Mutual Funds Information

Sound, sensible advice from a hero to frustrated investors everywhere

William Bernstein’s The Four Pillars of Investing gives investors the tools they need to construct top-returning portfolios­­–without the help of a financial adviser. In a relaxed, nonthreatening style, Dr. Bernstein provides a distinctive blend of market history, investing theory, and behavioral finance, one designed to help every investor become more self-sufficient and make better-informed investment decisions. The 4 Pillars of Investing explains how any investor can build a solid foundation for investing by focusing on four essential lessons, each building upon the other. Containing all of the tools needed to achieve investing success, without the help of a financial advisor, it presents:

• Practical investing advice based on fascinating history lessons from the market
• Exercises to determine risk tolerance as an investor
• An easy-to-understand explanation of risk and reward in the capital markets

Author: William J. Bernstein

Hardcover: 
240 pages

Company: McGraw-Hill 

(2002-04-26)

ISBN: 0071385290

List Price: $29.95
Amazon Price: $17.49

Used Price: $14.84

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The bestselling author of Pioneering Portfolio Management, the definitive template for institutional fund management, returns with a book that shows individual investors how to manage their financial assets.

In Unconventional Success, investment legend David F. Swensen offers incontrovertible evidence that the for-profit mutual-fund industry consistently fails the average investor. From excessive management fees to the frequent “churning” of portfolios, the relentless pursuit of profits by mutual-fund management companies harms individual clients. Perhaps most destructive of all are the hidden schemes that limit investor choice and reduce returns, including “pay-to-play” product-placement fees, stale-price trading scams, soft-dollar kickbacks, and 12b-1 distribution charges.

Even if investors manage to emerge unscathed from an encounter with the profit-seeking mutual-fund industry, individuals face the likelihood of self-inflicted pain. The common practice of selling losers and buying winners (and doing both too often) damages portfolio returns and increases tax liabilities, delivering a one-two punch to investor aspirations.

In short: Nearly insurmountable hurdles confront ordinary investors.

Swensen’s solution? A contrarian investment alternative that promotes well-diversified, equity-oriented, “market-mimicking” portfolios that reward investors who exhibit the courage to stay the course. Swensen suggests implementing his nonconformist proposal with investor-friendly, not-for-profit investment companies such as Vanguard and TIAA-CREF. By avoiding actively managed funds and employing client-oriented mutual-fund managers, investors create the preconditions for investment success.

Bottom line? Unconventional Success provides the guidance and financial know-how for improving the personal investor’s financial future.

Author: David F. Swensen

Hardcover: 
403 pages

Company: Free Press 

(2005-08-02)

ISBN: 0743228383

List Price: $28.00
Amazon Price: $15.67

Used Price: $13.94

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Investing is all about common sense. Owning a diversified portfolio of stocks and holding it for the long term is a winner’s game. Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), but after the substantial costs of investing are deducted, it becomes a loser’s game. Common sense tells us—and history confirms—that the simplest and most efficient investment strategy is to buy and hold all of the nation’s publicly held businesses at very low cost. The classic index fund that owns this market portfolio is the only investment that guarantees you with your fair share of stock market returns.

To learn how to make index investing work for you, there’s no better mentor than legendary mutual fund industry veteran John C. Bogle. Over the course of his long career, Bogle—founder of the Vanguard Group and creator of the world’s first index mutual fund—has relied primarily on index investing to help Vanguard’s clients build substantial wealth. Now, with The Little Book of Common Sense Investing, he wants to help you do the same.

Filled with in-depth insights and practical advice, The Little Book of Common Sense Investing will show you how to incorporate this proven investment strategy into your portfolio. It will also change the very way you think about investing. Successful investing is not easy. (It requires discipline and patience.) But it is simple. For it’s all about common sense.

With The Little Book of Common Sense Investing as your guide, you’ll discover how to make investing a winner’s game:

• Why business reality—dividend yields and earnings growth—is more important than market expectations
• How to overcome the powerful impact of investment costs, taxes, and inflation
• How the magic of compounding returns is overwhelmed by the tyranny of compounding costs
• What expert investors and brilliant academics—from Warren Buffett and Benjamin Graham to Paul Samuelson and Burton Malkiel—have to say about index investing
• And much more

You’ll also find warnings about investment fads and fashions, including the recent stampede into exchange traded funds and the rise of indexing gimmickry. The real formula for investment success is to own the entire market, while significantly minimizing the costs of financial intermediation. That’s what index investing is all about. And that’s what this book is all about.

JOHN C. BOGLE is founder of the Vanguard Group, Inc., and President of its Bogle Financial Markets Research Center. He created Vanguard in 1974 and served as chairman and chief executive officer until 1996 and senior chairman until 2000. In 1999, Fortune magazine named Mr. Bogle as one of the four “Investment Giants” of the twentieth century; in 2004, Time named him one of the world’s 100 most powerful and influential people, and Institutional Investor presented him with its Lifetime Achievement Award.

