Paul vs. Mutual Funds & Financial Advisers
You have a lot of options when you invest. And right now, there are a lot of opportunities out there for you.
There are financial advisers, brokers, mutual funds…
And then there’s us.
We are not financial advisers. We’re idea generators. We share our vision based on our experience of where our world is going.
We put the power in your hands. You have the options, the courage and tenacity to invest in what we recommend for America 2.0 — whether it be battery tech, space or a smart city play I call the trade of the decade.
And any money you make is all YOURS. So, what style of investing is right for you? Watch today to see:
Financial Newsletters vs. Mutual Funds and Financial Advisors
I want to talk about this newsletter business that I am in and how we compare to mutual funds and financial advisors. I have described in previous videos what we do and I’m just going to do it again without going into a lot of detail. Essentially we provide you stock picks, 12 — let’s say one per month.
As I mentioned earlier, it goes for $49 and the renewal rate is usually higher. There’s a link below to ProfitsUnlimited.com. We have something like 120,000 or 130,000 subscribers approximately. So how does that compare to a mutual fund, an ETF or a financial advisor?
Let’s go quickly to what those things are. When you buy a mutual fund you are buying into a portfolio managed by a person or based on an index. In other words, it’s based on a formula where they buy X amount of a certain stock and Y amount of another stock and they keep to that recipe.
Or else, there’s an actual person who is managing money and buying and selling based on whatever their system might be or whatever they have decided to base decisions around. An ETF is largely based around some sort of an index or it’s thematic. I can be based around robotics, cloud computing.
Now they essentially come up with a group of stocks that belong to an industry or sector. There are also broad ETFs for indices that are well known, like the S&P 500 or the Nasdaq 100 and others. The primary difference between a mutual fund and an ETF is that mutual funds tend to be more expensive.
ETFs, especially the ones associated with indices, tend to be cheaper. The last category is a financial advisor. To make it clear, we are not financial advisors. Financial advisors are licensed by each state. They are officially licensed to give you financial advice.
They look at your financial situation, your needs, whatever your risk level is and try to come up with a financial plan based on that. In terms of investment newsletters, being that we provide stock picks, we have no idea of what your particular financial situation is or what your income is.
Maybe you are in retirement, maybe you are young, maybe you are older. Your particular financial situation is known to you only. That means how you use our information is going to vary relative to your situation. Having a financial advisor means that someone is listening to you and customizing a financial plan based on your needs.
So how do we fit in? We provide you with stock picks. At least at Profits Unlimited, we also provide you with general guidance in terms of how you use those stock picks. If you go back a couple weeks ago you will see I made a video on Rules of the Game.
In other words, how you go about using the ideas we present to you in Profits Unlimited. We have chosen to exclusively focus on the Fourth Industrial Revolution and America 2.0, as we call it. We believe that ultimately the old version of the world — America 1.0 and we refer to it — is in decline.
It’s going to pass away. Any investments in it ultimately the destination is certain, which is zero, only the speed is unknown. That’s based on reading history. Most old companies, once their products are no longer desired, they rarely make the jump to the next level. They tend to fade away and go to zero.
You can see that in any number of books. You will see all companies never seem to last very long. So that’s our focus. Then there’s the question of how much money you should put into it and how big a part of your portfolio it should be. These are questions you will have to determine for yourself.
A lot of these companies we focus on in Profits Unlimited are growth stocks. These are companies that are relatively young. They have an investor base that is still somewhat uncertain as to what the prospects are. During periods of uncertainty, people sell them off in a big way.
We just went through that a couple weeks ago from mid-February and a few weeks after until quite recently. A lot of these stocks were being sold. Many people were suggesting it was the end of that market. We disagree. We are still laser focused on Fourth Industrial Revolution stocks and America 2.0 stocks.
We believe the future belongs to them. So if you are interested in those kinds of stocks, check into Profits Unlimited. The last aspect of comparing mutual funds, ETFs and financial advisors is that we have this laser focus. You can get that to some extent in a mutual fund by selecting a technology fund and the same thing with ETFs.
Financial advisors will generally guide you to much broader exposure. They may even guide you to bonds, cash and those types of things. However, the really big difference between us and them is cost. Most mutual funds will charge you 1% or 2%. An ETF will charge you. If it’s a very cheap ETF it might be very small.
Nonetheless, the ETFs that would give you exposure to our types of companies will charge you nearly 1% or maybe higher. Financial advisors will charge you, depending on the services they offer you, anywhere between 1% and 2%. Many people think this 1% or 2% is no big deal.
This is really where our industry shines. If you are thinking about Profits Unlimited, we have been in operation for nearly five years now. We began on June 1, 2016. Based on our tracking — and we’ve had this checked — our portfolio is annualizing at around 30%. It is quite volatile and people would consider it to be quite risky.
A Crucial Difference: Cost, Fees and Total Profits
However, it has done nearly double the S&P 500, so it has done significantly better. However, the critical factor in comparing us to a mutual fund, that maybe even has done the same thing, is cost. We charge you $49 or $99 a year. They charge you 2%.
I just want to show you a chart I have taken from a company called Vanguard that runs a scenario. It says, “Imagine you have $100,000 invested. Imagine if the account earned 6% a year for the next 25 years.” We know these are just situations to think about.
People will say, “I don’t have $100,000” or “I made 50% just last year.” Please just go with the example with the idea that it is intended to illustrate the impact of fees versus what we do with Profits Unlimited. In this scenario, if you had no cost or fees you would end up with about $430,000.
If on the other hand you paid a 2% fee per year in cost, after 25 years you would only have about $260,000. In other words, if you start with $100,000 and have no fees, you end up with a total of $430,000.
However, if you are paying fees of 2%, which seem quite small, you actually end up giving $160,000 of the $330,000 that belongs to you, to that those who are giving you financial advice or the people who run the ETFs or mutual funds. You can do this example with different amounts of the fee and what you are starting with and vary the number of years.
You can see, the longer you are paying a fairly high fee or even a small fee, the bigger the impact in terms of what you ultimately take home. If you are using Profits Unlimited like a portfolio and you are investing in it equal weighted — the way we suggest people use it — you are annualizing at something like 30%.
If you are paying $50 or $100 a year, you are pretty much keeping all the gains for yourself. Obviously this is illustrative. Our performance, just like any mutual fund or ETF or financial advisor, past performance is no guarantee of the future. Nonetheless, we have done very well and we do it very cheaply.
That is what, in my judgment, really separates us from mutual funds, ETFs or the financial advisors. We are very cheap. You can think of us as being Ikea to a fancy furniture maker. With Ikea, you buy it and you have to put it together yourself. There’s a bit of work you need to do.
That’s what we do. We give you the ideas and the basic tools so you can use those ideas as a way to help you. However, there is work you have to do yourself. Whereas if you go with a financial advisor or a mutual fund, they are doing the work for you.
However, in exchange, as you can see from the chart I put up, those costs can eat away at your investments. This sounds like a giant ad. I get it. However, there is a point to be made. The existing financial industry is expensive and we are cheap.
Second, the existing financial industry, while they do many things for you and charge you for it, there’s also an element of lack of control and understanding. People who know finance obviously know more than the people who are giving their money to people.
I believe if we were to do a similar analysis and compare what it costs to run a portfolio on the basis of Profits Unlimited versus a mutual fund or ETF following a similar strategy, I believe you would find you are keeping the vast majority of your earnings for yourself and that’s the bottom line.
Maybe you are invested in Profits Unlimited and you can compare it to a portfolio that is comparable. Do you see more of the earnings as a result of it?
That’s the question, so be sure to send us your answers!
Editor, Profits Unlimited
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