work lean

Lean Investing. Doing Less to Earn More.

by Brad Beckstrom

With most things in life, simpler is better. I’ve learned this is especially true in investing. It started out simple enough, it was the 80s and I was working at my first job out of college. I had a few dollars to invest so I purchased a mutual fund. It was the hottest fund at the time, The Fidelity Magellan fund managed by the infamous Peter Lynch. It was a few days before Black Monday one of the largest single day drops in US stock market history. I was off to a fabulous start.

But I stuck with it. I added a small amount to the fund each month. Over time, I purchased other funds, international funds, bond funds, small-cap funds, mid-cap funds, over-the-counter funds. At some point I consolidated all these funds into a Fidelity Brokerage account.

The brokerage account was very appealing to me. I could make stock purchases online and rollover retirement accounts into one place. I could shop in a mutual fund supermarket (Fidelity was one of the first brokerages to offer access to competitive mutual funds via a fund supermarket.) This made it easier to add even more variety to my portfolio funds with names like Pacific Tiger, The Clipper Fund, California Muni. I would look for funds highly rated by Morningstar. What could go wrong with a four-star rated fund? I was pretty much an investing genius. It was 1999.

The bubble bursting in 2000 was a wake up call. I would continue to stick with investing, but I would need an even more diversified portfolio, loading up on more bond funds and international funds, as well as individual value stocks. I would follow a bulletproof portfolio philosophy and be highly diversified, adding real estate investment trusts, emerging markets and global bond funds. Online trading made tracking and adding all of these investments much easier.

At one point, I owned over 30 different stocks and funds spread out across retirement and investment accounts. They were all with one broker, but it was a mess, hard to balance and even harder to fix. Not long before the global financial crisis in 2008, I also realized that many of these funds moved in the exact same direction, especially during a downturn.

Through all my efforts, I had basically created a giant global index fund with one key point of difference — I was wasting thousands of dollars in annual mutual fund fees. As with everything else in my life, I needed to simplify.

Around this time, I discovered The Stock Series by James Collins. I can sum up James’s investing philosophy with three bullet points:

You can’t beat the market long-term.
Buy no more than three low-cost index funds to cover the entire market
Low cost means funds with expense ratios of under 0.10%.

I can promise you once you read his stock series, you will be sold on this approach. If you need more convincing, visit personalcapital.com and try out their free 401K fee analyzer. You will find. as I did, that some of the mutual funds in your account have fees that are 10,15 or 30 times what James Collins is recommending.

How do high fees impact investments? Here is a sample for a 30-year-old active investor with a variety of widely traded mutual funds with fees ranging from 1.35% to 2.75%. Here’s the shocker, this investor will lose 44% of his earnings to fees from now to his retirement age at 65.

Image: Personal Capital 401K Analyzer Example

The funds listed in this example are actual funds and their fees are fairly typical. In my own research, I found that many of the funds I owned were charging fees ranging from 0.67% to 1.75%. Again, 10 or 20+ times the fees Vanguard charges for one of the funds that James recommends. Vanguard total Stock market Index fund VTSAX. Expense Ratio 0.05%. For those who don’t have access to Vanguard Funds you can research similar total stock market index funds. I was able to find Fidelity Spartan Total Market Index Fund with an expense ratio of 0.06%. FSTVX

If you want to do a quick check of your funds fees, you can also use Google Finance. Just type in the symbol of any mutual fund you own and scroll down to key statistics you will see both expense ratios and management fees.

If you’re a 30-year-old investor, you can thank me later after you’ve saved hundreds of thousands on fees over the course of your investing life. I found one of the added benefits to be less worry about picking a dog stock or a dog fund, and more free time through simplification.

So here’s my quick recommendation for simplifying your investing life.

Read the The Stock Series by James Collins. You can just start with the first five posts and get most of what I’ve discussed here.
Get a handle on what you’re paying in fees. You can use the free automated tool at personalcapital.com or go the manual route using Google finance to look up individual funds.
Make a quick spreadsheet of all of your funds called portfolio makeover include funds from your company 401(k) or 401(k) rollover accounts. You can also include fund investments in non-401(k) accounts
Make a plan to move money out of the funds in 401K accounts with the highest fees first.
Set a goal to consolidate all of the funds into two or three total stock or bond low-cost index funds representing the total stock market with expense ratios of than 0.25%
Buy and hold, avoid trying to time the market.

Not sold on this approach. I’ll drop in one simple chart from John Bogle.

I’d love to hear your experience in simplifying your investments. A quick disclaimer — Any concepts presented on this blog are simply opinions and should not be considered as professional investment advice. As with most other things in life, you are solely responsible for your own choices, make them thoughtfully.

The Frug

How to create your own personal search engine and remember everything.

01/14 by The Frug Leave a Comment

– Brad Beckstrom- Thefrug.com.

Have you ever scribbled a quick note, found something on your smartphone or online and bookmarked it, only to never find it again? Sure, the bookmark in your browser worked fine, it’s just you’re having trouble remembering some of the details, like what it was you thought was so great about the company, idea, article, gadget or piece of information in the first place. If the thought comes to you again this certainly makes it hard to find.

