What the E!

With all the economic turmoil that has taken place in the last year, I am sure we will see a number of people looking for “secret” methods to obtain positive returns and increase portfolio values. This methods may be successful for short term periods, but very few products will prove to have long term value.

A traditional method that almost no one in the financial services industry wants you to hear about is investing in index funds. Most investors for the long term are still going to find it tough to beat an index fund. Check out this story from the NY Times that details the continued fundamental strength of index funds. Index Funds are still winners.

We are switching 401k providers at work.  The switch is actually a good thing; vesting is happening sooner and matches are happening during each payroll cycle.  All great improvements!

However, the new options for investing are not award winners.  We had the normal visit from an investment adviser who claims to have a fiduciary relationship to us.  I think the adviser is a decent guy, just trying to make a living, but it is hard to believe that all his choices for mutual funds are going to be great.  He even said in the meeting that he will on a quarterly basis change out “under performing” funds.  He didn’t mention that chasing fund performance has been proven to be a very poor strategy.

So if you follow the link it sums up a bunch of really good academic research about active fund management.  For those of us who would like to follow this strategy, we strongly asked for a couple of low cost index funds.  I think we might get a couple, but we will see.

The best investment advice you’ll never get | San Francisco online