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CHOOSING THE RIGHT FINANCIAL PLANNER
Choosing a financial planner is a very important decision. Who will you trust to handle your life savings and plan your financial future? The fact that someone claims to be a financial planner does not qualify him or her to handle your money. They...
How You Can Simply Outperform Mutual Funds
How You Can Simply Outperform Mutual Funds
1. If trouble is detected in the stock/market you either take your profits and get out, or sell short. On the other hand, Mutual Funds can not exit the market quickly since they own huge amounts of...
Real Estate Problem Solver
Introduction
There are many areas one can invest in. Since I was 15 years old I have looked for the fastest, most effective way to accumulate a lot of wealth, with the least amount of risk. I am now 58. While looking for this road to truth,...
There are several factors an investor in the stock market should consider
There are several factors an investor in the stock market should consider
1. Do not spread your money too thin.
My friend has a little over $200,000 invested in the stock market through 27 different Mutual funds. In my opinion, 27 Mutual...
Wealthy people became rich thanks to their assets
What is an asset ? An asset is simply something that brings money into your pocket. Liability is the opposite. It is something that takes money out of your pocket. Personal loan is a liability, your credit cards debt are liabilities. Your car,...
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MUTUAL FUND STUPIDITY
THE ALCHEMIST by AL THOMAS
MUTUAL FUND STUPIDITY
For years the mutual fund industry has been
going great guns taking peoples' money and for the
most part doing a very lousy job of making a good
return for the investor. The reason I say that is
that 80% of them cannot meet the results of the
Standard & Poor’s 500 Index.
The S&P 500 is the most important 500 stocks
of the New York Stock Exchange with a few others
thrown in. If you buy any fund that is not
composed of this index you are relying upon the
fund manger to be able to weed out the poor stocks
and buy the best ones. After all he is a
“professional” and should know more than a monkey
with a dart.
Having been an exchange member and floor
trader I consider it rather easy to go thru the charts
of 500 stocks to eliminate the weakest 200 or 300.
There are even services that categorize all the
NYSE stocks in 5 categories from best to worst if
he doesn’t want to do the work himself yet the
largest majority of managers can’t seem to make an
average amount of money. By average I mean beat
the average performance of all the stocks in the
S&P500 Index.
When you go to the hospital do you want an
average doctor operating on you? Mutual fund
managers are financial doctors only they are
operating on your wallet. You sure don’t want your
money with Mr. Average.
Funds are luring you to give them money
because they have a lower expense ratio, a famous
manager,a specialized category, a socially responsible
portfolio or some other nonsense. Why do I say
nonsense? Because it doesn’t make any difference
which fund you are buying as long as it is
outperforming all the others.
There is one sure way to increase your
Associated Websites
return
and that is not to pay commission. That is called a
“load” in the industry and it might not show when
you buy it, but be charged when you sell. No load
funds do as well and better than load funds.
Now many funds are adding redemption fees. It
is an excess charge of a flat dollar amount to as
much as 2% of your sale if you sell before a
certain period of time. If their fund is declining
they don’t want you to take your money out so they
put this additional charge as a way of keeping you
in.
There is a new group of mutual funds that is
called Exchange Traded Funds. There are hundreds
of them and they are becoming the bane of the
traditional mutual funds. These trade like stocks,
can be bought or sold during the day with
permanent stop loss orders in place. The
commission charge at most discount brokers is $15
or less. Their expense ratio runs close to zero so
you also save money there. A win, win, win for the
investor.
Mutual funds will discourage investors from
buying these only because they don’t want to lose
your account. There are many sources of
information about ETFs and the easiest is
www.google.com . Just type in ETF and you will be
inundated with all you need to know.
Unless mutual funds stop chasing customers
away with high commissions, redemption fees and poor
performance the ETFs are going to take a large
portion of the investor funds.
About the Author
F*R*E*E investment letter www.mutualfundmagic.com
Author of best seller "IF IT DOESN'T GO UP,
DON'T BUY IT!" Never lose money in the market.
Copyright 2004 Albert W. Thomas All rights
reserved. Former 17-year exchange member, floor
trader and brokerage company owner.
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