Why I hate Mutual Funds Part 2: TAX INEFFICIENCY

Mutual funds held outside of retirement accounts are not tax-efficient. “Depending on the timing of their investment,” notes the U.S. Securities and Exchange Commission, “investors may also have to pay taxes on any capital gains distribution they receive—even if the fund went on to perform poorly.” It is different with stocks and bonds. The investor pays income tax on dividends and interest received, but pays capital gains taxes only when a security is sold at…

Why I hate Mutual Funds- Part 1: Wealth-Killing Fees

WHY I HATE MUTUAL FUNDS AND YOU SHOULD, TOO 1. WEALTH-KILLING FEES AND EXPENSES Mutual funds are expensive. Many costs are built into their share prices (Net Asset Values), but these are not always apparent. Shareholders effectively give fund managers an open expense account to pay for securities trading costs, market impact costs, spread costs associated with buying or selling securities at less than favorable market prices to fill shareholder orders, and more. It adds…

Why I hate Mutual Funds- Intro: Some Things No Longer Make Sense

SOME THINGS NO LONGER MAKE SENSE TO OWN THE MODEL T On October 1, 1908, the Ford Motor Company began production of the Model T in Detroit. Ford would build 15 million Model T cars over the next 18½ years — the longest production run of any automobile model in history except for the Volkswagen Beetle. 1 Though the Model T was fairly expensive — about $20,760 in today’s dollars, $825 in 2 1908 —…

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