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What a financial advisor would do if you gave them $200/mo

@budgeters_anonymous

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Why it worked

The video uses a clear, visual 'napkin math' approach to demystify a complex financial topic, making the long-term cost of professional management feel tangible and urgent.

Summary

The creator explains how a financial advisor would allocate a $200 monthly investment across different index funds and highlights the long-term impact of management fees. He demonstrates the math on paper to show that DIY investing can lead to significantly higher returns over time.

Structure

1Introduction to the hypothetical scenario
2Breakdown of the $200 allocation into three buckets
3Explanation of the automated investment process
4Comparison of total returns between advisor-managed and DIY
5Final takeaway on the impact of a 1% fee

On-screen text

What a financial advisor would do if you gave them $200/mo Roth IRA $200 $120 $50 $30 S&P 500 VOO VXUS QQQM 30 -> 65 $200/mo $360k $458k 1% Not financial advice, strictly education

Transcript

What a financial advisor would do if you gave them $200/mo to invest. First thing that they would do is they would just open up a Roth IRA for you. This would just be the investment account. Now that $200 would go into that account, but it would actually get split into three different buckets. The first bucket would be $120, the second bucket would be $50, and the last bucket would be $30. Then they would take this $120, the bulk of it, and they would basically put it into S&P 500 index funds, things like VOO, for example. They would take the $50 and they would invest it likely into international index funds, VXUS is an example. The last $30 they would probably put into something more aggressive, something with higher risk. As an example, QQQM. And they wouldn't wait for you to hand them over $200 every single month. They wouldn't try to time the market with any of these index funds. They would just automate this entire process by connecting your bank account, setting up an automatic withdrawal of $200, and then automatic purchases of all these index funds in these exact amounts. Look, if you did this from the age 30 to 65, and never increase that amount, it was always $200 per month that whole entire time, at the end, you'd end up with about $360,000. Not bad. Here's the thing, if you did this yourself, you'd actually have closer to $458,000 just because you would have to pay them about a 1% fee every single year. And that small difference, that 1% right there, is basically being able to add $500 a month in retirement income to your budget. Not financial advice, strictly education.