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Retirement Planning Consultants
Confused, overwhelmed, disappointed with the
investment process and don’t know where to begin?
As you may have discovered, investing isn’t all that fun
for the average investor. What options do you have?
You can do it on your own. But, how good are you on
picking from tens of thousands of stocks, bonds and
mutual funds that are available?
One financial writer calculated that if you stay up on the
news in the press, magazines, online and cable, you'll be
exposed to at least 42,000 "tips" every year from pundits
and ads. How do you sift through all of that confusing
information?
What do you ---
the average investor, need to know
about saving -
investing for retirement?
There are no investment gurus. A magic formula that will
help you to build your nest egg does not exist.
History shows us that the experts that you see on TV or
read about in print cannot produce above-average returns
on a regular basis. But, they will charge high fees and
expenses that will under perform a totally unmanaged
index mutual fund –
a fund that charges low expenses and
just buys and holds all or a representative sample of all of
the stocks in a broad stock market index.
More than a hundred years of academic research has
concluded that index funds are an investors best
investment. Why?
Studies have repeatedly shown that over the long haul,
index funds perform better than thousands of other
competing mutual fund.
Index funds have regularly produced rates of return
exceeding those of active managers by close to 2
percentage points. The reason? Management fees and
trading costs.
They are cost efficient. Funds that mimic indexes always
have lower fees and expenses because of their passive
investment style. You don’t have to pay high priced
managers of actively managed funds to pick stocks for the
fund.
The expense ratio of the average index fund is below
0.2%. The expense ratio for an actively managed fund is
1.52%. Research on mutual fund performance shows that
paying above average expenses makes above-average
performance less likely.
Expenses don’t enhance performance. They erode it. Every
$1 dollar you pay or lose now costs you not only that $1 but
also the amount that $1 could earn over your lifetime.
Why use index funds?
Returns from index funds are predictable. They do not
prevent losses when the market declines but you know
beyond doubt that you will earn the rate of return provided
by the stock market. With index funds, you capture the
entire return of each asset class.
By using index funds, you use a simple, time-tested, low-
cost, easy-to-understand, do-it-yourself, low-stress,
uncomplicated approach to building your nest egg. Your –
low maintenance portfolio does not require worrying about
your investments on a day-to-day basis.
The S&P 500 Index outperformed almost two-thirds of
large-cap active funds in the five years through 2005. The
S&P Mid-cap 400 index bested 81% of mid-cap managers
and the S&P SmallCap
600 topped 72% of small-cap
manaagers.
What’s the difference? Actively Managed Funds or
Passive Index Funds?
In an actively managed
fund, the manager will try to pick
individual securities (stocks and bonds) that will perform
better than the market.
However, beating the market is due to luck not a skill that is
repeatable. Studies show that only about 3 percent of active
managers beat an appropriate index over a ten year or
longer period. It is nearly impossible to predict which
manager will get lucky and beat the market. Investors who
have been lucky in the past should not expect a continuation
of their good fortune in the future.
Passively managed index funds
do not attempt to beat the
market.
They will seek to match the returns of a specific
stock benchmark or index by buying representative
amounts of each security in the index
In a 2004 report on investment behavior, Dalbar Inc, a
financial-services research firm, found that over a 20 year
period, the average equity investor earned 2.57% annually ,
compared to 3.14% inflation and the S&P 500 index
investor earned 12.22% over that same period. The gap
between the average active investor and the market is 9.65%
a year.
Saving –
Investing For Retirement-
A Simple
Approach That Works
An easy, step-by-step, time-tested process for building your
retirement nest egg.
.
Presents:
A Brand New
Workshop