Investors have two straightforward options to quickly and easily invest in the S&P 500 index and the Bloomberg U.S. Aggregate Bond index.

1) Open a Basic Brokerage Account:

• Consider opening a no-fee brokerage account with a reputable firm like Charles Schwab, Fidelity or E-Trade.

• Purchase the desired number of shares of SPY (an S&P 500 ETF) and AGG (a U.S. Aggregate Bond ETF) through the brokerage platform.

2) Open an Account with a Trusted Mutual Fund Company:

• Explore opening an account with a reputable mutual fund company, such as Vanguard.

• Consider purchasing the desired number of shares in the Vanguard S&P 500 Index Fund (ticker: VFIAX) for exposure to the S&P 500 and the Vanguard Total Bond Market Index Fund (ticker: VBTLX) for a comprehensive bond market portfolio.

* Please see the following question and answer on "Asset allocation" to help determine how much of each index to purchase.

The "age in bonds" asset allocation strategy is a simple rule of thumb that suggests determining the percentage of your portfolio allocated to bonds based on your age. The general guideline is to subtract your age from 100 (or 110 for a slightly more conservative approach), and the result represents the percentage of your portfolio that should be invested in bonds with the remainder in stocks. The idea is that as you age, you gradually shift towards a more conservative investment approach, reducing exposure to potentially higher-risk assets like stocks and increasing allocation to more stable assets like bonds.

Rebalancing a portfolio means adjusting the mix of stocks and bonds to bring it back to your desired or target allocation. This involves buying or selling assets within the portfolio to maintain the intended balance between different asset classes, such as stocks and bonds.

Rebalancing should be done annually. The easiest reminder is to do this around the time you do your taxes. This is all the housekeeping that's needed for your portfolio. It will take less than 10 minutes.

Taxable Investment Accounts: Regular brokerage accounts where you invest after-tax dollars. There are no tax advantages for contributions or withdrawals, but you have flexibility in investment choices.

Traditional IRA (Individual Retirement Account): Contributions to a Traditional IRA may be tax-deductible, and earnings grow tax-deferred. Withdrawals in retirement are taxed as ordinary income.

Roth IRA (Individual Retirement Account): Contributions to a Roth IRA are made with after-tax dollars, and qualified withdrawals, including earnings, are tax-free in retirement. It offers tax-free growth potential.

Custodial Accounts (UGMA/UTMA): Uniform Gift to Minors Act (UGMA) and Uniform Transfer to Minors Act (UTMA) accounts allow adults to contribute and manage assets on behalf of a minor.

Wall Street thrives on complexity, often charging hefty fees for intricate financial products. Choosing simplicity in your investments may mean less profit for them, but it could translate to greater financial clarity and success for you.

Do you currently own any gold for investment purposes?

NO = 93%

YES = 7%

Survey panel: 1,191 Experts

Completion date: 9/14/23

Trusted Wealth Inc. © 2023

If you had to choose one stock mutual fund or ETF to hold for the rest of your life, which would you pick? Top 3 choices 1) Vanguard 500 Index Fund (ticker: VFIAX)

2) SPDR S&P 500 ETF (ticker: SPY)

3) Fidelity 500 Index Fund (ticker: FXAIX)

Survey panel: 588 Experts

Completion date: Sept 30, 2023

Trusted Wealth Inc. © 2023

If you had to choose one bond mutual fund or ETF to hold for the rest of your life, which would you pick? Top 3 choices 1) Barclays Aggregate Bond Index ETF (ticker: AGG)

2) Vanguard Total Bond Market Fund (ticker: VBTLX)

3) iShare U.S. Treasury Bond ETF (ticker: GOVT)

Survey panel: 698 Experts

Completion date: September 15, 2023

Trusted Wealth Inc. © 2023

Do you currently own any Bitcoin or cryptocurrency of any kind?

No - 97%

Yes - 3%

Expert panel: 436 professionals Survey completion date: October 15, 2023

Trusted Wealth Inc. © 2023

Are you more comfortable recommending banks or credit unions to family and friends?

Credit unions = 83%

Banks = 17%

Survey panel: 512 experts

Completion date: August 9, 2023

Trusted Wealth Inc. © 2023

What percent of your retirement savings are invested in index funds or index ETFs?

What percent of your retirement savings are invested in actively managed mutual funds?

Index Funds = 94%

Actively Managed Mutual Funds: 6%

Survey panel: 445 Experts

Completion date: October 30, 2023

Trusted Wealth Inc. © 2023

Do you think people would make more money in the future by teaming up with a financial advisor or by investing in index funds on your own?

Index Funds = 91% Financial advisor = 8%

Expert panel: 383 professionals Trusted Wealth Inc. © 2023

Do you own any annuity products? No = 93%

Yes = 7%

Would you recommend annuities to family or friends?

