Jim Cramer - These Costly Funds Could Be Ripping You Off @VirtueRunsDeep-
I very much enjoyed reading your post, especially as it really reminded me of a similar situation with respect to lack of detailed financial knowledge with respect to our families. One area of financial knowledge that they
were aware of though, from hard personal experience through the Depression, was NEVER to go into debt to buy anything except a home. Both my parents and my wife's parents managed to impart that wisdom to us, by example as well as by lecture.
Because of that, my wife and I are natural "savers", so when IRAs (yes, I remember the $2000 max) became available, we had the savings to start investing. We started very conservatively, with savings accounts, as as we gained knowledge of some of the other possible areas of investment we slowly expanded our financial horizons.
There are quite a number of friendly and knowledgeable posters here on MFO, and based on your post in this thread I believe that your questions and observations would be well received.
Jim Cramer - These Costly Funds Could Be Ripping You Off Hello dear MFO everyone. I rarely post here (the tone is tricky to engage with) but I read often and am grateful for the many perspectives on financial health and responsibility that many share. So for that: a big thank you.
I just wanted to respond to Catch and Hank's note about people not having financial knowledge or desire to gain the knowledge. I grew up in a poor family in the Midwest. Both my parents worked hard but having money to pay the bills seemed to be what took up most of their time. Investing in the stock market wasn't remotely possible for my family which means there was almost no conversation about investing and managing monies. Flash forward and I was a young writer living in New York -- my "day job" was working as a temp ("word processing" -- remember that nostalgic term?). One of my temp assignments took me to an investment banking firm called The Portfolio Group which was a subsidiary of the old Chemical Bank -- 57th floor of Rockefeller Plaza. They invested money for wealthy individual and foundations. This was the late 1980s. I was just a guy doing word processing around a lot of conversations about millions of dollars. Some of the portfolio managers noticed that I was a curious guy (they knew I was an artist) and offered to tutor me about the stock market. They even convinced me to open an IRA, to fully fund it (it was $2,000 max in those days, I think) -- which I did and continued to do. They gave me articles to read, engaged me in conversations, and made me feel like I was someone who had the right to know more about financial/investing opportunities. That was all I needed -- someone taking an interest in me and my financial future. I've been invested through Fidelity for nearly 30 years now. And that was last temp job I ever had. I've made my living as a writer ever since (which means financially there have been some incredible years and some awful years). It also means I've been self-employed all these years and so my retirement is fully self-funded. One reason I can still do my work is because I invested fairly young and never stopped. But I needed help to not be intimidated. I was lucky to have gotten that help. I just wanted to point out that some folks come from families and places where the very idea of participating in the stock market is not possible. It isn't just laziness or disinterest. (And if anyone happens to read this from The Portfolio Group: thank you!)
Sorry for the long post. I'll now go silent again! Thank you for reading.
Jim Cramer - These Costly Funds Could Be Ripping You Off Catch said, “Yes, there are millions who hold monies in IRA, 401k or 403b accounts, but my experience is that a very small percentage have much knowledge or desire to gain the knowledge.”
Hi Catch. I’m afraid giving most people financial advice is akin to giving them health advice (ie “loose some weight dude”). It usually runs like water off a duck’s back.
(Edit) Having said that ... I am eternally grateful to the co-worker who around 1971 tipped me off about our workplace 403B and recommended the (Templeton administered) plan. Getting started early - even in relatively small amounts - made a huge difference over time.
Jim Cramer - These Costly Funds Could Be Ripping You Off If you can set aside Cramer’s cartoonish on-screen persona and the fact that Jon Stewart in a face-to-face once made him look like an inept school child, the article here, written by Abigail Stevenson of CNBC (I skipped the video), seems about on par with the dozens (if not hundreds) of diverse financial analysis / advice columns that get churned out daily by our journalistic mill. One thing these writers all seem to do is inject some type of “edge” into their article to try and distinguish it from the hundreds of other competing articles (including some they may have written themselves). So Cramer / Stevenson take aim at some of mutual funds’ most obvious excesses.
One of Cramer’s shots is at the extraordinarily large number of funds. I think he has a point here. Heck, just with TRP where I’ve invested for quarter century I’m confused by the hundreds of funds and what exactly distinguishes one from another. Their latest attempt to play off the success of PRWCX with a milder income-focused version of that fund is but one example. Others have noted that they appear to have two different lines of retirement funds competing against each other for investor assets. Personally, I’m able to ignore most of that clutter and maintain a rather short list of six or seven funds which I have long held there.
And, how can one argue with his logic on fees? Of course owning individual stocks (which he suggests) rather than mutual funds would reduce the cost of being in the market. What he doesn’t say is that people invest in funds because it’s an easy (and initially cheaper) way to get the diversification they desire as compared to buying small slugs of hundreds of individual stocks. Also, through retirement plans (like the IRA) many with minimal investment knowledge are first introduced to investing. In this case, a “half-loaf” (funds & fees) may be preferable to no bread at all (not investing).
