Thursday, July 22, 2010

Costs Matter

A seemingly small difference in mutual fund costs can make a huge difference in how your investment grows over many years. A 1% or 1.5% expense ratio may not sound like a lot, but compared to the 0.2% or less you will pay for a low-cost index fund, your investment returns are most likely to be severely diminished by the higher costs over an investing lifetime of 50 years or more.

Tuesday, July 6, 2010

Risks of Investing in Individual Stocks

For the vast majority of individual investors, investing in individual stocks, as opposed to mutual funds or ETFs, is a losing strategy. This assertion is based on financial theory and vast amounts of empirical evidence. Unfortunately, most of my own experience also is consistent with this assertion.