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19 Comments
- Venice310, on 10/12/2007, -0/+8johnchow.com is a website of dubious information. NOTHING should be taken at face value - search other diggs on this site for more thoughts on johnchow.com's info. BEWARE.
- fatdog789, on 10/12/2007, -0/+7john chow = inaccurate. 'nough said.
please add this fool's blog to the list of banned sites. - bengilbert, on 10/12/2007, -0/+7Wow, I hope that all 100+ articles aren't this inaccurate or digg is doomed. Frankly, Mr. Chow is an idiot. His statements are misleading and although not always inaccurate, they are questionable at best.
He states, "What about 'no load' funds? There is no such thing. All funds have a load on it. The financial planner will get his commission for selling you the fund. If you do not pay the commission, then the fund pays it." That is just patently wrong. Fee-only planners like those found on http://napfa.org/ don't charge commissions or loads or fees (or whatever you want to call them) on mutual funds they recommend. They are paid an hourly rate or a flat-fee for the services they provide. It's up to the investor to seek out who they work with, they can pay an advisor through the backdoor with loads or an upfront fee, but there is no free lunch.
Yes, there are financial planners and mutual fund managers that overcharge, but caveat emptor. All investors should do the appropriate research (examine expenses, historic return, volatility, asset drift, etc.) before investing. If you want a good place to start your education, try the Morningstar Investing Classroom http://www.morningstar.com/Cover/Classroom.html a great *FREE* resource on how to choose quality mutual funds.
You should not seek financial advice from people who blog on a domain with their own name in it. - krinthekuz, on 09/16/2008, -0/+5agreed... and all the comments on his page also noted the gross amount of innaccuracies. if you want to get into nitty gritty details, you cannot make sweeping generalizations and pick the best points for your argument. while there are ***** investment managers, there are tons of very good ones too.
- inactive, on 10/12/2007, -1/+6Any investment on the stock market comes with risks. Mutual funds are one way to invest, it is not garunteed and no one should ever think its garunteed safe. It is however usually safer to invest in a fund than in stock directly since a good fund doesn't keep all its eggs in one basket. If one stock in the fund falls the other stocks usually can still support the fund minimizing loss. However if you purchase stocks directly and one of your stocks falls, you feel that very very hard.
Either way do your own research before purchasing a stock or mutual fund. And always remember you can lose your entire investment. - ptaylor, on 10/12/2007, -0/+5Mutual funds are great investment instruments if you cannot stomach the volatility and uncertainty of other securities. This blog is by a guy that is just rambling. He didn't even differentiate the difference between load and no load funds, which doesn't carry the number of fees that he mentioned.
There are plenty of sites to get the real 411 on securities, such as Fool.com, Morningstar, and Kiplinger's. Hell, email Suzy Orman or visit her site. Digg and John Chow are not ideal places to get personal finance information ladies and gentlemen.
I'm digging this down as inaccurate and it's misleading. - swimshaun, on 10/12/2007, -1/+5@onehrcleaner
You may want to look up what "risk averse" means. You'll probably find out two things, 1) that you are in fact a n00b, 2) you aren't nearly as smart as you think you are - billspaced, on 10/12/2007, -0/+3That article is pretty poorly written and researched. Some of the things the author says are benefits of alternatives to "mutual funds" (interesting that he claims "index funds" are not "mutual funds") are the very things he says are drawbacks to mutual funds. For example, with ETFs, "you can...buy on margin and purchase as little as one share" -- buying on margin involves fees (margin interest), is highly speculative, and isn't targeted to the same market segment as "mutual funds" AND purchasing one share for the typical $7.99-19.99 discount brokerage fee represents a MUCH HIGHER "load" than the 1-2% a typical no-load mutual fund collects as a management fee.
The author needs to think some more before he writes such opinion pieces. And, yes, the 'Vette is beautiful. - ynggrsshppr, on 10/12/2007, -2/+5Actually if they charge the maximum 8.5% fee, you actually have to gain more than 8.5% to break even.
Example from my text:
1000 invested
85 goes to the managers
915 is actually invested
85/915=9.3%
You need 9.3% to break even. - Lasker, on 10/12/2007, -2/+4Vanguard index funds are great if you want diversity without fees. "A Random Walk Down Wall Street" lays down a great argument as to why mutual funds can be a bad investment compared to broad based index funds.
- inactive, on 10/12/2007, -1/+2I don't know about the accuracy of the article, but I know that Vette is pretty sweet.
- VitaRara, on 10/12/2007, -1/+2Diversification is a virtue of many mutual funds, but the article is absolutely right that many mutual funds charge high rates for their services. The one place you should really look out for this is on 401ks and 403bs. There you frequently locked into a set of chosen funds, which typically carry high loads, and management fees.
Personally I've found one company that provides real service for its fees, Dodge and Cox. No loads, and very low management fee, something close to 0.5% if I remember correctly. - dbloodnok, on 10/12/2007, -0/+0Dont forget to factor in inflation to all annual gains to get the true picture of your gains (or losses) in purchasing power. No point getting 4% a year if the dollar has declined in value by that amount. Also be aware that the CPI calculation has changed over time, so a more stable measure is growth in money supply.
- onehrcleaner, on 10/12/2007, -5/+5Vanguard generally has lower fees throughout ALL their mutual funds, not just the index funds. Generally speaking, index funds are for n00bs and risk averse investors. Sometimes you have to spread your wings, absorb some fees and go for the higher returns while you still have time.
- Lasker, on 10/12/2007, -2/+1Little FYI ServZero. The reason the fund you own has a 13% rate of return is because investment firms CLOSE DOWN funds which lose to the S&P. As a result the only remaining funds are those which have done well. That said the odds of your fund outpreforming the market are about the same as everyone elses.
Also high preforming funds can start to suck after a lot of success because more people invest in them and the asset base grows. Thus it becomes harder for the manager of the fund to take advantage of the little plays they built their track record on. - inactive, on 10/12/2007, -1/+0But what are inexperienced, uneducated, modest-capital, time-strapped investors supposed to do (besides index funds)?
- dcvtss, on 10/12/2007, -5/+2@onehrcleaner
You say index funds are for n00bs and then talk about buying other long only (i assume) mutual funds? Who's the n00b? LOL - Urusai, on 10/12/2007, -5/+3Usury is a sin. Burn in Hell, thralls of Mammon!
j/k - Wiggles2, on 10/12/2007, -7/+2The stock market will crash sometime within the next 4-6 months. Get all of your money out of it now.
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