
  • 6 squat racks and full sets of bumper plates
  • MIT which is basically its version of crossfit

Besides all that is has a world class tennis facility.

  • 20 outdoor courts (14 hards and 6 clay rubico)
  • 3 well lit indoor courts with a viewing gallery.

This place is amazing.Reds tennisreds 2

Two critiques I’ve heard are were the price and the bodybuilders. The former is an excuse, and the latter is an over generalization.

  1. Red’s over delivers on value. Those that say it’s too expensive just don’t want to go to the gym. That’s fine, but don’t tell me about how your free week at reds was amazing, and you really wish you could afford it. I paid a one time $230 joining fee. And I pay a monthly fee including meals and tennis court of around $80 per month. You get a world class facility for a low cost and it gets better every month. That’s a high return on investment.
  2. “Oh Red’s, isn’t that just a meathead gym”. It is a bodybuilding gym, but its a lot more than that. Red’s foundation is bodybuilding. He was 1960 Mr. America after all. Their are serious bodybuilders there and they do stand out, but to be honest they are maybe 5% of the total membership. And I’ve never had a bad experience with them. I think the critique is based on the assumption that if you are big you do steroids and act aggressive. I’ve found Red’s to be a community of like-minded people trying to improve everyday.

Compared to other gyms Reds is incredible for the value you get in return. You get a world class facility for a low cost and it gets better every month. That’s a high return on investment.


 

Mastery by Robert Greene. Chapter 1 Relfection

Robert Greene’s philosophy, strategy and self-help books are some of my favorites. He has written four international bestsellers, including two of my favorites The 48 Laws of Power and The Art of Seduction. I anticipated his newest book, Mastery, because I think it can give me guidance on how to be more successful. I have recently realized that I need to examine my past behavior and actions, and figure out how to become more self-disciplined in order to achieve the goals I have set for myself.

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I thought that Greene’s new book would help me by offering examples on people who faced obstacles and overcame them to get to success. In Mastery, he makes the case that humans are hardwired for success not destined. In other words, they had to work at success, but are hardwired to do so. The book, like his past works; examine great historical figures such as Mozart, Einstein, Henry Ford and Charles Darwin, and their paths to success.

Some Drake to read, and get hype too. Love his new Album.

What is Mastery?

Mastery is defined in the dictionary as a comprehensive knowledge or skill in a subject, or control over it. According to Greene it is a mindset. Our thoughts focus and we are exposed to new details and ideas we become creative and inspired. In this period of exceptional creativity, we are impelled to get something done, normally by some deadline or crisis. But this brilliance does not appear out of nowhere, due to luck, or talent. This power can is a kind of intelligence that can be manufactured and maintained. The great masters of their field, Da Vinci, Edison, and Bonaparte made it their way of seeing the world.

Why is it important today?

The idea of mastery and craft is increasingly looked down upon in today’s world. Distraction and entertainment are the main impediment in our society. No one wants to work hard and expose himself or herself to failure. Technology which puts all the world’s knowledge at our fingertips also causes us to expend minimal energy and lose respect for the repetitive process needed to master any subject or skill. Greene warns,

“This hunger for the magical shortcut has survived to our day in the form of simple formulas for success, ancient secrets finally revealed in which a mere change of these efforts- for instance, the emphasis in magic on deep focus. But in the end all of this searching is centered on something that doesn’t exist- the effortless path to practical power, the quick and easy solution, the El Dorado of the mind.”

During projects I sometimes focus extensively on finding the fastest way to finish. I have probably ignored the real power that I actually possess of mastering a skill through focus and creativity.

Greene points out that,

“We can see the material effects of this power in history- the great discoveries and inventions, the magnificent buildings and works of art, the technological prowess we possess, all works of the masterful mind. If we don’t connect to our calling we become slaves to time, as it passes, we grow weaker, less capable, trapped in some dead-end career. We become captive to the opinions and fears of others. The human that depended on focused attention for its survival now becomes the distracted scanning animal, unable to think in depth, yet unable to depend on instincts.”

Greene dishes out tough love and harsh truths that I need to hear. He is credible because he bases his advice on his continual analysis of great historical figures and current scientific literature.

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During the night of July 4th I made the decision to drink in excess by using the excuse that it was a holiday, in essence, free time. One man Greene examines in chapter two, Charles Darwin, had this to say about time. “A man who dares to waste one hour of time has not discovered the value of life.” Greene continues to warn me of my hedonism in harsher terms.

