Investing for your future
Saving and investing can seem like a daunting and complicated task. The problem with today’s investment environment is that there are endless options, and choosing the right one often feels impossible.
But, with a few tips and some clear direction, you can save and invest intelligently for your future.
You just need to know what to look for.
1: What do I Invest In?
This is the most important question. When saving for the future, you need to ensure that your portfolio:
Matches your risk profile
Is diversified in order to reduce market exposure and risk
Offers the right potential returns to meet your retirement or saving goals
Most 401ks, IRAs, and saving plans allow you to invest in a portfolio consisting of a combination of stocks and bonds, also known as a mutual fund. For younger investors who have a greater risk profile, more stocks than bonds are selected, as they would like more capital appreciation, and for older investors, more bonds than stocks are selected as they aim for capital preservation.
This sounds boring, and it is.
One of the major issues with these mutual funds is that they are directly correlated to the stock market. This means that they move in parallel with the US stock market, so if the economy has a downturn, your savings account will decrease, and your expected return will be affected. In 2008, the economy crashed because of the mortgage crisis and many Americans’ savings accounts were negatively affected because of their direct correlation to the stock market.
Recently, non-correlated funds have emerged allowing the average investor to allocate their savings into a portfolio of non-correlated investments. These funds are designed to be unaffected by movements in the stock market giving you more safety against large swings in the market.
For years, the wealthy investor (accredited) has been able to invest in high yielding, non-correlated portfolios, but most recently, funds have emerged allowing the 99% (non-accredited) to participate in these kinds of investments.
My goal when creating Forefront was to give everyone access to these kinds of opportunities. For years, the government allowed the average American to gamble and play lotto but restricted them from investing in specific investments because they deemed them uneducated or unable to evaluate specific risks because of their income level. I associated wealth inequality to the lack of opportunity the middle class had when it came to investing, which is why I created Forefront. My ultimate goal is to give everyone equal opportunity.
One of the goals of Forefront is to allow the average investor (non-accredited) to participate in investment opportunities previously reserved for the wealthy. The benefits of this are:
- Non-correlated portfolio giving the investor safety from the stock market
- Potential for a higher rate of return
- Risk mitigating structures to attempt to reduce potential risks
2. How do I evaluate fees, and should I be worried?
One of the major pitfalls with investing is the high fee associated with savings plans. Many 401ks and other retirement funds charge investment fees, service fees, and administrative fees. These fees can add up and can reduce the potential return you are expecting in your portfolio. A 2014 study by the Center for American Progress showed that a 25 year old worker who makes $30,500 could pay $140,000 in fees by the time they retire at 67 if they pay only 1% per year in fees and contributes 5% of her salary to her 401k.
This example highlights how fees can be a devastating aspect of investing, and if people are not careful, they could see a lot of their hard earned money lost.
When creating Forefront, I understood the importance of fees, especially when it came to servicing the average investor. We decided that we would not charge a management fee and not make any money until the investor made 8%* on their money per year. I wanted to turn Wall St on its head and make the investor the priority, not the broker or manager.
Forefront was created to empower the investor and provide them with the tools to have the opportunity to succeed.
At Forefront, the investor is the priority.
*The Trust will not pay the Advisor a management fee. Instead, the Trust will pay the Advisor an advisory fee that compensates the Advisor after shareholders receive the first 8.00% of annual Pre-Advisory Fee Net Investment Income (the “Hurdle”). The Advisor will receive no compensation until after the Hurdle is passed. For Pre-Advisory Fee Net Investment Income above 8.00% and up to and including 18.00%, the Advisory Fee will provide the Advisor with 80% of such income, while shareholders receive 20%. For Pre-Advisory Fee Net Investment Income above 18.00%, the Advisory Fee will provide the Advisor with 20% of such income, while shareholders receive 80%.