A fool and his money are soon parted, or so the proverb goes. I can’t think of anyone that has not heard some version of it and yet it surprises me still when I stumble across someone proposing to take you by the hand, leading you from the frying pan into the fire. And so it was that this past week I ran across two post within a day of each other, one advising you that you ain’t got what it takes to pick a stock so buy ETFs, and the other presenting a keeping-it-simple how-to.
When Canadians say “I’m sorry”, it’s followed by the word “asshole” in a pitch only other Canadians can hear — @lloydrang
updated 6 May, 2014
For the sake of complete transparency, and in order to make my point that it is entirely possible to beat, on average, the performance of most products issued by the mutual fund industry, I strive to provide portfolio updates, and will continue to do so. In good years and in bad. The last 5 years have been good, in fact excellent as I have shown here. Continue reading
This is no joke! If you understand nothing about mutual funds, understand this:
Why the Average Mutual Fund Return Stinks.
I am myself painfully familiar with mutual fund performance; consistent, long-term underperformance is simply an undisputed fact to me. Baked-in by design. Inescapable. What I have never done is work the numbers, the effect of Canada’s high MER’s on performance. Quoting Jack Bogle, directly from this great post:
Let me give you a little longer-term example. An individual who’s 20-years old today [is] starting to accumulate for retirement…. That person has about 45 years to go before retirement — 20 to 65 — and then, if you believe the actuarial tables, another 20 years to go before death mercifully brings his or her life to a close. So that’s 65 years of investing. If you invest $1,000 at the beginning of that time and earn 8 percent, that $1,000 will grow…to around $140,000.
Now the financial system — the mutual-fund system in this case — will take about 2.5 percentage points out of that return, so you’ll have a net return of 5.5 percent, and your $1,000 will grow to approximately $30,000 to you the investor.
Take a minute. Let that sink in. Almost 80% of your money went back to feed the Financial Industrial Complex. And please return to the link above and read the entire post at Confident Investor. You owe it to yourself. You owe it to your kids to steer them away.
I cling to milestones. Not the expected ones, like birthdays, but those slightly ‘off the beaten path’ ones like ‘our first date’, or ‘do you realise it was five years ago today that we …’. And so it should come as no surprise that I awoke today feeling that 1. I haven’t contributed to my blog in a while and 2. Hey, it has been exactly 6 months today that I Continue reading
It has now been over two years since I penned this email to the last mutual fund company left in my portfolio; as people understandably worry about this RRSP season (in Canada), searching for the best place to park their money, it seemed timely to put it out “in the wild”.
Take heart, there is life after decades of sub-par performances and the warmth of sunshine Continue reading
Found this in a today’s Financial Post:
The unfortunate truth is that, for many mutual fund companies, outperforming is not the primary goal.