Mutual Fund Quotes

True love is unconditional. And if it is a 'Conditions Apply' scenari, then it isn't true love. It is as good as a mutual fund...

Driving back to Portland I’d puzzle over my sudden success at selling. I’d been unable to sell encyclopedias, and I’d despised it to boot. I’d been slightly better at selling mutual funds, but I’d felt dead inside. So why was selling shoes so different? Because, I realized, it wasn’t selling. I believed in running. I believed that if people got out and ran a few miles every day, the world would be a better place, and I believed these shoes were better to run in. People, sensing my belief, wanted some of that belief for themselves. Belief, I decided. Belief is irresistible. Sometimes

Mutual Funds do not allow for your intellectual growth, Stocks do. And in life, wealth always catches up with your intellect

The mutual fund industry has been built, in a sense, on witchcraft.

Half of all U.S. mutual fund portfolio managers do not invest a cent of their own money in their funds, according to Morningstar.69 This might seem atrocious, and surely the statistic uncovers some hypocrisy.

If you keep a $495 car payment throughout your life, which is “normal,” you miss the opportunity to save that money. If you invested $495 per month from age twenty-five to age sixty-five, a normal working lifetime, in the average mutual fund averaging 12 percent (the eighty-year stock market average), you would have $5,881,799.14 at age sixty-five. Hope you like the car!

Business deals should be mutually beneficial. Don’t fund other peoples profits with your loss.

If you invest $464 in a good mutual fund every month from age thirty to age seventy, you’ll end up with more than $5 million.

And of course Brian was far more upset about separation from those two blond moppets than about leaving Louise. There shouldn't be any problem loving both, but for some reason certain men choose; like good mutual-fund managers minimizing risk while maximizing portfolio yield, they take everything they once invested in their wives and sink it into their children instead. What is it? Do they seem safer, because they need you? Because you can never become their ex-father, as I think I might become your ex-wife?

In the mutual fund industry, for example, the annual rate of portfolio turnover for the average actively managed equity fund runs to almost 100 percent, ranging from a hardly minimal 25 percent for the lowest turnover quintile to an astonishing 230 percent for the highest quintile. (The turnover of all-stock-market index funds is about 7 percent.)

The average monthly student loan payment for someone in their twenties is $351.15 If that student avoided student loans, started his or her career without that payment, and invested that $351 into a mutual fund every month instead, they’d have almost $3 million by age 65.16

Slavery is not a horror safely confined to the past; it continues to exist throughout the world, even in developed countries like France and the United States. Across the world slaves work and sweat and build and suffer. Slaves in Pakistan may have made the shoes you are wearing and the carpet you stand on. Slaves in the Caribbean may have put sugar in your kitchen and toys in the hands of your children. In India they may have sewn the shirt on your back and polished the ring on your finger. They are paid nothing. Slaves touch your life indirectly as well. They made the bricks for the factory that made the TV you watch. In Brazil slaves made the charcoal that tempered the steel that made the springs in your car and the blade on your lawnmower. Slaves grew the rice that fed the woman that wove the lovely cloth you've put up as curtains. Your investment portfolio and your mutual fund pension own stock in companies using slave labor in the developing world. Slaves keep your costs low and returns on your investments high.

Would you believe me if I told you that there’s an investment strategy that a seven-year-old could understand, will take you fifteen minutes of work per year, outperform 90 percent of finance professionals in the long run, and make you a millionaire over time?   Well, it is true, and here it is: Start by saving 15 percent of your salary at age 25 into a 401(k) plan, an IRA, or a taxable account (or all three). Put equal amounts of that 15 percent into just three different mutual funds:   A U.S. total stock market index fund An international total stock market index fund A U.S. total bond market index fund.   Over time, the three funds will grow at different rates, so once per year you’ll adjust their amounts so that they’re again equal. (That’s the fifteen minutes per year, assuming you’ve enrolled in an automatic savings plan.)   That’s it; if you can follow this simple recipe throughout your working career, you will almost certainly beat out most professional investors. More importantly, you’ll likely accumulate enough savings to retire comfortably.

Focus on being productive instead of busy.

The most popular investing products are the worst ones for investors.

Rich people's control of nonprofit funding keeps nonprofits from doing work that is threatening to the status quo, or from admitting the limits of their strategies.

Most individual investors would be better off in an index mutual fund.

Being dead is an improvement on a lot of things I can think of. Trying to sell mutual funds, for example.

If she were to invest $3,500 in a mutual fund averaging 12 percent, upon an average death age of seventy-eight, Sara’s mutual fund would be worth $368,500!

That’s when I realized it was really very simple. Index investing beats 85 percent of actively managed mutual funds.

Mandatory allocation of capital between bonds and stocks by mutual funds creates tremendous short-term opportunities for investors.

Structural factors are those such as ownership and control, dependence on other major funding sources (notably, advertisers), and mutual interests and relationships between the media and those who make the news and have the power to define it and explain what it means. The propaganda model also incorporates other closely related factors such as the ability to complain about the media’s treatment of news (that is, produce “flak”), to provide “experts” to confirm the official slant on the news, and to fix the basic principles and ideologies that are taken for granted by media personnel and the elite, but are often resisted by the general population.1 In our view, the same underlying power sources that own the media and fund them as advertisers, that serve as primary definers of the news, and that produce flak and proper-thinking experts, also play a key role in fixing basic principles and the dominant ideologies. We believe that what journalists do, what they see as newsworthy, and what they take for granted as premises of their work are frequently well explained by the incentives, pressures, and constraints incorporated into such a structural analysis. These structural factors that dominate media operations are not allcontrolling and do not always produce simple and homogeneous results.