Where I might argue with Cramer is his assertion that fund companies have no incentive to perform well, since fees are derived from AUM rather than performance. That’s true to an extent; however, by performing well (and rising in value) the company’s funds do serve to increase its AUM (and revenue) over time - albeit indirectly.
Don’t Punish Your Kids: Teach Them This Financial Lesson
Pretty Soon, You'll Get To Invest Just Like Ray Dalio what is risk parity ?
What you agree to when you get married.
FUNNY. And true. With tongue-in-cheek, before I stopped working, I would slip-in the following in the course of pre-marital interviews: "If you're independently wealthy, great. Otherwise, the two of you need to realize that financial insecurity will be your way of life." Why do spenders and savers attract each other? Drives us savers crazy nuts.
Ben Carlson: Are You Sure Your Investments Are Appropriate For You? “Messaging is important in the financial services industry because in many ways we’re all selling trust. Creating trust can be difficult when there is competition for your services and an audience that may be unfamiliar with your work.”Umm ... And I thought they were selling performance. What a silly notion.
Somewhat agree with
@JoJo26 that the article’s not particularly well written. On the other hand, I’m not finding any really glaring issues with grammar. This is very basic (and cursory at that)
Investing 101. For most here, thinking about these things is second nature. No new revelations. As for the “trust” issue, while I may disagree with the notion that that’s what’s chiefly being sold by the financial industry, I’m reminded of a great line in Miller’s
Death of a Salesman:
(Charlie in eulogy to Willy)
“ Nobody dast blame this man. You don’t understand: Willy was a salesman. And for a salesman, there’s no rock bottom to the life. He don’t put a bolt to a nut, he don’t tell you the law or give you medicine. He’s a man way out their in the blue riding on a smile and a shoeshine. And when they start not smiling back—that’s an earthquake.”
What To Do With Excess Cash I disagree vehimently with the thesis here. Perhaps it’s because I remember back a decade ago when the prevailing question on financial discussion boards wasn’t “Why do people hold so much cash?” but rather “Are money market funds safe enough to invest in?” I’m afraid current investment climate affects our perceptions of what’s safe / appropriate for different individuals and what is not.
Here’s an interesting line: “If a client has US$100 million, why would they need US$15 million or US$20 million in cash?” Bailin asks. “They should have it fully invested ....
I’d turn that question around and ask: “If an investor has $100 million, why would he/she expose that nice fortune to any market risk at all?”
Best Banks In America For Savings, CD's & Mortgage Rates 2018 This has been a paid advertisement, brought to you by ...
1.85%, is that really the best one can do on a Savings/MM account? Missing from the list is
Salem Five Direct, which yields 2.05%. The site also omits a couple of well known banks, Ally and Syncrony, that offer the same 1.75% as the second best yielding bank of those that are listed.
Nor does it show the superior savings account rate of 1.90% of a bank that even advertises on the site:
PurePoint Financial. Maybe PurePoint only paid to be listed with CD rates. Or maybe the banks shown on the savings account page paid to keep the higher rate off.
(It's not PurePoint's $10K min that's the problem, because the savings account page lists Capital One, that also has a $10K min. Nor it is that PurePoint is not included in BankRate.com's site, which is the source of the data.)
It doesn't even get the comparisons with TBTF banks correct. It shows them all yielding 0.01%. BankRate reports Citibank at 0.04% and BofA 0.03%.
Large corrections ahead on !? Stock Markets a Bomb Waiting to Go Off – Gregory Mannarino Thank you John. However, you failed to cite the
best part:
Mannarino expects war to come into play. Mannarino predicts, “This is going to lead to another world war. . . . I have said this many times, and that is this has the potential to be Biblical. It will be a worldwide event or a correction to fair value is really what it is. We might be seeing the opening salvos already. Governments around the world are building up their militaries just like the U.S. . . . We are unfortunately going to clear this out and lose a large percent of the world population through this financial correction and war. We will rebuild, but the world will not be what we are seeing now.”@JohnN - . What is your opinion on this? Have you sold off your stock holdings in anticipation of a market crash or world war?
@Mark - Radiation gear
How To Invest Your Nest Egg? Here’s Advice From Two Rich Guys.
Vanguard Isn't Taking In As Much Money; Neither Is Anyone Else: Podcast A quick search turned up this Financial Adviser Mag article from 2014. It cites a Vanguard figure saying that 20% of RMDs were reinvested there.
Of course that's only Vanguard investors, and may only count the RMD money that they reinvested at Vanguard, as opposed to moving it to an outside taxable account. Still, good for a ballpark sense.
https://www.fa-mag.com/news/what-if-your-client-doesn-t-need-the-rmd-19538.html
TCAPX (TRP) Capital Appreciation is Closed. Income is open. Capital Appreciation And Income is necessary why?
