"Education is what survives when what has been learned has been forgotten."B. F. Skinner
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Financial Tips for Trying Times
IHateFinancialPlanning.com offers advice on managing your money (ARA) - When life gets unpredictable, there's one thing Americans always want to hang onto: their money. During times of national uncertainty, it's only natural to want to hunker down and ...
Stop Foreclosure
For Immediate Release Contact: Bobby Johnson Comprehensive Financial Planner 770-210-8797STOP FORECLOSUREHow Homeowner Can Save Their Home From ForeclosureDrive around and see how many signs you see that says House for Sale. How many lease purchases do ...
Two For The Money
TWO FOR THE MONEY by Al Thomas Look back over the years and try to rememberhow many different stocks and mutual funds youhave owned. Suppose you had owned only 2different equities during that entire time. Onewhen the market was going up and the other ...
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Soft dollars, a form of legal kickback, is a sly way you can get ripped off by mutual fund managers. Full service brokers give these kickbacks to non-indexed mutual funds in the form of a “rebate” to purchase research, software, and even computer equipment.
You pay for these soft dollars! In recent years, the SEC estimated that soft-dollar deals exceeded $1 billion. Typically, $1 accrues for every $1.60 of brokerage commissions paid. Congress made these kickbacks legal in 1975 when it passed the “safe harbor” law. The legislation allows fund managers to pay more in commissions than is necessary, as long as the excess comes back in the form of services or research that benefits investors.
The problem is that this has created an opaque system that can be abused. In 1998, the SEC found that some money mangers were using soft dollars to pay for salaries, office rent, and even vacations! Think about this. You sweat every day at work to make a living. You buy a mutual fund to secure your retirement. Then the person who is supposedly protecting your retirement is sipping Margaritas in Cancun discussing with his or her buddies where to buy their next mansion with your retirement dollars!
The second problem is that many funds are not taking advantage of cost saving efficiencies in their operations just so that they can keep the soft-dollar spigot open. Think about this as well. If you had enough money to not have to work you would spend a considerable amount of time looking for safe places with a good return for your money. You would not waste money on things your family did not want and hence did not need.
Why give your money then to a mutual fund managers who could care less if they waste some of your retirement dollars; its no skin off their back! The best way to avoid these losses altogether is to restrict your purchases of mutual funds to your 401(k) and try to only buy indexed mutual funds such as the Vanguard 500 (FINX).
About the Author
ABOUT THE AUTHOR: Dr. Scott Brown, Ph.D., the Wallet Doctor, is a successful investor. Dr. Brown holds a Ph.D. in finance. The Wallet Doctor is sought after for investment advice and coaching. For more information visit Dr. Brown's site at www.BonanzaBase.com or sign up for his investment tips at www.WalletDoctor.com
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 U.S. stock futures point to dip; retail sales eyed - Reuters
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5 Steps to Set Up a Retirement ETF Portfolio - US News and World Report
Chances are, you already own a portfolio of mutual funds. So how would exchange-traded funds fit into the picture? For starters, ETFs are still struggling to break into company retirement plans, so you're not likely to find them on your 401(k) menu ...
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