Even for taxable clients, mutual fund managers supervised the assets in very much the same way, simply ignoring the tax impact and passing the tax liability through to largely unsuspecting fund shareholders.

The Education IRA is the same thing as an ESA (Educational Savings Account). The ESA is basically buying a mutual fund and stamping it “ESA.” You must make less than $200,000 annually, married filing jointly. You can contribute up to $2,000 annually per child. You can have several ESAs, but the total of them can only be $2,000 annually per child. That money will grow completely tax free when used for higher education.

Diversification, the easy accessibility of funds, and having a skilled professional money manager working to make your investment grow are the three most prominent reasons that mutual funds have become so popular.

for a large majority of fund managers, the selection of stocks is more like rolling dice than like playing poker. Typically at least two out of every three mutual funds underperform the overall market in any given year.

Bogle’s brilliance, for us investors, was to shift the ownership of his new company to the mutual funds it operates. Since we investors own those funds, through our ownership of shares in them, we in effect own Vanguard.

With real assets, everything is different. The price of real estate, like the price of shares of stock or parts of a company or investments in a mutual fund, generally rises at least as rapidly as the consumer price index.

Investment Owner’s Contract I, _____________ ___________________, hereby state that I am an investor who is seeking to accumulate wealth for many years into the future. I know that there will be many times when I will be tempted to invest in stocks or bonds because they have gone (or “are going”) up in price, and other times when I will be tempted to sell my investments because they have gone (or “are going”) down. I hereby declare my refusal to let a herd of strangers make my financial decisions for me. I further make a solemn commitment never to invest because the stock market has gone up, and never to sell because it has gone down. Instead, I will invest $______.00 per month, every month, through an automatic investment plan or “dollar-cost averaging program,” into the following mutual fund(s) or diversified portfolio(s): _________________________________, _________________________________, _________________________________. I will also invest additional amounts whenever I can afford to spare the cash (and can afford to lose it in the short run). I hereby declare that I will hold each of these investments continually through at least the following date (which must be a minimum of 10 years after the date of this contact): _________________ _____, 20__. The only exceptions allowed under the terms of this contract are a sudden, pressing need for cash, like a health-care emergency or the loss of my job, or a planned expenditure like a housing down payment or a tuition bill. I am, by signing below, stating my intention not only to abide by the terms of this contract, but to re-read this document whenever I am tempted to sell any of my investments. This contract is valid only when signed by at least one witness, and must be kept in a safe place that is easily accessible for future reference.

Do not ridicule my effort. Everybody likes a comedian’s company. That’s why they give them tips after watching the show, not their hard earned money for a mutual fund investment. Give him tips, not your heart. I guess you understand the difference.

By buying a share in a “total market” index fund, you acquire an ownership share in all the major businesses in the economy. Index funds eliminate the anxiety and expense of trying to predict which individual stocks, bonds, or mutual funds will beat the market.

I suggest a Money Market account with no penalties and full check-writing privileges for your emergency fund. We have a large emergency fund for our household in a mutual-fund company Money Market account. Wherever you get your mutual funds, look at the website to find Money Market accounts that pay interest equal to one-year CDs. I haven’t found bank Money Market accounts to be competitive. The FDIC does not insure the mutual-fund Money Market accounts, but I keep mine there anyway because I’ve never known one to fail. Keep in mind that the interest earned is not the main thing. The main thing is that the money is available to cover emergencies. Your wealth building is not going to happen in this account; that will come later, in other places. This account is more like insurance against rainy days than it is investing.

Failure to use tax money to finance things not liked by the taxpaying public is routinely called ‘censorship.’ If such terminology were used consistently, virtually all of life would be just one long, unending censorship, as individuals choose whether to buy apples instead of oranges, vacations rather than violins, furniture rather than mutual funds. But of course no such consistency is intended. This strained use of the word ‘censorship’ appears only selectively, to describe public choices and values at variance with the choices and values of the anointed.

One of the problems with a 529 plan is that you must give up an element of control. The best 529 plans available, and my second choice to an ESA, is a “flexible” plan. This type of plan allows you to move your investment around periodically within a certain family of funds. A family of funds is a brand name of mutual fund. You could pick from virtually any mutual fund in the American Funds Group or Vanguard or Fidelity. You are stuck in one brand, but you can choose the type of fund, the amount in each, and move it around if you want. This is the only type of 529 I recommend.

The simple fact is that selecting a mutual fund that will outpace the stock market over the long term is, using Cervantes’ wonderful observation, like “looking for a needle in the haystack.” So I offer you Bogle’s corollary: “Don’t look for the needle in the haystack. Just buy the haystack!

Warren Buffett, quoting Henry Ford, often talks about the importance of keeping all your eggs in one basket, then watching that basket very carefully. One thing that appalled me and that I’d seen too many times was the Wall Street practice of having many eggs in many baskets. Even the most reputable mutual fund companies have a practice of selling multiple funds. The ones that do well are those that then get the marketing dollars and raise more money from investors. The ones that do poorly are either shut down or merged into the better-performing funds. In the process, the failures are buried as if they’d never existed while

Opportunities don't just happen. You create them

Rich people think long term. they balance their spending on enjoyment today with investing fore freedom tomorrow.

Rich people think long-term. they balance their spending on enjoyment today with investing for freedom tommorow

The greatest fear of a professional investor, who manages money for a living, is capital withdrawals at the wrong time.

Money managers tend to make irrational decisions just to protect their calendar year performances, even if they believe that decision is not in the best interest of investors.

Annual performance means nothing to individual investors.

Most of us know how much we earn every month, but not many of us are clear about where our money gets spent. This exercise should show you clearly how you should manage your finances to achieve your goals.

