I Will Teach You To Be Rich: No guilt, no excuses - just a 6-week programme that works

by Ramit Sethi

Mutual funds – which are simply collections of different investments like stocks or bonds – are often considered the simplest and best way for most people to invest. But, as we’ve seen, fund managers fail to beat the market 75% of the time, and it can be hard to tell which funds will actually perform well over the long term. And no matter how good a mutual fund is, the returns are hampered by the large fees they charge. (Sure, there are some low-cost mutual funds, but because of the way they compensate their own portfolio managers and other employees, it’s virtually impossible for them to compete with the low costs of passively managed index funds, which I’ll talk more about in a minute.) When it comes to investing, as discussed, fees are a huge drag on your returns. This is a little counterintuitive, since we’re used to paying for service, like our gym membership or admission to Disneyland. If we’re getting something out of it, we should pay a fair price, right? The key is “fair”, and many of the financial “experts” we turn to for guidance make an effort to squeeze every last penny out of us.