“It is the height of stupidity to believe that in the course of your short life, your few decades of consciousness, you can somehow rewire the configurations of your brain through technology and wishful thinking, overcoming the effect of 6 Million years of development. To go against the grain might bring temporary distraction, but time will mercilessly expose your weakness and impatience.”

At this point in the book it moves beyond a scared straight seminar, and Greene gives reason to not put the book down.

“The great salvation for all of us is that we inherited an instrument that is remarkably plastic. Our ancestors over the course of time, managed to craft the brain by creating a culture that could learn, change, and adapt to circumstances, that wasn’t a prisoner to the incredibly slow march of natural evolution.”

I can still turn myself around. My brain is plastic, and the decisions good or bad, work to shape my character. He writes,  “At any moment we can choose to shift our relationship to time and work with the grain, knowing of its existence and power.” I can reverse the bad habits that have plagued me for many years. The ways I use to deal with anxiety, biting my fingernails, drinking, surfing the Internet can be dealt with.

“This is the real secret: the brain that we possess is the work of six million years of development, and more than anything else, this evolution of the brain was designed to lead us to mastery, the latent power within us all.”

Greene believes in identifying and honing your natural proclivities, perhaps through the long and difficult apprenticeship he describes in chapter 3, that he recommends before I can have a fulfilling vocation.

What are some takeaways from the book that I can use today?

1) The rewards in life come from learning skills. Our short-term attention span culture does not particularly push discipline before pleasure. Entertainment is preferred to moving toward pain, but in the long run the rewards far exceed that momentary relief. If you learn self-discipline and delayed satisfaction in your 20’s, your rewards will follow.

During my time in college I have been able to acquire lessons from great mentors and friends. I have grown my social skills and lost the shy demeanor that I used in high school. One skill I began to work on over the past year was learning to play the piano. I only known 12 songs and some scales at this point but I am immensely better than where I came from. I will continue to develop this skill more and more because I gain pleasure overcoming the challenges presented by the piano. It also helps that the student center has some free pianos in  that I can take advantage of during study breaks at the Library.

2) Learn one skill at a time. Do not multitask when you a trying to learn. Start with skills that you already have some natural ability in. Remember Cesar Rodriguez, the Last American Ace. Trust the process of trial and error, mixed with mentorship outlined on page 75 that took Rodriguez from the bottom of his elite flight school class to top. Greene summarizes this model quite well.

“You want to learn as many skills as possible, following the direction that circumstances lead you to, but only if they are related to your deepest interests. You are sure not where this will all lead, but you are taking full advantage of the openness of information, all of the knowledge about skills now at our disposal. You see what kind of work suits you and what you want to avoid at all costs. You move by trial and error. This is how you pass your twenties.”

3)  Take what you are given to do for others and make it yours. Follow the example of Leonardo da Vinci’s painted Angel’s and the enormous bronze statue of Francesco Sforza. He became the first artist to create realistic angelic wings, and invented a totally new way of seamless bronze casting. When someone else gives me a project, I should try and make it mine.

While not on the scale of da Vinci’s Angel’s I used this process while completing my student conduct sanctions. I received this book for Christmas and had been meaning to get to it for 6 months, but I had not. By establishing a deadline and consequences for not reading it I was able to read the book in three weeks. I though about the messages contained within for a few weeks, watching and listening to around 15 videos and podcasts given by author and then re-read certain sections that immediately applied to my situation. Beyond writing this paper, I plan on continuing my study of the book and annotating the book to send out to friends who share my interests of self-development.

My Favorite Podcast Interview.

Best Robert Greene Interview about Mastery

4)  Finally I plan to look for mentors once you have acquired some elementary skills and discipline that you can rely upon to interest them. Develop a solid work ethic and organizational skills. Once I am ready to learn I hope the teacher will appear. Once I identify a potential mentor, I will do a as Greene advises, to establish a relationship by appealing to their self-interest at all times. I will try to see the world through their eyes and ask the simple question of what it is they need most. And probably hardest for me, I will take Greene’s advice to “Get them to give you challenges that will reveal your strengths and weaknesses, and allow you to gain as much feedback as possible. Accustom yourself to criticism.”

Throughout the process of writing this I have started to discipline myself in various ways that give me confidence in my ability to change. It is a tough road, as Greene has told me, but the rewards for this are already starting to appear. At first I was very angry that I, a first offender, was given extra work. But now that I am finished with the program I am glad and appreciative of the value I gained during this course correction.