This can be especially frustrating at work. What was the name of that company that makes that free widget? Wazzle, Ziplot, Xplant. Search even becomes more difficult with all of the similar sounding Web 2.0 names out there. There’s just not enough information in most domain names or descriptions to make bookmarks very useful.

I have hundreds of bookmarks, dating back years. They are basically useless broken links from companies I don’t recall much about. I’ve found a better way.

On May 9, 2009 at 10:07 AM, I discovered Evernote. A free note taking, smartphone, web and desktop app linked to the cloud. I remember this because every note is automatically annotated with a date time and location. I took a picture of a place I wanted to stay at the beach. The photo automatically included a map and was now searchable by the address, name of the property, date time month location etc. Even the text in the photo of the sign was automatically synced and searchable. This included text in logos like Sunspot below.

I was just getting started. I also added the free Evernote App to my iPad , Google Chrome, and the desktop version for my Mac. All of these sync with one free Evernote account. This is where the personal search elements really come in handy. Once you add Evernote to your browser, you can clip and quickly tag information on any webpage. Evernote then saves all kinds of information to help you find that page in the future. You can add your own tags like “Taxes” or “Vacation“ or “To Do.” This browser plug-in / extension is available for most modern browsers and is super convenient for quickly saving a simplified version of any article, stripping away all of the extraneous screaming headlines and other unrelated information like banner ads with dancing monkeys.

For traveling, I like to add the airport code as a tag or note to make things easier to find. like PDX for an upcoming trip to Portland. The Frug likes to make reservations way in advance and this comes in handy when trying to instantly pull up flight, hotel and event details I lined up four months ago. It’s also helpful when you visit a city several years later and want to pull up your old info, like a cool restaurant or hotel you found. You can also clip any type of information and attach it to a to do or reminder in Evernote. Example: book this hotel next May.

The greatest feature of Evernote is the search function. You can obviously search in the app or in your Evernote account but the most useful feature is the search plug-in for your browser that displays all of your past related notes directly in your Google search results. So, if I search Dewey Beach not only do I get that note I created back in 2009, but also some important info related to a client program and a hotel reservation.

After a very short time, you will find yourself remembering everything and being of great assistance to friends, clients and family members who can’t remember the name of that thing we found or place we stayed. Because you’re primarily searching just your results, there’s much less muck to dig through to find what you’re looking for.

Here are my five quick steps to creating your own personal search engine with Evernote:

Go to Evernote.com and create a free account.
Download the desktop app and browser plug-in available for most computers.
Activate the browser plug-in or extension, Evernote calls this web clipper.
Get the smartphone app.
Start clipping, snapping, tagging and sharing anything that interest you. You’ll be glad you did later.

You’ll also be able to get rid of all those notes and scraps of paper that pile up on your desk and in your wallet.

Crush your ADD tendencies using a Pomodoro.

11/13 by The Frug Leave a Comment

Crush your ADD tendencies using a Pomodoro.

ADD. Attention Deficit Disorder. You hear this term so often now “She’s so ADD” or “Oops, that’s my ADD kicking in again.” Seems like many people have just self diagnosed. I believe most are just suffering from ADD tendencies created by our time crunched, multi screen lifestyles. The constant stream of Facebook updates, Twitter streams, and 24/7 streaming video, news, weather, celebrity updates. It’s difficult even for the most focused of us to get stuff done. There are a lot of “get stuff done” systems out there. Sure!!!! Just add one more checklist or website I need to go to to get stuff done, right? No thanks.

The High Intensity Answer

I’ve stumbled upon what I believe is an excellent solution for those with ADD tendencies. The answer lies in high-intensity training methods. Recently, I switched from traditional workouts, maybe two or three times a week to daily workouts, incorporating high-intensity training for short 20 minute periods.

This has been very effective for several reasons. When you know you can get something done in 20 minutes, there’s less dread involved in the task. Using high-intensity training, my workouts are so quick that they’re over before they feel like they’ve gotten started. The big advantage here is that I can always find 20 minutes to squeeze one of these in daily. This versus the two or three days a week I was trying to fit in a 60 minute workout which was significantly more difficult.

This worked well for me, so I began thinking about how the theory behind high intensity training could be applied to other everyday tasks. In my search, I came across the Pomodoro technique.

Are you ready, because it kicks ass.

The Pomodoro technique was named after a popular kitchen timer called the Pomodoro. This is a basic 25 minute kitchen timer. The Pomodoro technique involves focusing on single tasks in 25 minute intervals. The technique is designed to block and manage distractions during these intervals. (Don’t worry, you don’t need to set a kitchen timer on your desk. You can use any timer, or your smartphone, to time your intervals)

The technique works by training you to block distractions during, and completely focus on, the single task at hand during each 25 minute period or “Pomodoro.” Once you start a Pomodoro, you’ve committed to avoiding any distraction until the 25 minute period of focus is completed. It’s fine to mentally acknowledge a distraction and then train yourself intentionally avoid it. See – just now I acknowledged a distraction to search for the Molly Cyrus Wrecking Ball video I heard someone talking about. By the time I finish typing this, that distraction may be forgotten. If not I can just get to it after this interval.

