Quote:
Originally Posted by rsmurano
Most if not all of managed funds do worse than an equivalent index fund. Why fund managers charge loads is because most people investing in the stock market are naive, which is a shame because they need this money to live on in retirement. I have helped over a dozen friends get out of their ‘managed’ environment to something much simpler, much cheaper, with much better earnings. Some of them had to pay over 5% sales load fee when they exited which they never knew they had to pay.
As for fees, if your money is under a broker like fidelity, Schwab, etc, then these institutions get paid from the fund even if you do your own trading. So if I’m with fidelity and I have fidelity manage my money for a 1% fee, fidelity will still earn income from the fund itself.
1 more thing to consider when buying a managed fund, you will be paying more in taxes each year because the turnover of imbedded stocks has a much higher turnover within the fund. Nobody looks at this stat. Some of my friends managed funds had over 400% turnover rate because they are always chasing the market. Whereas index funds have very low turnover rates.
There are many low cost index funds (fees less than .1%, normally around .02%) making 20-30% and more during the last 6 months in low risk holdings, or if you are nervous about the market, you can make over 5% with no risk money market funds.
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Thank you for your informative post. Do you know if there are funds or stocks that are only available through an advisor? If that’s the case maybe there is some value there in using an advisor, assuming those exclusive funds are doing better than any other fund available to the general public.