Proverbs 27:12 “The prudent sees danger and hides himself, but the simple go on and suffer for it.”

As a child, a common ongoing sound in the Winquist home was “cuckoo, cuckoo, cuckoo!”  My mom liked to call herself the “Cuckoo Grandma.”  Her prized cuckoo clock now hangs in our home, and I always think of mom when I pull the chains to keep the clock and the bird active.  Children still gather around the clock in expectation so that they can catch a glimpse of the little bird inside.  At one point mom told a clock expert about this clock that she bought at Sears and Roebuck in 1949.  I believe she bought it for about $25.  He told her it was worth far more than that.

Time has a way of doing that.  Some things increase in value over time.  I think wisdom, experience, knowledge and a great family increase in value over time.  Investments should do the same.  But time also has a destructive impact.  Mold, rust, depreciation hit our belongings.  Failing health and the impacts of age hit our bodies and minds.  Our eyesight weakens, our knees groan and our memory can become fragile – now where did I put my car keys?

A wise investor doesn’t just look for investments that grow in value.  They look at the costs of those investments.  I like to see a dividend yield greater than 1%, but I quake in fear if I see an expense ratio greater than 0.50%.  Be very certain of this, just as interest compounds in a positive way, expenses have not only an annual negative impact but a compounding negative impact.  Here is the idea you must grasp: low expense ratios are your friend.  That is one reason I like ETF ITOT.  The expense ratio for ITOT is 0.03%.

Ask yourself this question (or ask your financial advisor!): “Do I know what I am paying every year for my investments?”  You should care and you should know your costs.  Each click of the cuckoo clock costs you a fraction of your investment.  Over time, you might discover you were cuckoo not to look at the costs of your investments!

John Bogle says this: “The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.”  Don’t be cuckoo!