index fund

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Why Index Fund Investing is the Last Thing You Should Do

I have a beautiful red brindled Whippet. He’s always scouting around for something to eat or filch surreptitiously. When I am cooking or cleaning up […]

How to Buy Stocks and Avoid Becoming a Closet Index Fund

How to buy stocks is usually focused on how to buy high quality stocks that will provide superior performance over the next few years. For example, if you purchased Apple at 100 you would have a 700% gain. If you did not buy Apple you are not alone. It is very difficult to predict the future price movement of individual stocks. This is why most investors have a number of stocks. However, diversification is a defensive, not an offensive strategy. The primary role of diversification is to minimize the risk of large losses.

An index fund is a managed portfolio of securities that is designed to replicate the performance of a segment of the stock market. For example, the S&P 500 index duplicates the performance of 500 large capitalization U.S. stocks. The EAFE (Europe, Australasia, Far East) index is supposed to represent the collective performance of the stock market in 22 foreign countries. […]

Investment Expenses Can Wreck Your Retirement Plans

On August 30, 2012 401k plan sponsors (companies, trustees) are required to disclose all plan expenses to plan participants. Expenses are a very big deal because every dollar of expense is one less dollar participants have available to reinvest for their retirements. It is in participants’ best interest to understand ALL of the expenses that are deducted from their accounts for three reasons:

1. Expenses may be excessive in relation to investment performance.

2. Expenses reduce participants’ net performance.

3. Participants may have to defer retirement dates due to high expenses and poor net performance. […]