No = 100%

Yes = 0%

Survey panel: 481 experts

Completion date: November 3, 2023 Trusted Wealth Inc. © 2023

The S&P 500 is a stock market index that tracks the performance of 500 of the largest publicly traded companies in the United States. It is widely used and relied on because it provides a snapshot of the overall health and direction of the U.S. stock market. Investors and financial professionals use the S&P 500 as a benchmark to assess the performance of their investments. The S&P 500 achieves diversification by encompassing major U.S. companies spanning various sectors, providing investors with a comprehensive exposure to the market. The index has consistently demonstrated returns over time that the majority of professional investment managers find challenging to outperform.

A full list of S&P 500 companies can be found here: https://en.wikipedia.org/wiki/List_of_S%26P_500_companies

The Bloomberg U.S. Aggregate Bond Index is a widely used benchmark that tracks the performance of a broad range of U.S. investment-grade bonds, including government, corporate, and mortgage-backed securities. It is popular and relied upon by experts for assessing the overall health of the U.S. fixed-income market, providing a comprehensive snapshot of the bond market's trends and serving as a key reference for investment and risk management decisions.

Warren Buffett made a bet in 2007 that a simple S&P 500 index fund would outperform a selection of hedge funds over 10 years. The only person who took the bet, Ted Seides from Protégé Partners, admitted defeat in 2017, acknowledging that passive investing like the S&P 500 was more successful. By the end of the bet on Dec. 31, $1 million invested in the funds chosen by Seides would have gained $220,000 in the same time period that Buffett’s low-fee S&P 500 Index fund would have earned $854,000. Buffett won $2 million from the bet, and the proceeds went to Girls Inc. to support a housing program for young women leaving foster care. The bet showcased the power of low-cost, passive investing and the impact of fees on returns.

During in interview conducted in 2019, Warren Buffett shared the following:

He’s instructed the trustee in charge of his estate to invest 90 percent of his money into the S&P 500 for his wife after he dies, Buffett told CNBC’s Becky Quick in an exclusive interview.

Why do financial advisors avoid disclosing their investment results and fees on their websites? Investing is fundamentally numerical, yet most advisor sites lack transparency in this regard. If they truly excel and add value, why not enlist an auditor to present the facts? Transparency isn't prohibited by law; comparing client results to a standard benchmark should be a straightforward practice for them.

Ask your advisor to provide audited total return numbers for the equity portion of your portfolio (mutual funds, ETFs, individual stocks) compared to the return of S&P 500 Total Return Index. Ask them to do the same for the bond portion of your portfolio (mutual funds, ETFs, individual bonds) and compare that to the return of the Bloomberg Aggregate U.S. Total Return Bond Index. Request annual numbers as well as the 3, 5 and 10 year comparisons.

Investment fees often fly under the radar, as they aren't directly billed to you. Instead, they silently chip away at your investment portfolio every quarter. However, despite their subtle nature, fees can wield significant influence over your wealth.

A 1% annual fee charged by a financial advisor may seem small, but over a lifetime of investing, it significantly reduces a portfolio's value. For instance, with a hypothetical $1,000 monthly investment over 40 years, a 1% advisor fee can decrease the final portfolio from $5.8 million to $4.3 million, costing about $1.5 million or more than 25% of potential wealth. This example highlights the substantial impact fees can have on long-term savings. In addition to the fee charged by financial advisors, investors must also consider additional fees charged by mutual funds that the advisor may be investing in. This can further reduce the value of long term savings.

Think of an investment benchmark like a yardstick for measuring how well your investments are growing. It's a standard, often a market index, that you use as a reference point. By comparing your investment returns to this benchmark, you can see if your investments are doing better or worse than the overall market. It's a tool to gauge the success of your investment strategy.

Examples of popular benchmarks are:

• S&P 500 Total Return Index for stocks

• Bloomberg US Aggregate Bond Index

A good financial advisor will be able to provide a clear and detailed explanation of how your investments are performing and which benchmarks are applicable to evaluate performance.

Actively vs. Passively Managed Funds:

• Actively managed funds are investment portfolios where fund managers actively make decisions to outperform a specific benchmark index. They rely on research and analysis to select securities.

• Passively managed funds, on the other hand, aim to replicate the performance of a specific benchmark index rather than outperform it. These funds typically have lower fees as they require less active management.

SPIVA Report on Index vs. Active Funds:

• The SPIVA (S&P Indices Versus Active) report compares the performance of actively managed funds to their respective benchmark indices over time.

• The SPIVA data consistently shows that, over the long term, more than 90% actively managed funds underperform their benchmark indices.

• This indicates that, on average, investors might achieve better returns with low-cost index funds that track the broader market, supporting the appeal of passive investing for some.

Settling for investment performance that consistently underperforms a simple set of benchmarks can cost you dearly over the long run.

Example:

Assume you have $500,000 invested with a financial advisor starting at the age of 45. By age 65, the following compound annual growth rates show how sensitive the end value is to small differences in the growth rates.

CAGR Portfolio Value

8% $2,330,478

6% $1,603,567

$726,911 lost to underperformance

Bottom line. Keep track of the performance your financial advisor has been delivering and compare it closely to what could be achieved with a simple two index fund portfolio that you manager on your own.