Comments on: “Are You a Better Investor?” http://www.thesunsfinancialdiary.com/investing/are-you-a-better-investor/ Fri, 03 Feb 2012 17:42:24 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: MoneyNinghttp://www.thesunsfinancialdiary.com/investing/are-you-a-better-investor/#comment-23425 MoneyNing Fri, 21 Sep 2007 17:13:16 +0000 http://www.thesunsfinancialdiary.com/articles/are-you-a-better-investor/#comment-23425 Thanks Sun. I quoted your article and sent an email to my dad about it! Thanks Sun. I quoted your article and sent an email to my dad about it!

]]> By: Sunhttp://www.thesunsfinancialdiary.com/investing/are-you-a-better-investor/#comment-23350 Sun Thu, 20 Sep 2007 20:27:47 +0000 http://www.thesunsfinancialdiary.com/articles/are-you-a-better-investor/#comment-23350 Actually, I am a mixed bag in investing in mutual funds. As you noticed, I have a dozen actively managed funds in my taxable accounts, on the other hand, 6 out of 9 funds in our IRA accounts are Vanguard index funds :). The reason of using actively managed funds wasn't really because of their performance, though that was a factor. When I started investing, I didn't the $3,000 required by Vanguard to buy their funds. So I decided to use funds that have lower initial investments such as $2,000, $1,000, or even no initial requirement. And in 2001, 2002, there were quite some actively managed funds, especially small-cap funds, that performed better than index funds. Then as I kept adding money into those funds, it doesn't make too much sense to start all over again with index funds. However, for IRA accounts, I started with a lump sum at the size of one year contribution limit, so I can buy Vanguard funds. Beside, I know I will hold these funds for years so it's better to keep the cost low. For the active funds, I don't know how long I will keep them.As for Buffett, his strategy actually works for individual stocks as he's a buy-and-hold forever kind of guy, but may not for mutual funds. If I find a good stock and want to hold it for, say, 10 years, it doesn't really make any difference if whether I pay $15 commission for a one-time purchase or zero in the long term. However, if I keep buying and selling stocks, as in Zweig's article, because I want to chase hot stocks and get *better* return, then the costs of trading will add up and eat a chunk of my returns. For mutual funds, things are a little different because the cost of mutual funds is not a one-time fee as with buying and selling stocks. The cost is always there as long as I own the fund. So in the long term, it's better to keep the cost low, especially when you have the choice to use low-cost funds and get similar returns. Actually, I am a mixed bag in investing in mutual funds. As you noticed, I have a dozen actively managed funds in my taxable accounts, on the other hand, 6 out of 9 funds in our IRA accounts are Vanguard index funds :) . The reason of using actively managed funds wasn’t really because of their performance, though that was a factor. When I started investing, I didn’t the $3,000 required by Vanguard to buy their funds. So I decided to use funds that have lower initial investments such as $2,000, $1,000, or even no initial requirement. And in 2001, 2002, there were quite some actively managed funds, especially small-cap funds, that performed better than index funds. Then as I kept adding money into those funds, it doesn’t make too much sense to start all over again with index funds. However, for IRA accounts, I started with a lump sum at the size of one year contribution limit, so I can buy Vanguard funds. Beside, I know I will hold these funds for years so it’s better to keep the cost low. For the active funds, I don’t know how long I will keep them.

As for Buffett, his strategy actually works for individual stocks as he’s a buy-and-hold forever kind of guy, but may not for mutual funds. If I find a good stock and want to hold it for, say, 10 years, it doesn’t really make any difference if whether I pay $15 commission for a one-time purchase or zero in the long term. However, if I keep buying and selling stocks, as in Zweig’s article, because I want to chase hot stocks and get *better* return, then the costs of trading will add up and eat a chunk of my returns. For mutual funds, things are a little different because the cost of mutual funds is not a one-time fee as with buying and selling stocks. The cost is always there as long as I own the fund. So in the long term, it’s better to keep the cost low, especially when you have the choice to use low-cost funds and get similar returns.

]]> By: marylandterpshttp://www.thesunsfinancialdiary.com/investing/are-you-a-better-investor/#comment-23337 marylandterps Thu, 20 Sep 2007 19:10:47 +0000 http://www.thesunsfinancialdiary.com/articles/are-you-a-better-investor/#comment-23337 First let me say that I enjoy your blog & consider it one of the best out there. My question is "Are you actually using the aforementioned advice" or "was the advice a summary of the article?" I remember that your portfolio is 100% active managed funds (as is my own portfolio). Did you change your portfolio?Side note: I find it interesting that Warren Buffett also advises using index funds but does not use them himself. A case do as I say & not as I do? First let me say that I enjoy your blog & consider it one of the best out there. My question is “Are you actually using the aforementioned advice” or “was the advice a summary of the article?” I remember that your portfolio is 100% active managed funds (as is my own portfolio). Did you change your portfolio?

Side note: I find it interesting that Warren Buffett also advises using index funds but does not use them himself. A case do as I say & not as I do?

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