“Wall Street makes its money on activity. You make your money on inactivity.” — Warren Buffett
Wall Street is not out to help you.
They’re out to collect their fees and to go after their own interests.
Now, this isn’t entirely bad.
We’re all working towards our own interests.
But while I worked as an investment advisor, I peeked behind Wall Street’s curtain.
The image they’re presenting is something totally different from reality.
Your Wall Street advisor will not help you get wealthy.
I’ve never seen anyone get wealthy using traditional finance methods.
Some people preserve their wealth, but they don’t build wealth.
There’s often a lot of volatility to deal with.
Today, we’re going over the main problems with Wall Street and how to overcome them.
Let’s jump into it!
1. Hidden Fees
Wall Street has all kinds of hidden fees.
In his book Money: Master the Game, Tony Robbins speaks on this.
He says mutual funds will typically list their fees around 1.2%, but they also have hidden fees they don’t have to legally disclose.
According to Tony, when you actually look at the numbers, the total fees are around 3.2%.
That’s almost 3x more than what they’re saying!
And if you have an investment advisor, they’re charging another 2% on top of that.
Added up, that’s 5.2% of annual fees no matter what your portfolio looks like.
The hidden fees are still there if your portfolio goes up, down, or stays the same.
For example: If your annual returns are 7%, and Wall Street is taking 5.2%, that’s 85% of your total returns.
Your investment turns into a glorified bank account for Wall Street.
That’s not an ideal situation for investors, but it happens all the time.
This is due in part to one glaring factor:
2. Misalignment of Interest
There’s a total misalignment of interest with Wall Street.
Morningstar, a research group in Wall Street, studied 7,108 investment managers.
They found that 4,643 of them had $0 invested in the funds they managed.
Those results show an incredible misalignment of interest.
You could lose 50% of your investment, and these guys are still getting paid.
We always try to invest something in syndicated deals with our investors.
It’s our way of creating an alignment of interest.
We believe investments can only work for you if there is a shared interest in success.
3. Real Assets Are Better
Wall Street is made up of financialized assets.
They’ll take an asset and sell little paper shares of it.
An alternative to this is real assets.
These are tangible things such as property or gold.
The stock market crashed 89% in 1929 and didn’t recover for 25 years (until 1954!).
That doesn’t even include inflation, which could add another 5 to 10 years.
Because of this, people steered clear of stocks for a long time.
Nowadays, around 50% of the total stock market is composed of retirement funds.
What happens if there’s a 40% decline?
Do people start panicking, selling stocks, and then going into other assets?
It’s absolutely possible.
Once, someone’s investment advisor told them to not invest in Bronson Equity.
After learning about this, I looked at what strategy the advisor was doing.
The strategy was full of stocks and bonds.
I concluded that the advisor was either not wealthy or didn’t become wealthy through these methods.
A lot of these Wall Street folks can seem like very smart advisors.
But does anyone actually become wealthy through their methods?
You can sometimes maintain your wealth through stocks, but you have to deal with a lot of volatility.
Look what’s happened with bonds in the last few years – they have been absolutely destroyed.
It’s important to look beyond these options to see what’s out there.
As a summary: Wall Street is not looking out for you.
Real assets give you a little more control.
You can see the assets and they can produce real results for you.
They also don’t have Wall Street’s volatility and misalignment of interests.
Now I want to hear from you!
Are you ditching Wall Street?
What investments are you looking to take its place?
Let us know in the comments.
Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.
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Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.