The index fund is a most unlikely hero for the typical investor. It is no more (nor less) than a broadly diversified portfolio, typically run at rock-bottom costs, without the putative benefit of a brilliant, resourceful, and highly skilled portfolio manager. The index fund simply buys and holds the securities in a particular index, in proportion to their weight in the index. The concept is simplicity writ large.

Truth doesn’t screw around, and truth doesn’t care about your opinions. It doesn’t care if you believe in it, deny it, or ignore it. It couldn’t care less what religion you are, what country you’re from, what color your skin is, what or who you’ve got between your legs, or how much you’ve got invested in mutual funds. None of the trivial junk that concerns most people most of the time matters even one teensy-weensy bit to the truth.

Mutual funds are run by highly experienced and hardworking professionals who buy and sell stocks to achieve the best possible results for their clients. Nevertheless, the evidence from more than fifty years of research is conclusive: for a large majority of fund managers, the selection of stocks is more like rolling dice than like playing poker. Typically at least two out of every three mutual funds underperform the overall market in any given year.

The creation of Vanguard and its truly mutual (fund-shareholder-owned) structure has been the so-far-single counterexample to this pattern. I explain why this structure has worked so well, and why it must ultimately become the dominant structure in the industry.

MYTH: Car payments are a way of life; you’ll always have one. TRUTH: Staying away from car payments by driving reliable used cars is what the average millionaire does; that is how he or she became a millionaire. Taking on a car payment is one of the dumbest things people do to destroy their chances of building wealth. The car payment is most folks’ largest payment except for their home mortgage, so it steals more money from the income than virtually anything else. The Federal Reserve notes that the average car payment is $495 over sixty-four months. Most people get a car payment and keep it throughout their lives. As soon as a car is paid off, they get another payment because they “need” a new car. If you keep a $495 car payment throughout your life, which is “normal,” you miss the opportunity to save that money. If you invested $495 per month from age twenty-five to age sixty-five, a normal working lifetime, in the average mutual fund averaging 12 percent (the eighty-year stock market average), you would have $5,881,799.14 at age sixty-five. Hope you like the car!

The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently.

Here’s a Reader’s Digest version of my approach. I select mutual funds that have had a good track record of winning for more than five years, preferably for more than ten years. I don’t look at their one-year or three-year track records because I think long term. I spread my retirement, investing evenly across four types of funds. Growth and Income funds get 25 percent of my investment. (They are sometimes called Large Cap or Blue Chip funds.) Growth funds get 25 percent of my investment. (They are sometimes called Mid Cap or Equity funds; an S&P Index fund would also qualify.) International funds get 25 percent of my investment. (They are sometimes called Foreign or Overseas funds.) Aggressive Growth funds get the last 25 percent of my investment. (They are sometimes called Small Cap or Emerging Market funds.) For a full discussion of what mutual funds are and why I use this mix, go to daveramsey.com and visit MyTotalMoneyMakeover.com. The invested 15 percent of your income should take advantage of all the matching and tax advantages available to you. Again, our purpose here is not to teach the detailed differences in every retirement plan out there (see my other materials for that), but let me give you some guidelines on where to invest first. Always start where you have a match. When your company will give you free money, take it. If your 401(k) matches the first 3 percent, the 3 percent you put in will be the first 3 percent of your 15 percent invested. If you don’t have a match, or after you have invested through the match, you should next fund Roth IRAs. The Roth IRA will allow you to invest up to $5,000 per year, per person. There are some limitations as to income and situation, but most people can invest in a Roth IRA. The Roth grows tax-FREE. If you invest $3,000 per year from age thirty-five to age sixty-five, and your mutual funds average 12 percent, you will have $873,000 tax-FREE at age sixty-five. You have invested only $90,000 (30 years x 3,000); the rest is growth, and you pay no taxes. The Roth IRA is a very important tool in virtually anyone’s Total Money Makeover. Start with any match you can get, and then fully fund Roth IRAs. Be sure the total you are putting in is 15 percent of your total household gross income. If not, go back to 401(k)s, 403(b)s, 457s, or SEPPs (for the self-employed), and invest enough so that the total invested is 15 percent of your gross annual pay. Example: Household Income $81,000 Husband $45,000 Wife $36,000 Husband’s 401(k) matches first 3%. 3% of 45,000 ($1,350) goes into the 401(k). Two Roth IRAs are next, totaling $10,000. The goal is 15% of 81,000, which is $12,150. You have $11,350 going in. So you bump the husband’s 401(k) to 5%, making the total invested $12,250.

If you were to assume that many experts use their information to your detriment, you’d be right. Experts depend on the fact that you don’t have the information they do. Or that you are so befuddled by the complexity of their operation that you wouldn’t know what to do with the information if you had it. Or that you are so in awe of their expertise that you wouldn’t dare challenge them. If your doctor suggests that you have angioplasty — even though some current research suggests that angioplasty often does little to prevent heart attacks — you aren’t likely to think that the doctor is using his informational advantage to make a few thousand dollars for himself or his buddy. But as David Hillis, an interventional cardiologist at the University of Texas Southwestern Medical Center in Dallas, explained to the New York Times, a doctor may have the same economic incentives as a car salesman or a funeral director or a mutual fund manager: “If you’re an invasive cardiologist and Joe Smith, the local internist, is sending you patients, and if you tell them they don’t need the procedure, pretty soon Joe Smith doesn’t send patients anymore.” Armed with information, experts can exert a gigantic, if unspoken, leverage: fear. Fear that your children will find you dead on the bathroom floor of a heart attack if you do not have angioplasty surgery. Fear that a cheap casket will expose your grandmother to a terrible underground fate. Fear that a $25,000 car will crumple like a toy in an accident, whereas a $50,000 car will wrap your loved ones in a cocoon of impregnable steel.