Over time you learn to use these Pomodoros effectively, assigning one or more to each project you need to get done during the day. You’ll learn to quickly estimate how many Pomodoros certain tasks will take. For instance, this blog post may take two Pomodoros with a break in between.

Eliminate Burnout

Just like in interval training, the breaks are important. Essential to the Pomodoro method is the notion that taking short scheduled breaks while working helps eliminate task burnout and keep you focused.

Conclusion

The endgame is you get more done and take more breaks. You’ll find that the 25 minutes of focus makes it a lot easier to ignore phone calls, tweets and other distractions while that timer is running. It also helps you identify the distractions. When I first started using it, I had to set my phone, with the timer running, in clear view so if I had the urge to check something online or pick up my phone, I quickly saw I had X number of minutes left in that interval.

The more you do this, the better you’ll get. Check out the video and read the book on becoming a Pomodoro Master. Clearly something you’ll be able to brag to your friends about. “Wow, who would’ve thought Brad would ever become a Pomodoro Master.”

Put a Knife in the Heart of your Junk e-mail

10/13 by The Frug Leave a Comment

Do you hate unsolicited e-mails? I’m not talking about straight up spam, I already know you hate that. I’m talking about e-mails you may have signed up for intentionally or unintentionally. It kind of works like this, you purchase something online, donate to a political candidate, request some information from a company like healthcare, banking services, widgets etc.

The Hook

You may have even checked off the please do not send me any more information box at the bottom of the from. Somehow they find you. The biggest abusers are often companies you gave permission to. So, for instance, I may follow my favorite hotel for special offers, the next thing you know I am receiving offers from three or four other hotels in the same chain.

Or, I may have donated to a certain political candidate and now I’m receiving multiple e-mails from candidates and other talking heads in his party. I definitely did not want to hear from these people. I could haplessly search at the bottom of these e-mails for the minuscule hidden unsubscribe link. Then login with more information and attempt to unsubscribe, often a fool’s errand. I could just mark the e-mail as SPAM or JUNK, however, I may be blocking actual e-mails I want to receive. This also often fails to block or trash e-mails from others in this group.

The Suckiness

Okay, regardless of how many ways I describe this, it sucks. It’s also unfair to bloggers, organizations and companies that spend some time creating newsletters, offers, and information you actually want to receive. This pisses some people off so much they declare e-mail bankruptcy and just shut off their e-mail address only to create a new one and start all over. Another trick I’ve used in the past is to use a “junk persona” or just a working junk e-mail address on Yahoo or Gmail, for those times you need to receive confirmations or links but don’t want to use your personal e-mail. This is also a pain in the ass.

The Solution

Now that I’ve completed my rant, I will share a FREE solution I’ve been using for the past year. It’s called Unroll.me. Once you sign up it scans your in box automatically searching for e-mails that you’ve subscribed to either willingly or unwillingly. Unroll.me then asks if you would like to consolidate these e-mails into a single rollup.

Unleash Your Inner Ninja

This is where the fun starts. This is where you get to exert your new found knife wielding powers on your unwanted e-mail guests. Unroll.me will present you with a list in alphabetical order of all of the e-mail subscriptions it has found in your e-mail account.

You don’t need to deal with them right away. They will stay in your inbox until you mark them as,” add to rollup” or “unsubscribe” you also have the choice to select “keep in inbox.” As you can see, my work e-mail was out-of-control. I actually unsubscribed to 174 lists so far. As far as all the other lists they go, into the roll up which is sent to you once a day allowing you to quickly scan any of the e-mails you’ve chosen to keep. My current rollup includes 481 lists. Some of these lists you may only hear from a couple times a year and they will neatly be placed in the roll up. My daily rollup averages about 5 or 6 rolled up messages. You can always unsubscribe or move them back to your inbox at any time.

Here’s what the subscription page looks like so you can quickly go through and unsubscribe, add to roll up or keep an inbox as new lists appear. You will be amazed at how many lists you’re actually on.

Some of these lists you will want to keep in your inbox and others you’ll have never heard of, and can dispatch them immediately forever with a click of the mouse. Generally, I won’t recommend something that I haven’t used for quite a while. I can say that Unroll.me is really onto something here.

End Game

If you’ve ever been distracted by an e-mail, this is the tool for you. It allows you to batch all of this less than important stuff into a quick daily single e-mail you can quickly scan through or trash. There are definitely organizations, companies and bloggers I want to hear from but don’t need them filling up my work inbox.

As you click on items to read in your daily rollup, you will be taken to a page where they are all consolidated by day. You can also sort them by category.

If you’re not sure about this, try it with a personal e-mail or one of your old junk e-mails. You’ll quickly see the value in unsubscribing and working lean with a much trimmer inbox.