According to a recent comment on this blog, I’m full of it. Apparently, the author thinks I pulled the following statement out of my butt…
The reality is that the typical mutual fund investor has actually been losing 1 percent per year over the last 20 years, after adjusting for inflation.”
The statistic comes from the respected research firm, Dalbar, Inc., in its 15th annual study of mutual fund investor behavior. The study measures the returns investors actually get, not the returns they wished they got.
According to Lou Harvey, the president of Dalbar, the study once again revealed that
“investor returns lag what performance reports and prospectuses would lead one to believe is achievable. While those returns are theoretically achievable, the reality is that investors are not rational, and make buy and sell decisions at the worst possible moments.”
Let me paint a picture of how this happens: Lets say you do what the author (who calls himself “David K.”) of the rather nasty blog comment suggests and buy “simple index funds” and hold them for twenty years.
[Read more…] “Think you have to risk your money to get big returns? Hogwash!”
The major stock market indexes have fallen to levels not seen for 12 years – since 1997.
Of course, inflation during that period has reduced the value of your dollars by at least 36%.
The reality is that most Americans have been digging themselves deeper into a financial hole every year, with no way of knowing how long it will take to crawl out.
[Read more…] “Stock Market Investors: Are Ya feelin’ lucky?”
I often get asked by subscribers if they should sell some of their investments and put those funds in a Bank On Yourself plan.
Of course, everyone’s situation is different, and I can’t make that call for you.
But I can suggest a few questions to ask yourself, that can help guide you to a decision:
[Read more…] “How financially secure are you? Take the 3 question test…”
How are folks who use Bank On Yourself faring today, during the greatest destruction of household wealth in history?
I just heard from the Wilder family, who told me how they “stayed sane” during the market crash:
We have had Bank On Yourself plans for about three and a half years. They were what kept us sane during the stock market crash of 2008. Everything that was not in Bank On Yourself policies lost 32%, but all of our Bank On Yourself policies grew. Our goal with it is to be free of all interest payments to lenders and to secure a retirement income stream we can count on. We have used the plans to purchase a new car and pay off our mortgage. It’s a pleasure to know our car cannot be repossessed and our home cannot be foreclosed on.”
Find out how people of all ages, incomes and backgrounds have taken back control of their financial future in my New York Times best-selling book, The Bank On Yourself Revolution: Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future.
Have you noticed that every day it seems we get a new reminder of just how badly Wall Street has failed us? One of the latest reminders is simply astonishing.
Do you know what a “Target Fund” is? This increasingly popular choice for 401(k) plans is a mutual fund billed as a one-stop solution for investors saving for retirement. You put your money in a single fund linked to the year in which you plan to retire, and the fund company does the rest.
The idea is that the company invests your nest-egg more conservatively every year, so that when you’re ready to retire, your money will be there for you.
So how well do you think that strategy worked last year, for investors who pinned their hopes on retiring next year? [Read more…] “Wall Street fails those planning to retire next year…”