Why I hate Mutual Funds 6: WHAT YOU SHOULD DO

It’s amazing that anybody buys into mutual funds anymore. True, your company’s profit-sharing or 401(k) plan may offer you little choice but to pick from certain funds made available. But, where you have a choice, I recommend these three steps:

    1. REDUCE FEES AND EXPENSES

    Search for an investment advisor who will help you avoid costly investment products and won’t add a hefty set of fees. Many advisors charge 1% or more in fees on balances invested. We’ve seen how this can take a tremendous chunk of wealth off the table in time. So, look for a firm that charges less — say, 0.25% or 0.5% in fees. Also, make sure the firm is up to speed with the latest trading and portfolio management platforms. Stock trades, for example, can run as little as $1 a trade these days.

    1. SEEK SMART RETURNS

    We’ve seen how mutual fund performance can be less than stellar. We’ve also seen how mutual funds can compromise an individual’s performance results through investment style drift and through the actions of other fund shareholders. You want smart financial planning (building a risk-adjusted portfolio that matches your individual needs and goals) and the ability to control your investment program (to buy and sell securities when they make sense for you, and not in response to others’ fears). If you don’t want to create your own portfolio, seek out a fee-based investment advisor with experience in trading and risk planning.

    1. PROTECT YOUR ASSETS AND YOUR LEGACY

    Tailor your investment plan as you age and as various life stages come and go. If you’re young and just starting out in the workforce, your needs and your plan will be very different from someone nearing retirement. Use a smart combination of guaranteed retirement options and low-cost investments to achieve financial success. Be sure your plan is your plan. Don’t fall prey to organizations that treat your money the same, whether you are just starting your career or just starting your retirement. Don’t spend another moment in a cookie-cutter mutual fund designed to maximize the firms profits at the expense of your profits. If retirement is just around the corner, you can’t afford to ride out another economic collapse investing in mutual funds.

    MUTUAL FUNDS HAD THEIR DAY

    The number of mutual fund choices available to investors is overwhelming. It currently stands at over 10,00029 — 10,000 funds that want you to pay their exorbitant fees, share others’ tax liabilities, accept poor performance, live with less than all the facts about fund management and be content with the system. You realize that it costs you. So, why write a check to a mutual fund?

    In 1924, the Ford Model T represented half of all cars on the road. It took everyday people to more places and improved the quality of life. Mutual funds came into existence In the same era. They, too, brought opportunities to common folks, but they’ve had their day.

    Financially, it’s time to live in the 21st century. It’s time to use modern financial tools, not the tools that cost you money, control and performance. That’s why, I take a strong position. I hate mutual funds. You should, too.

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The Retirement Guys