It seems like this thread has gotten a little contentious. I was just trying to help. A lot of people in TV just pay 1%+ for financial advice (2% to 3% total fees) because they think it is normal.... it is not and it is very expensive. Some people are ok with very expensive and some are not. I encourage your to not kid yourself about the data. Do the research yourself, do the math over a 3 or 5 year period (Does your advisor even show performance net of fees? If not, this is a huge red flag). Picking expensive mutual funds with high fees and picking individual stocks are less than optimal strategies. Math does not lie.
I am not affiliated with the investment education club. I have been to a couple meetings and they have some good content / education. They are going to specifically talk about mutual fund alpha. Alpha is the skill of the manager to beat their benchmark. The short answer is that most mutual funds do not have enough skill to cover their fees (thus, they fail to beat their index). All the marketing materials and Morningstar rankings don't mean anything. Low fees are the best predictor of success.
Some investors falsely believe the following:
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If my person changes 1%, but I get 8% gain after all fees and costs and you have no fees but only get 4%, then who wins?
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This doesn't happen. In most cases (90%+), if you properly benchmark the portfolio by asset class, there will be ZERO outperformance before advisor fee. The evidence is overwhelming! Most investors don't do the math and most advisors won't show you the data. If you have a 60/40 bonds portfolio with a 1%+ advisor fee, it is very hard to beat a 60/40 mix of index funds (matched to the same asset classes).
You can read some books from Jack Bogle or Larry Swedroe to prove the points. See below from the SPIVA US scorecard December 2016.
https://us.spindices.com/documents/s...r-end-2016.pdf
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-Given that active managers’ performance can vary based on market cycles, the newly available 15-year data tells a more stable narrative. Over the 15-year period ending Dec. 2016, 92.15% of large-cap, 95.4% of mid-cap, and 93.21% of small-cap managers trailed their respective benchmarks.
-Funds disappear at a significant rate. Over the 15-year period, more than 58% of domestic equity funds were either merged or liquidated. Similarly, almost 52% of global/international equity funds and 49% of fixed income funds were merged or liquidated. This finding highlights the importance of addressing survivorship bias in mutual fund analysis.
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