Some things should always remain in your own hands.
Choosing your home, raising your kids, and managing your health are personal decisions you wouldn’t delegate to someone else, no matter their expertise.
When it comes to life’s crucial matters, like financial planning and investing for your future, doing it yourself is essential. Handing over control of your finances to others introduces additional risks. Here’s why.
First, you need to find a trustworthy professional, such as a broker, money manager, or financial planner. However, you can’t be certain you’ve made the right choice until it’s potentially too late. Many brokers and money managers earn commissions based on the transactions they generate, not the quality of their advice. This system can lead to poor recommendations, conflicts of interest, or even outright fraud.
Even if you find a qualified and honest advisor, they will never understand or care about your needs as much as you do. Moreover, you’ll pay them 1.5-3% of your money in fees and commissions, often without realizing it. For instance, a 1% fee deducted from a 9% annual return delays the time it takes your money to double by a year.
There’s an inherent conflict of interest in this arrangement: while your goal is to maximize returns, the professional aims to maximize their fees and commissions. This often leads to frequent trading, generating more commissions for them and higher taxes for you, as short-term gains are taxed at ordinary income rates.
You can avoid these issues and perform better by investing directly in Dividend Reinvestment Plans (DRIPs) offered by top-rated U.S. companies. Although relatively unknown, DRIPs have been around since the 1960s when the SEC allowed companies to establish them, primarily for employees to buy stock efficiently and inexpensively. Some companies extended this option to individual investors, but they couldn’t advertise these plans, keeping them under the radar. Wall Street has little incentive to promote DRIPs since they don’t earn transaction fees or commissions from direct investments.
I’ve been educating small investors about direct investing since 1981 after discovering these plans. With my background in the financial industry since 1960, my focus has always been helping small investors gain the same advantages as their Wall Street counterparts. Dividend reinvestment plans have become my passion because they level the playing field for small investors.
By eliminating fees, small investors can build a diversified portfolio and invest small amounts consistently, efficiently building wealth. DRIPs also allow small investors to employ strategies like dollar-cost averaging—previously accessible mainly to wealthy investors.
Every day, countless investors demonstrate the success of this approach. For example, Eileen and Gerard Connolly from Jupiter, Florida, started with just one share of Kellogg, Coca-Cola, and Johnson & Johnson 15 years ago. Through small, consistent investments, their accounts now exceed $64,000.
Lynn Shaner from Katy, Texas, describes the strategy succinctly: purchasing good quality dividend-paying stocks regularly and reinvesting the dividends is the best investment advice she’s encountered in over 30 years of research.
Your financial security is too important to leave to “experts.” Surprisingly, managing your own investments can take less time than you think. Take a few moments to explore more about direct investing and secure your financial future.