Index Funds Vs Fees Behind The Financial Advisers Curtain

Guide to Transparent Investing” is a 53 page PDF about how financial advisers are ripoffs and you can do all your investing by putting your money in index funds. The basic principles they promote are to figure out how long you want to invest for, pick a portfolio based on your timeline and risk tolerance, and put the money in index funds. Set it, forget it, and spend more time doing the important things in life, like gardening and getting your scuba diving certification.

Transparent Investing [Official Site]


Edit Your Comment

  1. chrisdag says:

    I just did the math on this for an account that holds all the various retirement money rolled over from my previous jobs. Even though I was using highly rated mutual funds the built-in fees and expenses were pretty significant. I was planning on redoing it sensibly myself but found another option that works great (for me) …

    YMMV but I’ve been reading Scott Burns’ financial columns in the newspaper since I was in college. He started a company called AssetBuilder that focuses on portfolios built with an eye towards bare-bones expenses yet still having an excellent risk/return potential. I basically turned my “construct me a retirement porfolio!” duties over to and let them do all the work. They won me as a customer by having lots of good info on the website packaged around a subtle pitch for their services.

    Anyway, don’t want to shill but is a good site for articles and blog posts relevant to people interested in the topic of insane management fees.

  2. tmanAg08 says:

    For those of us who have worked for a financial adviser, this is a no-brainer. The fees are absolute murder, and the “active management” is usually little better than guessing/doing what morningstar suggests.

  3. XopherMV says:

    I agree that financial advisers can waste your money. Their bills don’t pay themselves. However, there are more financial options than just financial advisers and index funds.

    Index funds are the definition of 3-star funds. All you get are average returns for average risk. The last time these funds did great was during the late 1990s. Since then, their performance has been lacking.

    Since that time, actively managed funds have trounced index funds. 4- or 5-star funds offer either the combination of above-average returns for average risk, average returns for below-average risk, or above-average returns for below-average risk. Yes, you pay more in fees, but that is more than offset by the additional amount you earn.

    Yes, index funds reduce your fees. But, if you’re barely earning anything with them, what do fees matter?

  4. Myron says:

    If you are at all interested in building a diversified portfolio of index funds please read “The Four Pillars of Investing” by William J. Bernstein.