Today I’m going to aggravate even more individuals than I typically do, because frankly I have a lot of family and friends who make their living selling mutual funds. By the afternoon I’m willing to bet that I’ll have a dozen negative emails with adverse reactions, snarky comments and excuses identifying why the items I’ve outlined in this article are invalid and why my approach is “too risky”. A warning in advance to financial advisors, I won’t respond to your comments, they are biased and I know my article is risking your cashflow for the benefit of your coveted customers. It’s unfortunate that average investors will be persuaded to listen to such rhetoric because well, simply put – it’s complete bullshit!
Okay so here’s a picture-perfect scenario. This is you. You buy mutual funds. You have for years. You are very happy with the returns. As you can see, even though it’s unlikely, I’ve chosen the best case scenario for the sake of this explanation because there are a hell of a lot of naysayers out there (usually financial advisors in this instance because I’m cutting their commissions out of the equation). Now; let’s assume that you’ve chosen a high quality mutual fund that is managed perfectly, with low fees, consistently high returns and is executed entirely ethically – nobody is generating a single dollar of additional revenue beyond the managed fund’s fee of 2.9%. Sounds like a dream come true, right?