If you are Investing in managed mutual funds, your getting screwed. At very least, you are exposed to the elements and frozen in one spot.Does your investment adviser think you should be in mutual funds? Does he work for the fund company? Is he more interested in "his" portfolio than yours? Is he texting on his blackberry while you are handing over your meager Retirefunds? does he forget your name? Did he ever know your name?
"The Rich" as Voltaire said, "Require an abundant supply of the poor"!
The monstrous mutual fund industry is built on a simple premise. You give your hard earned money to someone you know, usually only by reputation. That fund manager then invests your money in the markets, in stocks, bonds, gold, commodities and/or companies that are involved in any of these or a myriad of other businesses. Depending on the fund(s) prospectus (an explanation of how it invests your money), you could be invested in any country in the world (or group of countries) The fund manager is paid a salary along with all of his staff, and their company earns money by charging you a percentage of all monies invested. The manager can also earn bonuses based on his agreement with the company, whether he performs or doesn't perform.
Congratulations! You have just hired one of the highest priced bookies in history! They make money whether you win lose or draw. Usually it is lose or draw in the modern mutual fund industry.
Fully 60% of "all" fund managers "do not" beat the index of the market they are invested in. Many are "closet indexers". In other words, they say they are active managers but invest your money by simply matching the index (buying the companies that make up the Index in the exact proportion as they are weighted to the Index). Usually they collect anywhere from 2%-3% of your portfolio, every year, for this so-called management. Why do you keep shoveling your hard earned money into this bloated, gluttonous industry? There is no other industry out there that is so grossly overpaid for providing so little.
This industry got it's start at a time in history when average people were "shut out" of the information streams that made fortunes for those in the know. With the advent of the internet, trading platforms, trading software etc, those days are gone. At the beginning of this industry, managed mutual funds were developed as a way that average people could invest and "diversify" their investments like the big dogs always did when they bought individual stocks, but only with a savvy money manager in control of their savings. It was a good premise that, initially, worked for it's investors but it has morphed into a monster that eats billions of your dollars, every single year. Like every other investment scheme ever created by the Gluttons of Wall Street, it has been milked dry, to the point where it no longer resembles the initial product, and value has dried up like a lake bed in Death Valley.
Three distinguished professors of finance studied the returns of 2076 actively managed mutual funds over 21 years ending in 2006. Their conclusion: By applying a sensitive statistical test to separate luck from skill, the study found that 99.4% of the fund managers had no genuine stock picking ability. In other words, with today's information avalanche and trading software, "you" can pick stocks and do as well as most of these vultures .
If you feel you just don't know enough about investing or don't have enough time to research individual stocks, and you feel you must give your retirefund over to someone else to invest, then I promise, if you give it to me I will invest it in an "Index fund" which only costs .5% and I will only charge you .5% for my troubles. In that way you will already be ahead by 1%-2%. You will also beat 60% of "all" fund managers in the world and I will become rich on the shoulders of your hard earned money.
Or, you could just invest in the Index fund yourself and cut out the middle man (Me).
(Shoot, I just talked myself out of millions)
I ho
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