The first concerns how an investor should choose among different types of broad-based index funds. The best-known of the broad stock market mutual funds and ETFs in the United States track the S&P 500 index of the largest stocks. We prefer using a broader index that includes more smaller-company stocks, such as the Russell 3000 index or the Dow-Wilshire 5000 index. Funds that track these broader indexes are often referred to as “total stock market” index funds. More than 80 years of stock market history confirm that portfolios of smaller stocks have produced a higher rate of return than the return of the S&P 500 large-company index. While smaller companies are undoubtedly less stable and riskier than large firms, they are likely—on average—to produce somewhat higher future returns. Total stock market index funds are the better way for investors to benefit from the long-run growth of economic activity.

In Lebanon, home to well over a million Syrian refugees, the UN Refugee Agency (UNHCR) decided to use its limited ‘winterization’ funds to pay cash transfers to vulnerable families living above 500 metres altitude. These were unconditional, although recipients were told they were intended for buying heating supplies. Recipient families were then compared with a control group living just below 500 metres. The researchers found that cash assistance did lead to increased spending on fuel supplies, but it also boosted school enrolment, reduced child labour and increased food security.55 One notable finding was that the basic income tended to increase mutual support between beneficiaries and others in the community, reduced tension within recipient families, and improved relationships with the host community. There were significant multiplier effects, with each dollar of cash assistance generating more than $2 for the Lebanese economy, most of which was spent locally.

This state of affairs, which bodes ill for the future, causes Us great distress and anguish. But We cherish this hope: that distrust and selfishness among nations will eventually be overcome by a stronger desire for mutual collaboration and a heightened sense of solidarity. We hope that the developing nations will take advantage of their geographical proximity to one another to organize on a broader territorial base and to pool their efforts for the development of a given region. We hope that they will draw up joint programs, coordinate investment funds wisely, divide production quotas fairly, and exercise management over the marketing of these products. We also hope that multilateral and broad international associations will undertake the necessary work of organization to find ways of helping needy nations, so that these nations may escape from the fetters now binding them; so that they themselves may discover the road to cultural and social progress, while remaining faithful to the native genius of their land.

IRA funds became a form of play money for the middle class... Because the pool of capital that made up an IRA could not be withdrawn for twenty or thirty years, many people viewed their IRAs as containing money they could experiment with. They could use an IRA to buy their first stock or their first mutual fund. They could put in in a money market fund first, and then, as they got bolder - and the bull market became more irresistible - shift some of it into something a little riskier. IRAs gave people a way to try on the stock and bond markets for size, to see how they felt, and to become slowly comfortable with the idea of investing. The knowledge that the money couldn't easily be withdrawn acted as a psychological safety net, allowing investors to feel as though they could take a chance or two. If they made a mistake, they reasoned, there was still time to recoup - several decades, perhaps.Over time, many people came to believe that it as imperative to maximize the returns they were getting on their IRA account, even at the risk of taking a loss. How else would they ever have enough to retire on? This, surely, is the classic definition of investment capital.

Strategy involves creating “fit” among a company’s activities. Fit has to do with the ways a company’s activities interact and reinforce one another. For example, Vanguard Group aligns all of its activities with a low-cost strategy; it distributes funds directly to consumers and minimizes portfolio turnover. Fit drives both competitive advantage and sustainability: when activities mutually reinforce each other, competitors can’t easily imitate them. When Continental Lite tried to match a few of Southwest Airlines’ activities, but not the whole interlocking system, the results were disastrous.

suggest funding college, or at least the first step of college, with an Educational Savings Account (ESA), funded in a growth-stock mutual fund. The Educational Savings Account, nicknamed the Education IRA, grows tax-free when used for higher education. If you invest $2,000 a year from birth to age eighteen in prepaid tuition, that would purchase about $72,000 in tuition, but through an ESA in mutual funds averaging 12 percent, you would have $126,000 tax-free. The ESA currently allows you to invest $2,000 per year, per child, if your household income is under $220,000 per year. If you start investing early, your child can go to virtually any college if you save $166.67 per month ($2,000/year). For most of you, Baby Step Five is handled if you start an ESA fully funded and your child is under eight. If your children are older, or you have aspirations of expensive schools, graduate school, or PhD programs that you pay for, you will have to save more than the ESA will allow. I would still start with the ESA if the income limits don’t keep you out. Start with the ESA because you can invest it anywhere, in any fund or any mix of funds, and change it at will. It is the most flexible, and you have the most control.

Data sliced sufficiently finely begin once again to tell stories. The top 1 percent of the income distribution—representing household incomes in excess of roughly $475,000—comprises only about 1.5 million households. If one adds up the numbers of vice presidents or above at S&P 1500 companies (perhaps 250,000), professionals in the finance sector, including in hedge funds, venture capital, private equity, investment banking, and mutual funds (perhaps 250,000), professionals working at the top five management consultancies (roughly 60,000), partners at law firms whose profits per partner exceed $400,000 (roughly 25,000), and specialist doctors (roughly 500,000), this yields perhaps 1 million people. These are surely not all one-percenters, but they are all plausibly parts of the top 1 percent, and this group might comprise half—a sizable share—of 1 percent households overall. At the very least, the people in these known and named jobs constitute a material, rather than just marginal or eccentric, part of the top 1 percent of the income distribution. They are also, of course, the people depicted in journalistic accounts of extreme jobs—the people who regularly cancel vacation plans, spend most of their time on the road, live in unfurnished luxury apartments, and generally subsume themselves in work, encountering their personal lives only occasionally, and as strangers.

