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Gemini846 (90.64)

Are Non-Index Mutual Funds a Waste of Money???

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October 02, 2009 – Comments (6) | RELATED TICKERS: PFG

After last year's market crash, like most people I've been taking a much closer look at my 401k. It has always been my personal opinion that I can do better with my money than fund managers simply because of turnaround time et.  The amount of my employeer match is rather small so I normally deposit the minimum into my 401k to get the match, and then put the rest of my retirement savings into a self directed traditional IRA.

I can move my money between funds once a month without penalty. As this market rebound topped out I shifted into a high yield government bond fund but it strangely enough seems to be tracking down with the rest of the market. (FKUSX is the ticker). Now I guess the drop is pretty small 0.3% and maybe this move is doing what I want it to do (protect my gain) since the fund where I had the bulk of my money during the rise (RERFX) has lost a full 3.8% since it topped out.

Maybe this is a situation where the numbers tell the truth and the charts (which are nearly identical in overlay) are an optical illusion. Anyone here have good experiences with managed funds?

6 Comments – Post Your Own

#1) On October 02, 2009 at 11:53 AM, pj19 (< 20) wrote:

I'v read that after fees 80% of mutual funds underperform the S&P 500. 

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#2) On October 02, 2009 at 12:02 PM, nottheSEC (72.97) wrote:

One rec for an interesting topic that can't be said enough.Anyone here have good experiences with managed funds? NO,Nada Never their 1.5-5 % fees take away from gains and more importantly I think like 80 % underperform the market. I think anybody here on the fool who can hold at steady 65 or higher can manage their own money and those above 95 can work in the field. The only factor is time especially of you are a fundies person.

 I think you have a great sitiation these days when the employer matches anything. So I would do what you said "..l so I normally deposit the minimum into my 401k to get the match." Hey INSTANT returns even if the market stand still... All best..J

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#3) On October 02, 2009 at 12:04 PM, nottheSEC (72.97) wrote:

LOL posted at the same time cause I type slow and am wathcing the boss pj19 (< 20) wrote I'v read that after fees 80% of mutual funds underperform the S&P 500. 

nottheSEC (67.23) wrote: Anyone here have good experiences with managed funds? NO,Nada Never their 1.5-5 % fees take away from gains and more importantly I think like 80 % underperform the market.

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#4) On October 02, 2009 at 12:32 PM, chk999 (100.00) wrote:

Yeah, mostly.

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#5) On October 06, 2009 at 2:52 PM, KamranatUCLA (29.98) wrote:

Hey Gemini

in respond to one of my responds to another blogger you wrote:

"College educations outside of Law or Medicine are largely net negative when it comes to financial gain.

I'm curious to know what you thought the American Dream is?  House in the 'burbs and 1.8 kids?  The American Dream is freedom to start your own business and be free of government intervention that cripples business owners. Quit putting rich people in your tyrade. Rich people got rich creating jobs, government destroys them. They don't have more education than you, they have desire which is something you lack.  

PdoBear couldn't have put it better. Get off the entitlement bandwagon and quit blaming other people."

1) I agree with you on: "College educations outside of Law or Medicine are largely net negative when it comes to financial gain."

But now my question is: if this is the case why do we have the other majors. My major at UCLA was International Development Studies ( a mix of history, sociology, political science, economy, etc), my major has been cancelled since 2007 because of budget cuts. Many of my classmates were people like me who came from different walks of lives and thought that once we are at UCLA we had made it. All of us, all 6000 people with that major at that year, we all worked damn hard to get to UCLA. UCLA having a good reputation we thought we made it. Non of us thought they would be worst off going to UCLA. I was very concerned when I was at UCLA because I wasn't learning any technical thinsg and I always talked to my counsolor about jobs and they always assured me I can make good money and have stable job after graduation. I still wasn't sure. It didn't feel right, we weren't learning anything substantial...it was more like philosophical things, so at UCLA I would also take additional classes...20-24 units a quarter, more than double of what a regular student would take. I was 32 when I finally got to UCLA (after having a clothing company for 7 years, went bankrupt because of high taxes, high accounting costs, high rents, couldn't comepete with people who were not paying taxes and so on) I was taking many more classes to get my money's worth. I took many accounting classes at UCLA, I took geology, biology, architecture...you name it I have taken it, but non of them was my major. After graduating from UCLA i managed to go to law school...I was now 36. I went to law school for 3 days and my loan didn't go through which I thought would be an automatic thing since the law school had already accepted me.

After those 3 days in law school I went back to school almost with no break in between. This time I went to a community college again ( i did go to community college before ucla and then transfered to UCLA) and said to myself I want to learn something of a value so I sign up for Aviation Technician programm. 3 years later, finishing that program and I still can't find a good paying job. Like UCLA, at the beginning the teachers said once we graduate we make atleast 80k/year. One teacher even brought a newspaper and showed me the begginer's salery for airplanes mechanics, it was 78,900.

