Are Your Mutual Fund Returns Killing Your Retirement? Fix It Now!
Good mutual fund returns are hard to come by these days. Most actively managed funds are don't give their investors market-beating returns. It shouldn't come as a surprise though. Regulations have have helped this industry (and also hurt it), and as a result, this has dragged down returns for many individuals.
There are some ways that you can try to boost your fund's returns, even still, don't look for these products to be the end all, be all that they are pitched as.
Your mutual funds are probably posting inflated returns. By not paying attention to past performance numbers that are posted by the fund company, and instead asking an independent adviser to help you calculate your true return, you'll get a better idea of how you're doing. The fund company typically shows you the simple average instead of the compound average which will result is higher returns on paper. It's good for business but not for your portfolio.
If you have a scientific calculator or a lot of time on your hands to do it manually, you can calculate the compounded return over time for these (or any) investment.
The second step in raising your mutual fund's return may be just to dump the fund. I know that's not really boosting the return of the fund, but you may be better off investing in something else. Actually, that's one of the basic rules of investing: understand what you are investing in. Unless you understand every business that that mutual fund holds, you are asking for trouble. You're not being a smart investor, you're just guessing.
One final way of getting more out of your fund is to choose funds that invest in small cap companies. You could also do well by just investing in smaller funds. A smaller mutual fund would probably be the essential point here. Think about how easy it would be for a mom and pop shop to double in size as versus a giant corporation like Walmart.
There are some ways that you can try to boost your fund's returns, even still, don't look for these products to be the end all, be all that they are pitched as.
Your mutual funds are probably posting inflated returns. By not paying attention to past performance numbers that are posted by the fund company, and instead asking an independent adviser to help you calculate your true return, you'll get a better idea of how you're doing. The fund company typically shows you the simple average instead of the compound average which will result is higher returns on paper. It's good for business but not for your portfolio.
If you have a scientific calculator or a lot of time on your hands to do it manually, you can calculate the compounded return over time for these (or any) investment.
The second step in raising your mutual fund's return may be just to dump the fund. I know that's not really boosting the return of the fund, but you may be better off investing in something else. Actually, that's one of the basic rules of investing: understand what you are investing in. Unless you understand every business that that mutual fund holds, you are asking for trouble. You're not being a smart investor, you're just guessing.
One final way of getting more out of your fund is to choose funds that invest in small cap companies. You could also do well by just investing in smaller funds. A smaller mutual fund would probably be the essential point here. Think about how easy it would be for a mom and pop shop to double in size as versus a giant corporation like Walmart.
About the Author:
About the author: Only so much information can be covered in one article. If you would like more detailed information about any aspect of personal financial planning, please visit David's website.
posted by Credit Counseling at
4:07 AM
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