Every time I’ve ever interviewed a candidate for our company, the minutes before I step into the interview room have always been preceded by emotions of anxious anticipation, excitement and hope. By the time I’ve gotten to the interview stage with a candidate, I’ve done sufficient due diligence to give me reasonable cause for hope. […]
Today, it’s extremely easy to invest in products called “index funds” that accurately track the S&P 500 (or many other market indices). The best news of all is that most index funds are extremely efficient and costs very little to own.
As I mentioned in a previous piece, employers who place job ads typically receive hundreds of resumes. Thus, if you only apply to posted jobs, you’ll be one of 200 to 300 (or more) resumes in a pile on someone’s desk. In this case, you’ll need a great resume and a bit of luck to […]
The Zero-Sum Game. Investing in a stock is participating in the profits of a company. It is possible for a group of shareholders to buy stocks in a company and all win together. Ideally, there are no losers as all shareholders participate in the value creation of the company and its employees. Correspondingly, investing in […]
Checking Historic Performance. As we’ve already discussed, the combination of short-term performance constraints and the fees charged makes it nearly impossible for all but the luckiest of fund managers to succeed. Here’s the sad truth from some recent research . The good news is that 7.8% of funds actually outperformed the S&P 500 over that […]
Comparing Their Top 10. So is there indication of “closet indexing” in the mutual funds you own? Most, if not all, mutual funds publish a marketing fact sheet that details fees, historic performance and their top holdings. As an example, it would be instructive to compare the largest companies in the S&P500 against the top […]
How Money Managers Keep Their Jobs. Mutual funds make money by charging its unit holders a fixed percentage each year (typically between 1% to 3%) for managing its investment portfolios. Total revenues of the fund company is a fixed percentage of all Assets Under Management (AUM) of the company’s funds. The greater the AUM, the […]
How 1% becomes 30%. Mutual funds make money by charging fees to unit holders. Good or bad, up or down, fees are deducted from unit values. Management Expense Ratios (MER) typically range from 1% to as much as 3% each year. This means that even if you’ve purchased the lowest costing mutual funds (e.g., MER=1%), […]
Today’s interest rate on savings is less than 1%, here’s why I keep using an 11% annual compound rate of return in most of our examples.
Would you rather invest $50K to earn $1.1M or $125K to earn $570K?
Most people choose the latter.