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

by Ramit Sethi

Financial companies know very well about survivorship bias, but they care more about having a page full of funds with great performance numbers than revealing the whole truth. As a result, they’ve consciously created several ways to test funds quickly and market only the best-performing ones, thus ensuring their reputation as the brand with the “best” funds. These tricks are especially insidious because you’d never know to look out for them. When you see a page full of funds with 15% returns, you naturally assume they’ll keep giving you 15% returns in the future. And it’s even better if they have five-star ratings from a trusted company like Morningstar. But now that we know about survivorship bias and the fact that most ratings are meaningless, it’s easy to see that financial “experts” and companies are just looking to fatten their wallets, not ensure that you get the best return for your money.