2) "I'm curious to know what you thought the American Dream is?  House in the 'burbs and 1.8 kids?  The American Dream is freedom to start your own business and be free of government intervention that cripples business owners. Quit putting rich people in your tyrade. Rich people got rich creating jobs, government destroys them. They don't have more education than you, they have desire which is something you lack."

You shouldn't judge people you don't know. I was born in Iran. At 14 I moved all alone to Germany. Had to learn German and English all by myself. Imagine you go to China and you have to translate Chinese to Japanese. That's how hard it was for me. In Europe you have to have 2 other languages and mine was French and Latin.

At 19 I moved to the U.S. It was 1993. I went to school part-time, worked like a dog too, and in 1995 I quit school and started my own business with $2000. 1998 I had 4 employees, all U.S. citizens while I didn't even have my green card. By the way, as an international student here in the U.S. you pay 60 times more than residents. I had to pay 140 dollars a unit when I first went to college before I had my business.  So don't tell me I didn't have the desire!!!

in 2000 I got my green card because of my business and because I had all those empoyees that depended on me. And you are right...American dream is about haveing your own business but every month I had to pay so much for taxes and accouting fees...just the amount of paperwork was overwhealming...in 2001 I went bankrupt..because of taxes, uneven cashflow, and so on...chapter 7 and chapter 11. That's why in 2006 my loan for law school didn't go through.

So you see where I am coming from...I have pushed and pushed and pushed myself to have a better life....meanwhile my friends who never moved out from Iran have nices homes, nice families, take long vacations, have less stress ( in Iran there is no credit, everything is cash bases. you buy a house you own it also no propaert taxes, it's priced in when you buy the house cash!).

So not only I can't see myself getting a good paying job, I can't even see myself living like my friends in Iran...AFter seeing that even rich people here go bankrupt and they can lose their houses...I mean I become depressed and hopeless, and I think many people like me feel the same.

The rich that I see around myself-remember I am a driving instructor now in the richest area of Los Angeles- they are sooooooo ignorant, so stupid. They got their money in 3 ways: connections, or doctors, or lawyers.

Now tell me...if all other majors are net negative...why do universities have those damn majors...and if your answer is for greater good...because we need teachers and we need consolors, etc...then how come I had to pay for that tuition...why is it like you said a net negative???

If you were me...wouldn't you be pissed?

Losing all my father's money...losing all the money he sent me in Germany for my "education", being now in debt for 30K to UCLA that I can't see how I can repay because like you said it's net negative.

And I have to pay back taxes of 20K because of my part-time job while I was taking 20 units at UCLA.

So yeah...i think you are wriong in your assesment of me being a lazy person or lack desire.

I am just burnt out and am hopeless...if only i saw some light at the end of the tunnel I would run at it....but I see nothing. I see thieves and rich people getting richer and honest, hard working people getting poorer....and the only solution I see is violence.

 

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#6) On October 07, 2009 at 11:24 AM, Gemini846 (90.64) wrote:

KamranatUCLA thanks for the thread hijack. Your advocation of rampant violence against rich people made you sound like a combination of an uneducated hick clinging to "guns and religion" and a "gangsta rappa" saying the man is holding him down rather than a diciplined student. Basically you misrepresented yourself in your frustration.

Perhaps you could have changed your major but maybe you figured out that wasn't doing any good.

I'm not arguing with you that your situation sucks, or that you were lied to (most people are). Over 50% of people who get college degrees don't even stay in thier field (myself included). College ed in this country is a big scam. I've posted about it before. The fact that no-one can bankrupt out of student loans puts people in financial bondage. The government is looking at it, but I don't expect change. The only reason they offer those degrees because they can get people to borrow money to take them. When colleges and universities were founded in the 18th and 19th century most of them only offered degrees in law and medicine.

I don't argue that there isn't a need for good teachers, but why does a primary school teacher who teaches 6 year olds how to spell 3 letter words need a masters degree? Her income will NEVER keep up with the cost of that education.

The problem with rampant undirected violence is that there is nothing to replace it with. I don't think the problem is rich people, it's corrupted systems that steal liberty and enslave people (like student loans). If you wanted to make the case that burning down every Sallie Mae office in this country until our legislators get off their duff and do something, then that's a case I could listen to.

Bankrupcy courts are designed to prevent loss of life or liberty at the expense of another man's loss of property. They are somewhat of a necessary evil.  As I have come quite close to entering myself I am disuaded by the fact that they wouldn't wipe out my student loans.  

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