Tag Archives: Simple
Common Sense Investing: Ten Simple Rules to Finance Your Dreams, or Create a Roadmap to Achieve Financial Independence by Investing in Mutual Funds with a Personal Financial Plan
Common Sense Investing: Ten Simple Rules to Finance Your Dreams, or Create a Roadmap to Achieve Financial Independence by Investing in Mutual Funds with a Personal Financial Plan
Learn basic financial concepts to make it more likely that you’ll achieve common life goals such as owning a home, providing for yourself or your family, taking fun vacations, and retiring in comfort–all free from financial stress. Topics include:
* The ten rules to successful investing
* How to write a personal investment plan
* How to diversify your investments
* How to know a good mutual fund
* How to be a tax-savvy investor
The 108-page book (17,000 words
Simple Wealth
Simple Wealth
The simplest and most effective guide to building your wealth. This book takes years of experience and study, and translates it into very practical rules for saving, investing, and building wealth from absolute scratch. Designed for people on a regular income, and those in debt, it shows simple and effective techniques for eliminating that debt and gaining enormous amounts of wealth over time. Having had much of his own time and money wasted by motivational speakers and “series authors” o
Improving Mutual Fund Performance Is Fairly Simple
A few hours ago, I sat down and began writing a list of tips to improve mutual fund performance for new investors who wanted to know how to squeeze a couple of extra percentage points of return out of their holdings. The remarkable thing was, the more I thought about it, the more I realized that the secret lies in cutting costs so that more of the money in your investments stays in your family’s pocket instead of going to banks, stock brokers, mutual fund management companies, sales commission loads, and other “frictional” expenses. The difference in mutual fund performance between a high cost fund and a low cost fund is staggering over a long time period of 20+ years.
Why don’t most new investors know this? That is easy. They can’t even answer the question, “What Is a Mutual Fund?” so how on earth are they going to know what a mutual fund expense ratio is? Instead, they are likely to look at the literature sent out by the fund management company, peruse the charts in the glossy-paged sales literature, and go with the fund that has the best name or best track record, even though countless empirical studies have shown that past performance is no guarantee of future results. It is the nature of the industry now that pensions have gone by the wayside and there are easy fees to be made. It is the incentive system our society has set for the money management game.
Don’t misunderstand me. Sometimes, a fixed fee of, say, 1% or 2% can be useful if you have an investor who otherwise would destroy their family’s net worth through frequent trading, irrational concentration in specific stocks or asset classes, or just poor decision making. In such a situation, the steady hand of an experienced portfolio manager can add enormous value that far exceeds the cost of his or her fee even though such as fee must, by definition, lower mutual fund performance.
For example, I once heard a story of a young man who a decade ago lost a $ 5 million inheritance trading derivatives and options. He now works as a waiter for minimum wage. Surely, a $ 50,000 or $ 100,000 fee on his holdings each year (again, 1% to 2%) would have been an enormous bargain compared to the total loss of his capital. He could have been sitting at home or pursuing his passion, collecting $ 175,000 per year in cash dividends. But he lost everything, chasing after a little better performance. It’s asinine. Totally asinine and unnecessary.
