Being smart with $$ - A chance to make money but more likely lose it

An "actively-managed fund at least has a shot at (beating an index fund)" is a statement heard in Kiplinger's (07/2015) as an argument for paying for active management.   Yet the same article admits that the S&P 500 index funds beat actively-managed large cap funds by a half percent per year for 10 years! On a $10,000 investment, that difference would have cost you $1000.  Yes, active funds can outperform but they can also underperform and are more likely to do so.  I will stick with the sure thing.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com 

Being smart with $$ - Warranty over? There's other solutions

Two of my Vizio TVs dead each after less than 2 years of owning them and the warranty is only for 1 year. But wait! Don't neglect extended warranties.  Your credit card probably doubles the warranty. Bought it at Costco? They double the warranty too. Dead gadget? Call the manufacturer.  They often help even if past the warranty date. Sometimes with below-market replacement options.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Boring indexing may make you richer

Still think index funds are boring? In the last five years Vanguard's index 500 fund has beaten actively managed large-cap funds by an average of 1.73% each year. Think that doesn't matter? Over 20 years of steady annual investing that difference could cost you 20% of your money which might be tens of thousands of dollars. (Source: Morningstar in the Economist online 2/13/15)
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Accidental indexing

Are you indexing and didn't know it? You might own an actively-managed large cap fund that owns 200 stocks and charges a 1% management fee. You might own 2 such funds each with 200 stocks. You may even own 3 or 4, each with 200 stocks. At that point you are pretty close to matching the Vanguard 500 Index Fund that charges a 0.05% fee. Except YOU are still paying a 1% fee which makes it a pretty good bet you are doing worse than if you just bought the Index 500 fund.

Larry Pike, CFA

www.clientpriority.com 

Being smart with $$ - Small amounts matter with fees and performance

Yesterday I reported that just 1% in fees over 40 years could cost you 1/3 of your portfolio (see prior post for details.) But what if you pay 1% in fees AND the investments that your advisor's boss tells him/her to recommend also underperform by 1%? Now your account is less than HALF of what it would be without the fees and the underperformance.  The little stuff does count!
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Fees matter a lot

Don't think fees matter? An extra 1% in fees over 40 years can cost you 1/3 of your wealth! This loss is the cumulative effect of the fees plus lost earnings on those fees with 6% annual investment returns (per bankrate in Money Mag May '15). And there's so many different ways to get hit by fees. Ask me more.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com