I’m just covering all my bases so this post will be relevant no matter when you read it. If you already read my review of A Random Walk Down Wall Street, Irrational Exuberance, or The Intelligent Investor, then you already know that it doesn’t matter to me if the stock market moves up, down, or sideways day-to-day. If you have a reasonably well-informed investment plan in place and an investment horizon of 10, 20, 30, or 40 years, then you shouldn’t care either. News headlines are written to generate clicks not to generate information.

On the other hand, just in case you day-trade, then you might benefit from Investing Made Easy by Tela Holcomb or how Teri Ijeoma makes $1,000 a day investing in Bull and Bear markets.

Although the stock market’s daily moves dominate the headlines, over 80-percent of the stock market’s actual wealth is held by just 10-percent of individuals. Further, 1 in 3 Americans have zero dollars saved for retirement, or otherwise. And yes one-hundred percent of Americans pay (some form) of taxes–local, state, or federal.

I am no math whiz, but it certainly seems like a significantly higher portion of the average American’s budget is more directly impacted by taxes than changes in the stock market. That’s why when I overheard Rick Ferri, CFA at FinCon19 in Washington, DC discussing why taxes are more important to the average person than the diversification of (or nonexistence of) their investment portfolio, I was all ears, eyes, and blog.

I later reached out to his website to follow-up. He was kind enough to share more insights about himself, his background, and his thoughts on taxes and investments.

Over 30 Years of Experience in the Investment and Adviser Industry

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Rick graduated from the University of Rhode Island with a Bachelor of Science Degree in Business Administration and from Walsh College with a Master of Science Degree in Finance. He became a Chartered Financial Analyst (CFA) holder in 1994. Rick is also a retired Marine Corps officer, a pilot, and flew fighter aircraft carriers.

Rick has over 30-years of experience in the adviser industry. He has published extensively on the benefits of low-cost investing, including several books on index funds, ETFs, and asset allocation. He also writes for and The Wall Street Journal.

Rick is also the creator and host of the “Bogleheads On Investing” podcast, a program sponsored by the John C. Bogle Center for Financial Literacy, a 501(C)3 organization dedicated to helping individuals learn to invest better and with less cost.

New “News” is Old News for The Intelligent Investor

Rick began his career on Wall Street. In 1999, he founded one of the nation’s first low-fee portfolio management companies. After growing the firm to over $1.5 billion in assets, he was bought out by a private equity investor. Today, he is the founder and CEO of Ferri Investment Solutions and advises affluent do-it-yourself investors by the hour. 

They hide information in books, so everyone doesn’t know where to look. I read 15 of the top-recommended Personal Finance and Investment Books to inform my own investment and saving strategy. The lessons from a hard knock life taught Rich Jones and I. Similarly, Rick found himself inspired by a certain author too: Bogle On Mutual Funds: New Perspectives For The Intelligent Investor.

The Marcus Garrett: What was it about JC Boggle’s book that inspired you and changed your perspective?

Rick Ferri, CFA: Well, first off, he spoke the truth! There’s so little of that on Wall Street where the art of deception is ingrained in the culture. 

I was working for one of the largest brokerage firms in the country back in 1996. One of my jobs was to sit on a committee that selected portfolio managers for the firm’s wrap-fee program. I helped analyze past performance, investment process, and qualitative factors of various money management firms to find ones that might outperform the market in the future.

It was a total bust. There was no way to determine this. We might as well be filling coins. Yet we were still tasked with writing up reports about how great some of these firms where, even though we had know idea what would happen in the future. 

I came to the realization that investment firms that say they can pick outperforming investments or outperforming managers including mutual funds were a hoax [bold emphasis added by Editor]. It was all a facade designed to make money from you, not for you. 

This did not sit well with me, especially given my Marine Corps mindset. Then I heard Jack Bogle speak about this very topic at a CFA conference in Atlanta. He talked about the inability of mutual funds to deliver the performance they promise, and why that occurred. It was so obvious – high fees!

As Your Personal Finances Mature, Get Tactful About Your Taxes

I really enjoyed Rick’s “a-ha” moment and great awakening. Low fees are more important to most people’s portfolio than trying to “beat” the stock market averages. This sentiment was often repeated in the fifteen money books I read. In fact, this very philosophy has completely changed how I manage my own money.

You don’t have to be the next Wolf of Wall Street to make a lot of money during your lifetime; simplicity is the key to victory. Instead of trying to beat the market averages and find the “best” broker, most investors are better served by focusing on making strategic, simple decisions: like taking advantage of low fees and basic tax-friendly accounts (401k, Roth, etc.).

This advice goes over-looked and under-discussed. The following individuals in the personal finance community have taken a straightforward assessment of this gap in the personal finance space.

A Bad Tax Plan Is the Most Costly Financial Plan of All

Like many of you, I’ve really just started scratching the surface of moving from debt management to net worth growth. Yes, I paid off $30,000 in debt. But getting out of debt, “only gets you back to broke.” This was a painful lesson I learned when I was finally debt-free, yet still net worth broke. Now I’m looking forward to when my finances are more complicated than just “max out your 401k.”

It’s still true that mastering the basics will offer most people much greater return (and peace of mind) than “mastering” the stock market. To keep it simple: 1) focus on what you can actually control (it’s not the stock market); 2) Design a money plan that works with your lifestyle; 3) Find simple ways to save on everyday expenses, fees, and taxes; 4) lower your taxable income wherever possible thru smart investment choices, like with a simple, low-cost index fund investment strategy; 5) Trust the process.

Many of you have already taken a great first step: you’ve started making smarter financial choices and you follow the men and women that will help inspire you to stay the course even when you get off track.

Now you can go back to enjoying life and allow the plan to come to fruition. The time will pass on its own.

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