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401(k) Plans
I’ve been in and interested in the stock market so long (one year shy of forty years) I can remember when the mutual fund pages in my home town paper were just one page! Now it looks like there are more mutual funds then there are stocks listed on...
Are Social Security Private Accounts a Good Deal or Raw Deal for African Americans?
Whew! I almost wrote a really long article about the Social
Security System and what it means to Black folks.
Fortunately,I fell asleep while writing it just like you would
have reading it. Ican't think of anything more boring then an...
Investing Stock Market ABC’s
While most folks today trust mutual funds and their professional managers with their investments, it’s still important to understand the basics of the stock market. Although investing in individual stocks may not be right for everyone, a basic...
No Load Mutual Funds: Boost Your Portfolio's Returns
Investors who exclusively use broadly diversified, no load mutual funds for their stock investments often lose out on opportunities to increase the reward potential of their portfolios. This article looks at two methods investors may use to...
Optimize Portfolio Performance with Equity Styles
1) Equities can be grouped into six "equity styles"
2) Returns of each equity style can vary significantly with trends persisting for months and years.
3) By dynamically altering a portfolio's exposure to various equity styles, investors can...
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SECRET FEES MAKE MUTUAL FUNDS BILLIONS AT YOUR EXPENSE!
Many investors think that investing in mutual funds is free. What nonsense! Funds collect more than $50 billion a year in fees from investors. That is truly a ton of money. The first way you get hosed in a mutual fund is due to high fees charged. These fees can dramatically reduce your returns over time!
The way that these fees are deducted automatically from a fund’s returns makes them invisible because you never see an invoice or have to write a check. If you invest $10,000.00 in a domestic stock mutual fund with an expense ratio of 2% and a sales load of 3%, and let’s imagine that you get annual returns of 7.5% for twenty years, your money would almost triple to $27,508.00.
The bad news is that you would have lost $14,970 in fees and foregone earnings over the twenty years. Yikes…that really hurts! Why not just bypass the system and buy your own stocks as I teach finance students and home study investors?
These funds are also sold and managed on pure hype, short term trading, and with key information withheld from the public. All of these factors I teach finance students and investors to avoid! The
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industry confuses investors by focusing on past performance, which should not be a factor to consider. Many mutual funds are able to cheat the public with excessive fees because investors don’t understand how these big costs destroy their profit. Mutual funds have no interest in educating investors because it is easier to hoodwink the ignorant!
Don’t put your trust in mutual funds unless they are fully indexed. Indexing means that the mutual fund simply uses a computer to buy and sell stocks in the mutual fund portfolio so as to mimic the composition of a major stock market index like the S&P 500. This means that there is no fund manager sucking out needless fees. A good example is the first fully indexed mutual fund called the Vanguard 500 (VFINX) which is also now the largest of its kind.
About the Author
ABOUT THE AUTHOR: Dr. Scott Brown, Ph.D., the Wallet Doctor, is a successful investor. Dr. Brown holds a Ph.D. in finance. The Wallet Doctor is sought after for investment advice and coaching. For more information visit Dr. Brown’s site at www.BonanzaBase.com or sign up for his investment tips at www.WalletDoctor.com
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