DO BETTER WITH MUTUAL FUNDS BY SENDING YOUR SPOUSE ON A SHOPPING SPREE
Whatever you do, don’t let your spouse read this chapter or he or she will hate you unless you do what I say. Because he or she will either know you’re not doing as well as you could with your mutual fund investments, or demand the right to a shopping spree. Sound nuts or weird? It isn’t.
Some folks think I’m anti-mutual funds. I’m not. At all! You know they’re a fine vehicle for smaller investors to diversify and get access to professional money management or passive commingled investing more efficiently. But for big investors, they are pretty inefficient and costly. The wealthier you are, the more relatively inefficient they are—and for big investors there are a million better ways to skin that cat. But for smaller pools of assets, the benefits of diversification can outweigh all drawbacks. And mutual funds as a “packaging device” are awfully convenient. Plus, plenty of mutual funds get fine performance.
And you know to pay close attention to the fees with these funds—the higher they are, the more they erode returns. But this is also where folks miss a basic investing truism. I hear from plenty of investors who think their “no-load” mutual funds are just grand. No fees means cheap! Maybe—but sometimes, “cheap” comes at a huge cost. With funds, this is a provable and very slippery slope into potential bunk. Sometimes more is less.
All mutual funds have costs—even “no-load” funds. The load refers to ...