Then came the so-called flash crash. At 2:45 on May 6, 2010, for no obvious reason, the market fell six hundred points in a few minutes. A few minutes later, like a drunk trying to pretend he hadn’t just knocked over the fishbowl and killed the pet goldfish, it bounced right back up to where it was before. If you weren’t watching closely you could have missed the entire event—unless, of course, you had placed orders in the market to buy or sell certain stocks. Shares of Procter & Gamble, for instance, traded as low as a penny and as high as $100,000. Twenty thousand different trades happened at stock prices more than 60 percent removed from the prices of those stocks just moments before. Five months later, the SEC published a report blaming the entire fiasco on a single large sell order, of stock market futures contracts, mistakenly placed on an exchange in Chicago by an obscure Kansas City mutual fund. That explanation could only be true by accident, because the stock market regulators did not possess the information they needed to understand the stock markets. The unit of trading was now the microsecond, but the records kept by the exchanges were by the second. There were one million microseconds in a second. It was as if, back in the 1920s, the only stock market data available was a crude aggregation of all trades made during the decade. You could see that at some point in that era there had been a stock market crash. You could see nothing about the events on and around October 29, 1929.

The math is revealing. The typical American with a $50,000 annual income would normally have an $850 house payment and a $495 car payment, with an additional $180 payment on the second car. Then there is a $165 student-loan payment; and the average credit-card debt is about $12,000, making those monthly payments around $185 per month. Also, this typical household will have other miscellaneous debt on things like furniture, stereos, or personal loans on which they pay an additional $120. All these payments total $1,995 per month. If this family were to invest that instead of sending it to the creditors, they would be cash mutual-fund millionaires in just fifteen years! (After fifteen years, it gets really exciting. They’ll have $2 million in five more years, $3 million in three more years, $4 million in two and a half more years, and $5.5 million in two more years. So they will have $5.5 million after twenty-eight years.) Keep in mind, this is with an average income, which means many of you make more than this!

In May 1981, Yuri Andropov, chairman of the KGB, gathered his senior officers in a secret conclave to issue a startling announcement: America was planning to launch a nuclear first strike, and obliterate the Soviet Union. For more than twenty years, a nuclear war between East and West had been held at bay by the threat of mutually assured destruction, the promise that both sides would be annihilated in any such conflict, regardless of who started it. But by the end of the 1970s the West had begun to pull ahead in the nuclear arms race, and tense détente was giving way to a different sort of psychological confrontation, in which the Kremlin feared it could be destroyed and defeated by a preemptive nuclear attack. Early in 1981, the KGB carried out an analysis of the geopolitical situation, using a newly developed computer program, and concluded that “the correlation of world forces” was moving in favor of the West. Soviet intervention in Afghanistan was proving costly, Cuba was draining Soviet funds, the CIA was launching aggressive covert action against the USSR, and the US was undergoing a major military buildup: the Soviet Union seemed to be losing the Cold War, and, like a boxer exhausted by long years of sparring, the Kremlin feared that a single, brutal sucker punch could end the contest. The KGB chief’s conviction that the USSR was vulnerable to a surprise nuclear attack probably had more to do with Andropov’s personal experience than rational geopolitical analysis. As Soviet ambassador to Hungary in 1956, he had witnessed how quickly an apparently powerful regime might be toppled. He had played a key role in suppressing the Hungarian Uprising. A dozen years later, Andropov again urged “extreme measures” to put down the Prague Spring. The “Butcher of Budapest” was a firm believer in armed force and KGB repression. The head of the Romanian secret police described him as “the man who substituted the KGB for the Communist Party in governing the USSR.” The confident and bullish stance of the newly installed Reagan administration seemed to underscore the impending threat. And so, like every genuine paranoiac, Andropov set out to find the evidence to confirm his fears. Operation RYAN (an acronym for raketno-yadernoye napadeniye, Russian for “nuclear missile attack”) was the biggest peacetime Soviet intelligence operation ever launched.

Chang came in five minutes later, in the same jeans but a fresh T-shirt, her hair still inky with water from the shower. Her own jacket was pulled down on one side, by her own Smith. Like any ex-cop she looked around, the full 360, seven or eight separate snapshots, and then she moved through the room with plenty of energy, powered by what looked like enthusiasm, or maybe some kind of shared euphoria at their mutual survival through the night. She slid in alongside him. He said, “Did you sleep?” She said, “I must have. I didn’t think I was going to.” “You didn’t go meet the train.” “He’s a prisoner, according to you. And that’s the best-case scenario.” “I’m only guessing.” “It’s a reasonable assumption.” “Did you see the woman in 203?” “I thought she was hard to explain. Dressed in black, she could have been an investor or a fund manager or something else deserving of the junior executive routine. Her face and hair were right. And she has a key to the company gym. That’s for sure. But dressed in white? She looked like she was going to a garden party in Monte Carlo. At seven o’clock in the morning. Who does that?” “Is it a fashion thing? Someone’s idea of summer clothes?” “I sincerely hope not.

The math is revealing. The typical American with a $50,000 annual income would normally have an $850 house payment and a $495 car payment, with an additional $180 payment on the second car. Then there is a $165 student-loan payment; and the average credit-card debt is about $12,000, making those monthly payments around $185 per month. Also, this typical household will have other miscellaneous debt on things like furniture, stereos, or personal loans on which they pay an additional $120. All these payments total $1,995 per month. If this family were to invest that instead of sending it to the creditors, they would be cash mutual-fund millionaires in just fifteen years! (After fifteen years, it gets really exciting. They’ll have $2 million in five more years, $3 million in three more years, $4 million in two and a half more years, and $5.5 million in two more years. So they will have $5.5 million after twenty-eight years.) Keep in mind, this is with an average income, which means many of you make more than this! If you are thinking that you don’t have that many payments so your math won’t work, you missed the point. If you make $50,000 and have fewer payments, you have a head start, since you already have more control of your income than most people.

