As an economic conservative, I know a thing or two about money, although I'm certainly not a financial advisor. I'm passionate about preparing for my future to ensure that I never have to rely on the government for my financial wellness.

I want to share guidelines that I believe conservatives should live by to make investing in the stock market much easier and more profitable. For most people, a significant chunk of their portfolio should be automated, diversified, and very low expense.

First, the platform I use for all of my stock and fund investing is M1, which you should consider using as well. I'll talk more later about some of the advantages. M1 doesn't have any minimum investments or fees. If you sign up, I may receive some affiliate compensation. The one thing that you should know is this is not one of those platforms with all the day trading options, but a great platform for mid-long term investing.

TIP 1: AVOID BROKERAGE FEES!

One of the first investment platforms to charge $0 commissions and fees was M1. They have other ways of making money that they are very transparent about. But charging you fees to hold your investments is not one of those ways.


I have legitimately heard of people spending 1% or more on fees, which when compounded, amounts to hundreds of thousands of dollars in lifetime stock value for the average person.


Back before automation and efficient platforms like M1, fees and commissions were a necessary way for brokerages to keep running. Now high fees are a scam to take advantage of investor perception that these platforms are able to accomplish more (they aren't).

If I were using a platform that charge fees, I'd switch to M1 as soon as possible.

TIP 2: Easy, Automated Diversification

The main reason I'm an M1 fan: It is the only platform I've ever seen to automate diversification, but it's a genius feature.

Basically you make a pie, and choose the size of your slices. The slices are stocks or funds that you can find on M1. M1 does the rest to make your pie look exactly how you ordered it.

Let's say you want to deposit $1,000 every month into your investments. Traditionally you'd need to login and put in buy orders for those stocks. With M1, it'll automatically divvy up your $1,000 to make your pie the exact measurements you want!

You can also make more pies and add those pies as slices to your overall pie. This helps to keep your asset classes more precise. For instance, I am higher risk and invest only in stocks right now but let's say you want a portfolio that is 50% stocks, 30% bonds, and 20% REITs. Your account pie would have a stock pie, bond pie, and REIT pie. Each of those pies would have the funds or individual stocks that you choose to buy.

Invest with M1 Now for automated diversification.

TIP 3: AVOID BAD FUNDS and HIGH EXPENSE RATIOS in work 401Ks

This isn't specific to M1, but a tip I wanted to share to improve your lifetime investment results. Seriously, I'm talking about hundreds of thousands or even millions of dollars in some cases. Read the story below for an example of how I saved a lot of money.

When I got my first full time job, the retirement match was 100% up to $1500 deposited. My parents of course told me to take full advantage of that match, and of course that's the right decision. It's free money. Nowhere else are you going to get a 100% ROI. Not only that, but my company occasionally has done "profit sharing" where they drop a small amount of money into everyone's retirement accounts.

However the platform we used had extremely limited fund options. Even the best fund not only underperformed the market but had a 0.8% expense ratio. That was one of the lowest expense ratios of those fund options.

How much does that really cost? Let's assume the fund can generate an 8% annual return, which is lower than the S&P 500 index which is closer to 11% annual returns.

If the fee was 0% and all I did was invest the $1500 plus $1500 match every year starting when I began my employment, the value of that account would've been worth $738k when I turned 60. However with a 0.8% expense ratio that value would have been $596k.

With just that small investment, the high expense ratio would truly cost me $142k. That's not a small mistake.

The moment my wife retired from this same company, I got her retirement accounts transferred to M1 and invested in some amazing funds like the Vanguard Growth ETF (VUG) which historically has outperformed the comparable funds in the work platform by 3-4% per year. Oh, also even if it had an 8% annual return the expense ratio is 0.04%. Over the lifetime of an 8% annual return the drawdown on net worth would be $8k, which is still kind of crazy but saves $134k over the expensive fund.

If you're stuck with bad funds, you may explore your options on how to take advantage of your employer's match but do the rest of your investing in M1 which offers retirement accounts for you to use.

Lucky for me, my workplace came out with a self-directed option for our retirement so I picked great low-cost mutual funds to invest in, but it's in Schwab which doesn't automatically invest dollars in a diversified fashion as they enter your account.

TIP 4: Ditch the Terrible Financial Advisors

It can be good to consult with a financial advisor for an hourly fee to go over your investments with you if you do not feel completely confident in your choices. This is especially worth it as your nest egg gets big. However some financial advisors do four very sketchy things that will cost you a lot of money over your lifetime.

1. Charge a commission, often 1%. If 0.8% expense ratio costs $142k in lifetime performance for a $3k annual investment, imagine what a 1% fee costs you in annual performance for a larger annual investment! Try to avoid this if possible and take a few minutes to read up on investing in passive investing in ETFs. I recommend the book "Simple Path to Wealth".

2. Offer underperforming products that have a fee where they get a kickback. For obvious reasons this costs you extra money and is completely unnecessary.

3. Be mediocre investors who actively manage your portfolio but like every other person tend to underperform in their stock picks.

4. Advise young people to be risk-averse and invest in bonds or other super low-yield products. This helps the advisor save face because they never have to admit that the portfolio went drastically down in a stock market crash, but it is unnecessary for young people who will not be withdrawing from their retirement accounts in the next few decades because the stock market indexes have historically recovered from every crash.

I never plan on using a financial advisor for my retirement accounts unless something drastically changes in the way things work in the financial world. As long as super-low fee funds that track the market exist, and I can just automatically invest in those funds with M1, there is no benefit I'd receive from talking to a financial advisor about these accounts.

-> Sign up for M1 and start investing with simple, automatic diversification