Comments on: Ways to Improve Investment Return

By: Mark Wolfinger

Mark Wolfinger — Tue, 19 May 2009 16:12:56 +0000

Cutting costs is the single ingredient often overlooked by investors.

There is evidence that individual investors – and especially those who trade more frequently – consistently under-perform the market averages. That makes them no better than active fund managers.

Despite the evidence, the idea of passive investing will never overtake active investing. There are just too many salespeople pushing mutual funds, or stockbrokers pushing individual stocks – so they can earn commissions. The needs of the investor come last on Wall Street.

By: Mike

Mike — Tue, 19 May 2009 14:35:35 +0000

Neal: I like that you added “almost” anywhere else.

Jim: “Who wants to be average” is right. The argument against average is very seductive. And thank you for adding the point about minimizing taxes.

By: Jim Blankenship, CFP®, EA

Jim Blankenship, CFP®, EA — Tue, 19 May 2009 14:27:43 +0000

You’ve hit the nail on the head, @Mike – this is the way to build your savings/investments slowly and steadily. However, as you point out, it’s not sexy to be average. I think it’s eTrade who has a commercial to that effect “who wants to be average?” Well, average is far better than paying extra and then coming out below average, in my opinion.

I’ll add to your list: pay as little in taxes as you can. Have a Roth IRA and fund it to the max if you can. Make sure to take advantage of taxable (non-IRA or other deferred) accounts in order to get the capital gains rates on your gains, and (heaven forbid) if you have losses make that available to offset earned income.

Great post!

By: Neal Frankle

Neal Frankle — Tue, 19 May 2009 13:36:28 +0000

Yes. Simple is good. We need to keep hearing this message.

Find excitement anywhere else (just about) other than with your money.

Nice reminder.