I understand this but you would be amazed at what is available so I disagree. I may have more experience with this since I do this for a living and I see the clients win with the right plan and product. And even so, sometimes the most important result of someone buying insurance is not whether they win on the contract. Maybe it makes them sleep at night. Maybe it guarantees their children don't have to sell the family home that was in the family for generations. Anyone have a beach house in the family? Who paid the taxes on transfer? Granted, some of these people are fairly well off and are in the need for solutions to complex problems so it is a little different than what's right for the average individual but even so, its still not always best to buy term. In review of your other comments, just remember that Vanguard still makes a ton of money off you and Chuckle "I'm making a killing" Schwab has his own private jet. Active management costs an additional 70 basis points. That cost is risk so if you are a person that is willing to take that risk, what's wrong with it? The main large endowments people study in school (probably you may have too with your MBA) have consistently been pretty happy being active. My suggestion is to be open to many things, nothing is the end all solution. So in the essence of giving someone advice about their posed question its probably best to recommend him to go see someone he trusts to get a little more educated and keep an open mind.
I see your point. And I see the appeal of indexing. Have no qualms there. But there is more than one option. I did not only handle the funds, I've also been their client years. For example, Yacktman's Focused Fund has been criticized for years for their fees. About 1% annually, and a 2% exit fee. But a 72%%+ (approx) return in 4 years was well worth it. I also have indexed investments. But to get ahead, I have dramatically increased weightings on value stocks and good performing managed funds to great effect. Another advantage to stock picking is that you can step away from the market. Index funds will always be fully invested.
Slightly off topic but interesting way to keep things in perspective: You need an annual income of $34,000 a year to be in the richest 1% of the world, according to World Bank economist Branko Milanovic's 2010 book “The Haves and the Have-Nots”. To be in the top half of the globe you need to earn just $1,225 a year. For the top 20%, it's $5,000 per year. Enter the top 10% with $12,000 a year. To be included in the top 0.1% requires an annual income of $70,000. America's poorest are some of the world's richest. Nowhere else is the world do the poor have flat screen TVs, cellphones and some even cars. As an Angolan politician once said to me: if I die and return, I'd be happy to return as a poor American.
As an immigrant, I can attest to that. I am still happily amazed the life one can live in the US with a job that would struggle to make 100 dollars a month in the 3rd world. This is a great country.
Any time I think I should have more, or don't make enough, I just think how well I've got it compared to most of the world. Appreciation and gratitude is what I then feel. Modern American life is complicated, but good.
the optimistic almost always do better than the pessimistic. Invest in a positive outlook and work every day to make your dreams happen.
^^this. unless you're an investment guru and can get guaranteed returns equal to higher than your debt, you are losing money by investing. Pay off your debts first and foremost. Don't even think about individual stocks and timing the market unless you do a ton of research first...
+ on the Fidelity. I started with infidelity almost 10 years ago and the guidance is stellar. I am now a millionaire....if I sell everything including the Polo shirt off my back, but seriously Fidelity is great, (and yeah I am a millionaire) check out the factoids: https://www.fidelity.com/why-fidelity/pricing-fees Also buy a 650b bike
http://finance.yahoo.com/news/buffet-s-advice-leads-to--5-5-b-pop-in-this-index-fund-130311854.html Warren Buffett – the richest man ever to make his fortune through investing – even told his shareholders this year that most people are better off in a Vanguard index portfolio. (Some Fidelity index funds have low fees also.)
http://online.wsj.com/news/articles...0001424052970203858004580104143815843602.html Investors are pouring money into Vanguard Group, the epitome of the hands-off approach to investing, flocking to funds that track market indexes and aren't run by stock pickers or star managers. The inflow has pushed the mutual-fund giant to almost $3 trillion in assets under management for the first time. Vanguard’s ascent is notable because its plain-vanilla index funds are often derided by more adventurous investors who believe in trying to do better than the overall market.
It's great that Vanguard is experiencing record investment and is rocking assets exceeding $3 trillion. That means that the economy is flourishing, and typical people have excess income that they can invest into their futures. It means that they have at least a minimal understanding of economics; they possess the knowledge that a dollar earned in 2014 won't be worth much in twenty or thirty years, so they need to grow their money NOW. It's notable because it's an indicator that the middle class is now realizing that they're going to have to take care of themselves, and that neither the government nor their employers are going to provide in their retirement all the nice things to which they've become accustomed. I don't think that experienced investors have reduced their expectations to do better than the overall market. All this optimistic data just a start, however. American people are still behaving recklessly financially. I quick data search shows that 2012 savings rate for American families is only 3.8%. In 1962 it was 9.2%, and was at the highest in the early 1980's just under 11%. I don't think there is ANY financial expert who would recommend a savings rate of lower than 10%. Things are looking up, but we've a long way to go.
You guys have to really watch what you read and how you interpret it. Its one year, but if you change every year what you invest in you really aren't technically indexing are you? Compare his BRK to the indexes and enlighten yourself.
Ya honestly dont listen to Buffet, follow him instead, he says one thing and does another. He sounds like your grandpa but would eat you for dinner. All his politics are there to benefit his investing agenda, not a bad thing, everyone thinks for their self interests
There is a lot of truth to this. I've worked for a Buffet owned company. It was one of the worst experiences of my life when it comes to corporate culture and employee well being. Talk about politics. It was plain to see that his investment in rail was preempted by the his politics raising energy prices. The gumption to ask for raising taxes, while exercising all the loopholes that can be had, including the companies that he has large stakes is hypocritical at the least, and borders on deceit.
Lots of great advice !! I love the idea of getting out of debt first ( That will cost you a fortune in the long run ) and also not trying to pick single stocks. Time is your best friend when it comes to investing, think crock pot and not microwave. Like others have stated, find a professional that can teach you about what you are buying so you can make a sound decision. Beware of sales people that want you in a product just because it lines their pocket. If you are interested in becoming wealthy without gimmicks then read " The Total Money Makeover " By Dave Ramsey it WILL change your financial future for the better.
i second Dave Ramsey. Too conservative and careful in many ways but he gets at people most important problem first - Live within your means and pay off debt"
Yep Very basic conservative careful advice and I fall in that "most people" category. Get out of debt, set a budget and live on less than you make so you can invest in you and not in the banks. I started in 2008 and by 2011 I was debt free and haven't looked back. I do believe the borrower is slave to the lender.
