etfs

Active Investment Managers Underperform Indexes

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better investment performance

Every year or so, somebody freshens up a study that shows active mutual fund managers underperform passive investing, usually in the form of an ETF of the category benchmark. In plain English: Buying the ETF instead of the mutual fund of the same type will generate higher returns for you over the long-run, and often even the short term. So, why are active investment managers so bad? Mutual Funds Cost Money to Run Mutual funds are not charities. They have expenses they need to cover. Expenses include everything from offices to high paid analysts, to traders to execute the trades, to all of the electronics and equipment it takes to monitor and use all the information in the trading world. Oh yes, then there is the matter of profit. These expenses are disclosed to all investors in the required information made available to any investor in the prospectus and on most trading and investment research platforms. Pulled quickly and semi-random is the Dodge & Cox Stock Fund, a large U.S. stock mutual fund. You will notice that compared to the S&P 500 index listed below, our well-respected Morningstar 5-star fund returns less than the S&P 500 over any time period. …

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Is Ark Innovation a Scam?

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ark innovation

Sometimes, a fast rise comes with expectations that are difficult to live up to. Sometimes the person rising fast doesn’t really help matters. Cathie Wood came into the “mainstream” of financial news with a prediction of a huge rise for Tesla. She was “right,” at least over that sample period, and then some guy anointed her best stock picker of 2020. That will attract some eyeballs. But, just like Abby Joseph Cohen rose to fame by always being more optimistic than the next stock market analyst who said, “Are we really sure all of these no-earnings, no-profit, internet stocks should be pulling everything this high?” while the market rose and rose during the internet bubble, being right isn’t always so much being right, as being the last one to ignore the iceberg. Cohen told investors to “buy the dip” as the internet bubble popped, and the market crashed. I hope everyone who thought she was amazing just didn’t listen to her that time… Wood’s problem is that when you become famous for catching unicorn, people only think you’re amazing while you still have one. Since finding another one is almost impossible, there is a tendency to hold on too long, …

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Stash vs Acorns vs Robinhood vs Betterment vs Wealthfront

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acorns robinhood stash wealthfront betterment

It is time for a mega-review session where we review Stash versus Acorns versus Robinhood versus Betterment, and Wealthfront. Why these apps? These are current front runners in a crowded space that encourages small investments from regular people as a way to invest rather than the traditional broker models of investing. In a way, this Wealthfront review versus the other money investing apps begs for a new investing apps versus Fidelity, Schwab, ETrade, Ameritrade, ScottTrade review. That will have to wait for another day since I’ve already bitten off more than I can likely chew with an in-depth look at each of the Stash, Acorns, Robinhood, Betterment, Wealthfront apps and financial services. The Quick and Dirty Look (No Fine Print) Is Stash safe? What does Betterment do? Why is Wealthfront better or worse than Acorns? These questions demand an in-depth look at each one, and a thorough review of the fine print. Before that, we can take a look at what each money app and financial service say they do, and how that fits for regular investors. What Is Stash? Stash is why I’m writing this mega-review. People keep asking me about Stash. Then they ask me if Stash is …

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Energy Stocks Up In 2021 Article

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energy oil production

As a freelance finance writer, I get a steady feed of financial news stories and articles. I thought I would share this one from investors.com. Headlines Matter A lot of financial writers are under instructions to post something every day, or even several times a day. Under those circumstances, they can’t all be diamonds, but this one about 2021’s runaway sector, is cracking me up. For those of you not paying attention, today is January 14. That just the 9th trading day of the year (New Year’s Day is a holiday, plus weekends). So the sector that’s running away “so far” in 2021 is not exactly a meaningful time period. Why Are Energy Stocks Up? Saudi Arabia announced it would cut production. As the world’s largest oil producer, that is big news to the energy markets and resulted in oil prices rising, even though Russia says that it will increase production because it doesn’t want U.S. shale oil markets benefiting from the higher prices. Whatever higher oil prices happens to trickle through is good news for U.S. oil producers, hence the quick runup in the last few days to make it the “runaway” sector for 2021… so far. My favorite …

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Wealthfront Review: Safe, Scam, or Legit?

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wealthfront reviews

I keep getting questions about the pros and cons of Wealthfront, probably because they are advertising pretty heavily on Facebook and other platforms. So, it’s time for a Wealthfront review. The most important thing is to make sure Wealthfront is legit. It is SIPC insured (that’s like FDIC insurance for brokerages) so it at least has to be a real financial organization. Of course, that doesn’t mean that Wealthfront has good investment advice or good service advice, but it does mean that if they go under all of the sudden, then Wealthfront is safe insofar as your money is insured. Wealthfront reviews agree that Wealthfront is not a scam. Wealthfront Fees Wealthfront’s trademark is “Self-Driving Money.” It’s value proposition is that it will take care of your money, and manage it for you. Wealthfront is a robo-advisor, and one of the mini-investor platforms. Wealthfront fees are low. The main Wealthfront fee is the advisory fee of 0.25% on the amount deposited with Wealthfront. Of course, like any other wealth app, or brokerage, the investments Wealthfront uses have their own expenses. According to the company, the funds Wealthfront uses charge between 0.06% and 0.13%, which are very low fees for mutual …

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Lower Investment Costs on ETFs

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There are many different ways to successfully invest for the long-term. One such strategy is indexing. The idea of index investing is that over time very few, or maybe even none, of the various mutual funds out there, nor any portfolio you make yourself, beats the returns of the index anyways, especially after expenses. Therefore, you may as well just invest in the indexes themselves. Of course, there is no way to directly invest in an index. To do so, you basically have two choices, index funds, or index-based Exchange Traded Funds, or ETFs. (Theoretically, with enough time and money, you could create your own portfolio to mimic an index, but this is often impractical.) When doing index investing, it is important to keep the expenses, or fees, of your investments as low as possible. After all, you aren’t paying for research or in-depth analysis, since the indexes already exist. Index Investing and Expenses Exchange Traded Funds, trade on the stock exchange, just like their name suggests. That means you buy them just like you do a stock, by putting in an order. For most investors, that purchase (and any subsequent sales) involves a commission, that’s part of your expenses. The …

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