We’ve already seen how creating a ground of sociability among strangers can often require an elaborate process of testing the others’ limits by helping oneself to their possessions. The same sort of thing can happen in peacemaking, or even in the creation of business partnerships.50 In Madagascar, people told me that two men who are thinking of going into business together will often become blood brothers. Blood brotherhood, fatidra, consists of an unlimited promise of mutual aid. Both parties solemnly swear that they will never refuse any request from the other. In reality, partners to such an agreement are usually fairly circumspect in what they actually request. But, my friends insisted, when people first make such an agreement, they sometimes like to test it out. One may demand their new partner’s pet dog, the shirt off their back, or (everyone’s favorite example) the right to spend the night with their wife or husband. The only limit is the knowledge that anything one can demand, the other one can too.51 Here, again, we are talking about an initial establishment of trust. Once the genuineness of the mutual commitment has been confirmed, the ground is prepared, as it were, and the two men can begin to buy and sell on consignment, advance funds, share profits,

Here are some of the handicaps mutual-fund managers and other professional investors are saddled with: With billions of dollars under management, they must gravitate toward the biggest stocks—the only ones they can buy in the multimillion-dollar quantities they need to fill their portfolios. Thus many funds end up owning the same few overpriced giants. Investors tend to pour more money into funds as the market rises. The managers use that new cash to buy more of the stocks they already own, driving prices to even more dangerous heights. If fund investors ask for their money back when the market drops, the managers may need to sell stocks to cash them out. Just as the funds are forced to buy stocks at inflated prices in a rising market, they become forced sellers as stocks get cheap again. Many portfolio managers get bonuses for beating the market, so they obsessively measure their returns against benchmarks like the S & P 500 index. If a company gets added to an index, hundreds of funds compulsively buy it. (If they don’t, and that stock then does well, the managers look foolish; on the other hand, if they buy it and it does poorly, no one will blame them.) Increasingly, fund managers are expected to specialize. Just as in medicine the general practitioner has given way to the pediatric allergist and the geriatric otolaryngologist, fund managers must buy only “small growth” stocks, or only “mid-sized value” stocks, or nothing but “large blend” stocks.6 If a company gets too big, or too small, or too cheap, or an itty bit too expensive, the fund has to sell it—even if the manager loves the stock. So

Found a startup society. This is simply an online community with aspirations of something greater. Anyone can found one, just like anyone can found a company or cryptocurrency.2 And the founder’s legitimacy comes from whether people opt to follow them. Organize it into a group capable of collective action. Given a sufficiently dedicated online community, the next step is to organize it into a network union. Unlike a social network, a network union has a purpose: it coordinates its members for their mutual benefit. And unlike a traditional union, a network union is not set up solely in opposition to a particular corporation, so it can take a variety of different collective actions.3 Unionization is a key step because it turns an otherwise ineffective online community into a group of people working together for a common cause. Build trust offline and a cryptoeconomy online. Begin holding in-person meetups in the physical world, of increasing scale and duration, while simultaneously building an internal economy using cryptocurrency. Crowdfund physical nodes. Once sufficient trust has been built and funds have been accumulated, start crowdfunding apartments, houses, and even towns to bring digital citizens into the physical world within real co-living communities. Digitally connect physical communities. Link these physical nodes together into a network archipelago, a set of digitally connected physical territories distributed around the world. Nodes of the network archipelago range from one-person apartments to in-person communities of arbitrary size. Physical access is granted by holding a web3 cryptopassport, and mixed reality is used to seamlessly link the online and offline worlds. Conduct an on-chain census. As the society scales, run a cryptographically auditable census to demonstrate the growing size of your population, income, and real-estate footprint. This is how a startup society proves traction in the face of skepticism. Gain diplomatic recognition. A startup society with sufficient scale should eventually be able to negotiate for diplomatic recognition from at least one pre-existing government, and from there gradually increased sovereignty, slowly becoming a true network state.

I sometimes wish I could hire toy-motivated children to sell mutual funds.)

Once we’ve taken all of this into account, we see that the results against objectives or “black box” results are a lagging indicator. And as they say in the mutual fund prospectuses, “past performance is no guarantee of future results.” The white-box CEO evaluation criteria—“Does the CEO know what to do?” and “Can the CEO get the company to do it?”—will do a much better job of predicting the future.

Compared to females from a same-sex twin, the study concludes that female twins from an opposite-sex pair: allocates more of her financial assets to equity; invests in a higher-risk portfolio, as measured by return volatility; and allots a higher proportion to individual stocks relative to mutual funds.

To paraphrase the discussion, she shocked us with this: First, we get a feel for the client. The bank suggests that if the client doesn’t know much about investing, we should put them in a fund of funds, for example, a mutual fund that would have a series of funds within it. It tends to be a bit more expensive than regular mutual funds. This sales job only works with investors who really don’t know what they’re doing. If the investor seems a little smarter, we offer them, individually, our in-house brand of actively managed mutual funds. We don’t make as much money with these, so we push for the other products first. Under no circumstances do we offer the bank’s index funds to clients. If an investor requests them and we can’t talk them out of the indexes, only then will we buy them for the client.

When people have lost money in common stocks or mutual funds, they often face a dilemma. Should they stick with their losing investments, increase their stake (perhaps through dollar cost averaging), or move their holdings to an entirely different investment vehicle? Virtually the same dilemma confronts people who are dissatisfied with their current jobs, careers, or marriages. They must decide whether it is wise to continue in these situations or start anew with different firms, occupations, or partners.

