March 2017 Update From Our CEO

The market’s near all-time highs. It’s great for the value of your retirement account, but now’s the time to be extra vigilant. Some ideas how: pay less in fees; learn about how health and wealth go hand in hand; and stop guessing how long you’ll live.

Buffett wants you to pay less in investment fees

People admire Warren Buffett not just for his wealth, but also for his no-nonsense approach to business. 10 years ago he made a friendly wager with an active fund manager that a low-fee passive index fund from Vanguard would outperform any group of actively-managed hedge funds. The fund manager who took Buffett up on the offer chose a basket of 5 funds. Their bet won’t end until the end of the year, but Warren Buffet’s Vanguard fund has already gained 4 times more in value after fees. Read more in Marketwatch.

Real steps that improve your chances of a long life

I’m not usually impressed by articles that are long lists. They tend to have great titles but be light on substance. I thought this one was different. This article brings together 50 actionable suggestions that could help you live longer, all of which are backed by academic data. Read more on AARP’s website.

Your financial plan shouldn’t force you to guess your own longevity

You shouldn’t have to guess your own longevity when preparing for retirement. You didn’t have to when you had a pension, but you do have to now because of the way the 401(k) works. I’m an adamant believer that that doesn’t make much sense. And it seems like others agree. I was quoted over two weeks ago in an article that is still one of the most emailed stories on the NYT. Read more in The New York Times.

Closing Thoughts

One of the biggest mistakes investors make is judging a financial advisor by how much the money they control has appreciated, rather than how well it’s done relative to comparable investment options over a similar time period.

Here’s an example: You hire a new broker (Broker A) and 12 months later your portfolio has declined by 20%. You fire Broker A, hire Broker B and 12 months later your portfolio is up 10%. So did you do the right thing? The answer seems obvious (yes!), but it’s actually not. Let me explain.

We tend to judge investment performance by how it did, rather than how well it did compared to similar benchmarks. This focus on absolute returns rather than relative returns has led investors to hire brokers who told them they could beat the market, although they rarely do in the long run. It’s also meant that investors haven’t focused enough on high fees being paid to the middle man.

I really liked this NPR story about the new stock market highs and the need to (i) avoid anyone who tells you they have a crystal ball about what will happen next; and (ii) pay as low fees as possible.

Just because the market’s at all-time highs, don’t forget the basics.

To Your Continued Longevity,
Matt and the Blueprint Income Team

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