Author: John C. Bogle

Hardcover: 
240 pages

Company: Wiley 

(2007-03-05)

ISBN: 0470102101

List Price: $19.95
Amazon Price: $10.57

Used Price: $10.56

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The present day society provides you the luxury of realizing your dreams very easily. The proximity to the loan market enables you to spend extravagantly till one day you find a fading bank balance and mounting debts. The constant nagging by the lenders leaves you embarrassed and you begin to repent your past mistakes. Debt consolidation for homeowners is especially designed for those who are serious in dissolving the debts and are aware of a precious possession, their home. This investment provides you with the luxury of consolidating your debts at a cheaper rate.

Debt consolidation for homeowners seems a pretty good idea to reinvent your peace. As this loan is secured it would require you to place your home as collateral. But this brings with it extra benefits like lower interest rate, lower monthly payment, easy repayment option and an enviable capacity to negotiate the loan term. On the one hand it enables you to deal with one loan, one monthly payment, one loan lender and on the other hand it helps you dissolve your debts faster.

Before banking upon debt consolidation for homeowners, you should be clear about your credit score. Though the loan being secured, this factor is less important; still it goes a long way in bringing down the interest rates by a few points.

Debt consolidation for homeowners is ideal for those who have debts exceeding ₤5000 with three or more individual creditors. Debt consolidation for homeowners would be more efficient if they have an expendable income of 100 pounds or more. This sends you with a note of caution. With no debt problems on hand, after debt consolidation a homeowner would pine to spend more, which would result in more debt. Therefore a borrower should be sure of their present debt amount and nature of debt so that their main aim should include paying off previous debts and also for a shorter loan term. It is advised that if you do not have the necessary disposable income, then take small loan amounts.

Debt consolidation depends on the circumstances of the homeowner. They should form an effective debt management plan. This includes study of income and expenditure of the homeowner, which in the long run helps the borrower to effectively deal with their debt repayment.

Debt consolidation for homeowners is an effective instrument of dissolving ones debt. The most important factor to be kept in mind is the choice of the lender. You should make it a point to compare different lenders on the web offering free quotes. Their loan term may vary, so you should select the best suited to your financial requirement. Once you dissolve your debts effectively, you are free to live a carefree life.

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With the stock market stubbornly refusing to settle down and smooth out, Wall Street has been scrambling to come up with “product” they can sell to gun shy investors.

One such new concept is the Lifestyle fund; an extremely diversified package designed to be the single fund in an investor’s portfolio.

There are two general types of these funds, in which assets are spread out across a wide range of stocks and bonds. In one, securities are held directly, in the other, assets are held through other funds.

Fidelity’s Freedom 2030 is an example of the first type. It targets a specific retirement date, and the cash and bond stakes rise as that date approaches.

This type of fund has created a perception among investors that its value will not drop and that it is safe. But, in fact, these are no safer than a standard mutual fund.

Since we sold all of our investment positions on October 13, 2000 and preserved our capital, Fidelity Freedom 2030 has lost 39% (through 2/21/03). Do you think that’s an isolated incident?

I’m not picking on Fidelity, but here are some of their other Lifestyle funds with returns over the same period:

Fidelity Freedom 2020: -34% Fidelity Freedom 2010: -22%

So much for perceived safety.

The other Wall Street bright idea is the fund of funds (FOF). It sounds good, but it actually creates a double layer of costs; the cost of purchasing the fund itself, and then the expenses of the mutual funds the FOF purchases. Take for example, the Enterprise Group of Funds. It shows an expense ratio of almost 2% plus a sales charge of 4.75% according to Morningstar. Tack on the underlying expenses and you’re paying out more than 3% a year in investment expenses.

If you’re a new investor (with less than $10k), and have your account at a discount broker, you can add a minimum of 1% per year in fees just for the privilege of having an account. That brings the total up to 4% in annual expenses. Talk about adding insult to injury.

FOFs are sometimes being touted as the only fund you need no matter what the investment climate. So, let’s compare to see how the Enterprise fund of funds performed during the same period as mentioned above for the Freedom funds:

Enterprise Group of Funds: -35%.

The bottom line is that no matter what type of mutual fund you choose, or what anybody claims it will do for you, you must be vigilant and see if it does what you were told it would. In investing, there is simply no such thing as a sure thing. Sure you need to know how to recognize a good investment.

But just as importantmaybe even more importantyou must know when to recognize that a good investment idea didn’t work out, cut your loss, and sell.

About The Author

Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped hundreds of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: http://www.successful-investment.com; ulli@successful-investment.com

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