This is why I hate(d) Royce. They allege(d) to be on the side of the shareholder and closed funds only to open near clones, some of them of course where ground to the dust in the wake of the financial crisis.
I really think TRP has enough funds. I can understand if they want to start TRP Energy Fund or TRP Materials Fund since they also have some other sector funds. But THIS?!
10 Mutual Funds Worthy Of July Fourth Fireworks 2 funds in above list weren't around at the time of the financial crisis. As per MFO, these are there DD numbers
ETIHX -37.7%
DMCRX -28.9%
DD's for the rest...
AOFIX -49.9%
LAGWX -54.5%
WAMCX -62.6%
MPEGX - 63.2%
PHSKX -77.8%
PTSGX -49.5%
PXSGX -46.5%
BIOPX -48.8%
Recently, Dr Snowball in his running commentary hinted about the amount of information overload we get on daily basis. I'm adding to that overload. Hopefully, I'm actually improving it.
The point of the article beats me. If I want fireworks knowing I can lose 77.8% of my principal, might as well buy Bitcoin at these levels.
SPAM is SPAM. Doesn't matter if it's on MFO. I do not need to have EVERY single link on the internet posted on MFO. Every google search from my finger tips is going to end up on MFO.
NOT!!!
Why Aren’t Most Americans Rich? These Theories May Help Explain It Isn't being rich a moving relative target? So if most Americans had $2.4 million in personal net worth, wouldn't that amount cease to be the one necessary to be rich? Then being rich would be $62 million. The article also of course--like most financial propaganda pieces--doesn't mention that wages for the poor and shrinking middle class have stagnated when adjusted for inflation for over 35 years, especially for the poor who have seen wages decline when adjusted for inflation. Invariably these pieces blame people for spending too much on avocado toast, lattes and cell phones when the situation is far more complex and also inequitable than that.
Wise Quotes Another Samuelson quote:
What then is it that, since 2007, has caused Wall Street capitalism's own suicide?At the bottom of this worst financial mess in a century is this: Milton Friedman-Friedrich Hayek libertarian laissez-faire capitalism, permitted to run wild without regulation. This is the root source of today's travails. Both of these men are dead, but their poisoned legacies live on.
Bond Managers Eyeing Rising Volatility, Recession Potential I am gonna trademark 'recession on horizon'
Possibly, similar to putting-off a hangover by drinking more? :)
OK - I’ve now complied with your request for more
sophisticated posts and have read the article. It’s very technical in its approach to analyzing current attitudes of credit managers and other financial gurus. Suspect this is the kind of research based analysis of current financial opinions money professionals, including fund managers, get paid to digest.
Relevance to ordinary investors? Negligible. However, the excellent comments from several board members makes this thread of value.
The GAMCO Mathers Fund to liquidate Fascinating fund. About the best investment you could possibly have made over its first 17-18 years of life (1965 onward) as it profited from one financial disaster after the next. After that, not so sweet as the stock of disasters dried up a bit. The fund has now posted a net loss over the past 3, 5, 10, 20 and 30 year periods.
Bond Managers Eyeing Rising Volatility, Recession Potential
Another financial writer who doesn’t take into consideration total return when computiing performance for ETFs. Far from being down (1.9%). YTD, HYG is actually positive YTD on a total return basis, albeit barely. . A fairly large discrepancy for those of us who are into attention to detail. The other large junk bond ETF is down YTD to the tune of 0.61%. The YTD total return for LQD of a negative 5.8% is also inaccurate. The gist of the article was correct however in that junk is outperforming investment grade.
Almost Half Of U.S. Couples Say Financial Health 'Very Good,' Fidelity Finds @DavidMoranOK, you're right- I (we?) didn't read down to that part. Note that it states that each couple "have a minimum household income of $75,000 or at least $100,000 in investable assets". Well hell, that's your average American "couple" for sure.
Here's some of what Fidelity
actually said:
"Fidelity® Couples Study Uncovers Disconnects on Retirement Expectations""43 percent, up from 27 percent in 2013) couldn't correctly identify how much their partner makes—and of that, 10 percent were off by $25,000 or more. Which begs the question: if so many couples can't get this most basic item in their financial lives correct, what other disconnects exist that are unknowingly causing cracks in their financial foundation"
"When asked how much they will need to save to maintain their current lifestyle in retirement, nearly half (48 percent) have "no idea"—and 47 percent are in disagreement about the amount needed. This level of disagreement is highest among those who are closest to retirement—Baby Boomers (born 1946-64)."
"74 percent say they worry about being able to afford unexpected health care costs in retirement, up from 70 percent in 2013. More than half (51 percent) worry about outliving their savings in retirement, a number that is significantly higher than what was reported in 2013."
"Despite these concerns, only 21 percent have developed a retirement plan to ensure they do not outlive their savings"