There's never a perfect time to invest in stocks or the stock market, but there is a right time and a wrong time!

What does this mean in practical terms? Let’s keep things simple, ignore private equity and commercial real estate, and focus just on the broad stock and bond market. You might buy three funds: an index fund offering exposure to the entire U.S. stock market, an index fund that will give you exposure to both developed foreign stock markets and emerging stock markets, and an index fund that owns the broad U.S. bond market. Suppose we were aiming to build a classic balanced portfolio, with 60 percent in stocks and 40 percent in bonds. Here are some possible investment mixes using index funds offered by major financial firms:     40 percent Fidelity Spartan Total Market Index Fund, 20 percent Fidelity Spartan Global ex U.S. Index Fund and 40 percent Fidelity Spartan U.S. Bond Index Fund. You can purchase these mutual funds directly from Fidelity Investments (Fidelity.com).     40 percent Vanguard Total Stock Market Index Fund, 20 percent Vanguard FTSE All-World ex-US Index Fund and 40 percent Vanguard Total Bond Market Index Fund. You can buy these mutual funds directly from Vanguard Group (Vanguard.com).     40 percent Vanguard Total Stock Market ETF, 20 percent Vanguard FTSE All-World ex-US ETF and 40 percent Vanguard Total Bond Market ETF. You can purchase these ETFs, or exchange-traded funds, through a discount or full-service brokerage firm. You can learn more about each of the funds at Vanguard.com.     40 percent iShares Core S&P Total U.S. Stock Market ETF, 20 percent iShares Core MSCI Total International Stock ETF and 40 percent iShares Core U.S. Aggregate Bond ETF. You can buy these ETFs through a brokerage account and find fund details at iShares.com.     40 percent SPDR Russell 3000 ETF, 20 percent SPDR MSCI ACWI ex-US ETF and 40 percent SPDR Barclays Aggregate Bond ETF. You can invest in these ETFs through a brokerage account and learn more at SPDRs.com.     40 percent Schwab Total Stock Market Index Fund, 20 percent Schwab International Index Fund and 40 percent Schwab Total Bond Market Fund. You can buy these mutual funds directly from Charles Schwab (Schwab.com). The good news: Schwab’s funds have a minimum initial investment of just $100. The bad news: Unlike the other foreign stock funds listed here, Schwab’s international index fund focuses solely on developed foreign markets. Those who want exposure to emerging markets might take a fifth of the money allocated to the international fund—equal to 4 percent of the entire portfolio—and invest it in an emerging markets stock index fund. One option: Schwab has an ETF that focuses on emerging markets.

Percentage of Actively Managed Mutual Funds Outperformed by the S&P 500 Index (Periods through June 30, 2012) Sources: Lipper and The Vanguard Group.

Average Annual Returns of Actively Managed Mutual Funds Compared with S&P 500 20 years, Ending June 30, 2012 Sources: Lipper, Wilshire, and The Vanguard Group. S&P 500 Index Fund 8.34% Average Active Equity Mutual Funda 7.00% Shortfall +1.34%

At the outset, investing is an act of faith, a willingness to postpone present consumption and save for the future.

A high school dropout, Robert Vesco bilked and conned his way to riches. Two times Forbes magazine named Vesco as one of the 400 richest Americans. The articles simply stated that he was a thief. As a man continually on the run, he was constantly attempting to buy his way out of the many complicated predicaments he got himself into. In 1970, Vesco made a successful bid to take over Investors Overseas Services (IOS), an offshore, Geneva-based mutual fund investment firm, worth $1.5 Billion. Employing 25,000 people and selling mutual funds throughout Europe, primarily in Germany, he thought of the company as his own private slush fund. Using the investors’ money as his own, he escalated his investment firm into a grand “Ponzi Scheme.” During this time he also made an undisclosed $200,000 contribution to Maurice Stans, Finance Chairman for President Nixon’s Committee to Re-elect the President, known as CREEP. To make matters worse, the media discovered that his contribution was being used to help finance the infamous Watergate burglary.

Another problem is the number of options available for investment allocation in pension plans. Even grocery shoppers can get overwhelmed by the number of choices available. For example, a store display of 6 flavors of jam results in more purchases than a display of 24 flavors of jam. Employees can also get overwhelmed when they have hundreds of investment choices in their pension plan. An overwhelmed employee delays making decisions so long that he or she never ends up participating in the plan. One study shows that the probability of participation by an employee falls by 1.5–2 percent for every ten mutual funds added to the menu. Having fewer funds to choose from leads to higher participation.16

Another huge toll has been taken by taxes. Passively managed index funds are tax-efficient, given the low turnover implicit in the structure of the Standard & Poor’s 500 Index (and, to an even greater extent, the all-market Wilshire 5000 Index).

It is fair to say that, by Graham’s demanding standards, the overwhelming majority of today’s mutual funds, largely because of their high costs and speculative behavior, have failed to live up to their promise. As a result, a new type of fund—the index fund—is now gradually moving toward ascendancy. Why? Both because of what it does—providing the broadest possible diversification—and because of what it doesn’t do—neither assessing high costs nor engaging in high turnover. These

Mutual fund investors, too, have inflated ideas of their own omniscience. They pick funds based on the recent performance superiority of fund managers, or even their long-term superiority, and hire advisers to help them do the same thing. But, the advisers do it with even less success (see Chapters 8, 9, and 10). Oblivious of the toll taken by costs, fund investors willingly pay heavy sales loads and incur excessive fund fees and expenses, and are unknowingly subjected to the substantial but hidden transaction costs incurred by funds as a result of their hyperactive portfolio turnover. Fund investors are confident that they can easily select superior fund managers. They are wrong.

