This is HUGE because the far majority of my clients have 401K's composed of mutual funds and some simple, small changes will equal BIG long-term rewards.
Oh man. Is there a better feeling than finding out you're right? The answer is yes. Because in this case it's helped hundreds of my clients and now not only am I right but also they get to reap the rewards.
I'm referring to a 15-years study that broke this week and released years of data looking at mutual funds and their cost and benefits.
(I apologize for the cheesy walking-on-a-path-fading-in-the-distance investment metaphor photo.)
Obviously, we haven't met, but yes. Most people are invested in mutual funds.
Mutual funds are a grouped collection of stocks.
The thinking is simple: rather than investing in one company's success in the stock market, mutual funds allow you to diversify your portfolio and spread your investment/risk across many companies.
but There's been a debate in the investment world between financial nerds over the years arguing if active mutual funds or passive mutual funds (index funds) yield the stronger return for clients.
The debate is finally over. There is proof.
Active mutual funds have professional investors on the payroll with the responsibility of choosing what to invest in and picking stocks they have researched. Real humans making your investment decisions.
On The Other Hand, You Have Passive Mutual Funds (Index Funds)
Passive mutual funds track a market index like the SMP 500 to buy and sell stocks without having to pay the salaries of professional. It's essentially a computer that runs algorithms to invest your money.
The study showed that 82% of the top active funds trailed the passive benchmarks.
Many people are invested in active funds. Are you?
The financial nerds found proof that it costs more to invest in active mutual funds and it actually is not near as successful.
It feels pretty great to see a long-term study support what we continual advise our partners. Now to stop patting our backs and see how we can help more people like you.