Monthly Archives: March 2021

Weekly Musings – March 17th 2021

Weekly Musings – March 17th 2021

Best Tweet

Patrick brings the heat on how to save. Remember, taxes and fees are guaranteed, gains are not.

https://twitter.com/AskForTaxAdvice/status/1370513242624245768?s=20

Best Podcast

Lex Fridman talks with the founder of Algorand and MIT Professor Silvio Micali

They talk about:

  • What is money and the importance of social constructs
  • What is cryptocurrency and why it is important
  • The trilemma of Scalability, Security, and Decentralization
  • Why Alogrand is important and how it addresses the trilemma
  • What Bitcoin and Ethereum got right, and where they fall short
  • Life, love and the meaning of it all

Best Article

Ray Dalio, the famous hedge from manager of Bridgewater Associates, brings a scathing treatment of bonds.

…The world is a) substantially overweighted in bonds (and other financial assets, especially US bonds) at the same time that b) governments (especially the US) are producing enormous amounts more debt and bonds and other debt assets.

-Ray Dalio

Because I believe that we are in the late stage of this Big Debt Cycle that mechanistically works in the way I described, I believe cash is and will continue to be trash (i.e., have returns that are significantly negative relative to inflation) so it pays to a) borrow cash rather than to hold it as an asset and b) buy higher-returning, non-debt investment assets.

-Ray Dalio

Wild Card

Backtest Dollar Cost Averaging into Bitcoin over different time periods

The Silent Killer of Investment Returns – The Impact of Fees

The Silent Killer of Investment Returns – The Impact of Fees

Did you know fees compound in your investments just like your investment returns? Let’s looks at some funds that track the S&P 500 and the impact of fees.

  • VOO – 0.04%
  • SPY – 0.01%
  • MXVIX – 0.52%
  • RYSYX – 2.33%

So what impact does this make? Lets work through an example.

Assumptions:

  • $1,000 invested every year
  • Investment Timeline is 30 years
  • Investment return is 8% annually the same across all funds

Vanguard S&P 500 ETF

  • Ticker: VOO
  • Manager: Vanguard
  • Website
  • Expense Ratio: 0.04%
  • Return in 30 years at 8%: $121,381
  • Cumulative Impact of Fees: $554
  • Cumulative Impact of Fees %: 0.45%

SPDR® S&P 500® ETF Trust

  • Ticker: SPY
  • Manager: State Street Global Advisors
  • Website
  • Return in 30 years at 8%: $119,953
  • Annual Fee: 0.01%
  • Cumulative Impact of Fees: $1,225
  • Cumulative Impact of Fees %: 1.00%

Great-West S&P 500® Index Fund

  • Ticker: MXVIX
  • Manager: Great-West Funds
  • Website
  • Return in 30 years at 8%: $109,855
  • Annual Fee: 0.52%
  • Cumulative Impact of Fees: $6,491
  • Cumulative Impact of Fees %: 5.31%

Rydex S&P 500 Fund

  • Ticker: RYSYX
  • Manager: Rydex Series Funds
  • Website
  • Return in 30 years at 8%: $76,190
  • Annual Fee: 2.33%
  • Cumulative Impact of Fees: $25,445
  • Cumulative Impact of Fees %: 20.80%

Just by making a smart choice you can net THOUSANDS of dollars! This is true of any fees associated with your investments, be watchful! Some 401(k), 403(b) or asset under management can be very high!