When you have identified your long-term objectives, defined your tolerance for risk, and carefully selected an index fund or a small number of actively managed funds that meet your goals, stay the course. Hold tight. Complicating the investment process merely clutters the mind, too often bringing emotion into a financial plan that cries out for rationality. I am absolutely persuaded that investors’ emotions, such as greed and fear, exuberance and hope—if translated into rash actions—can be every bit as destructive to investment performance as inferior market returns. To reiterate what the estimable Mr. Buffett said earlier: “Inactivity strikes us as intelligent behavior.” Never forget it.

I would add that I am not persuaded that international funds are a necessary component of an investor’s portfolio. Foreign funds may reduce a portfolio’s volatility, but their economic and currency risks may reduce returns by a still larger amount. The idea that a theoretically optimal portfolio must hold each geographical component at its market weight simply pushes me further than I would dream of being pushed. (I explore the pros and cons of global investing in Chapter 8.) My best judgment is that international holdings should comprise 20 percent of equities at a maximum, and that a zero weight is fully acceptable in most portfolios.

But it is the long-term merits of the index fund—broad diversification, weightings paralleling those of the stocks that comprise the market, minimal portfolio turnover, and low cost—that commend it to wise investors. Consider these words from perhaps the wisest investor of all, Warren E. Buffett, from the 1996 Annual Report of Berkshire Hathaway Corporation: Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals.

in the CRB group companies got nothing, the investors of the mutual fund received a part and would get something. Only after the CRB case, SEBI tightened the regulations and introduced stringent measures for the protection of the investors’ interest. In short, MF investments are safe and it is practically very difficult for sponsors or managers to run away with the money. 

Dividend received from a mutual fund is exempt from tax for the investor. However, other than equity oriented MF schemes, Dividend Distribution Tax (DDT) is required to be paid by the MF schemes issuing the dividend. Please refer to DDT for more details.

Any buy or sell transaction in the shares of a company listed in a recognized stock exchange is subject to STT. The mutual funds with at least 65% allocation to investment in shares of companies (equity) are considered as an equity mutual fund and are also subject to STT. The

The taxation of capital gains on sale of equity or equity mutual fund is different and depends on whether STT has been paid or not.

Because cash transfers is such a simple program, and because the evidence in favor of them is so robust, we could think about them as like the “index fund” of giving. Money invested in an index fund grows (or shrinks) at the same rate as the stock market; investing in an index fund is the lowest-fee way to invest in stocks. Actively managed mutual funds, in contrast, take higher management fees, and it’s only worth investing in one if that fund manages to beat the market by a big enough margin that the additional returns on investment are greater than the additional management costs. In the same way, one might think, it’s only worth it to donate to charitable programs rather than simply transfer cash directly to the poor if the other programs provide a benefit great enough to outweigh the additional costs incurred in implementing them. In other words, we should only assume we’re in a better position to help the poor than they are to help themselves if we have some particularly compelling reason for thinking so.

The investment through gold ETF or gold mutual funds is not subject to wealth tax or the Security Transaction Tax (STT).

For example, Mr. Jiten from Dubai has Rs. 100,000 to invest but has no finance or investment experience and wishes to hire an investment manager to manage his investments fulltime. However, he may not be able to afford one due to either limited amount of money or the fact that  the investment manager may not be interested as he would not be employed full time. If he joins other 9999 investors having Rs. 100,000 each and all having the same investment objectives, with Rs.1,000,000,000, they would be in a position to hire the best investment manager. This is the concept of a mutual fund.

Mutual fund Investments have Capital Protection Plans, Fixed Maturity Plans (FMP) or Liquid or Money market schemes that invest very conservatively to protect the capital.

Mr. Ankur from USA invested in an equity mutual fund that is an overseas fund of funds. He sold the fund after 10 months of investment for a profit of Rs. 1,000,000 without paying STT. As equity mutual fund was sold before 12 months, the capital gain would be a STCG. However as STT was not paid, STCG would be included in the income and taxed as per the income tax slab rates.

Tax on income from investment in debt mutual fund, real estate and other assets

Mr. Keyur from Australia sold an equity mutual fund subject to STT after 18 months of purchase for a gain of Rs. 1,000,000. As STT is paid and the holding period is more than 12 months, the gain would be a LTCG and would be exempt from income tax in India.

For a simple, hands-free investment experience, invest in lifecycle mutual funds. Choose a low-cost, target-date fund like Vanguard Target Retirement 2050 Fund. Avoid actively managed mutual funds; these funds rarely beat the market. Not only that, but high fees will eat into your investment returns over a long period of time. You are better off choosing a low-cost index fund as described above.

Nowadays, most banks offer stock trading services and it would be a good idea to start your enquiries with your bank.

Investors tend to be touchingly naïve about stockbrokers and mutual fund companies: brokers are not your friends, and the interests of the fund companies are highly divergent from yours.

Driving back to Portland I’d puzzle over my sudden success at selling. I’d been unable to sell encyclopedias, and I’d despised it to boot. I’d been slightly better at selling mutual funds, but I’d felt dead inside. So why was selling shoes so different? Because, I realized, it wasn’t selling. I believed in running. I believed that if people got out and ran a few miles every day, the world would be a better place, and I believed these shoes were better to run in. People, sensing my belief, wanted some of that belief for themselves. Belief,

So please don't forget that considering the probabilities of future returns only begins the decision-making process. Decisions have consequences. If the consequences of being badly wrong about future returns would imperil your financial future, be conservative.