It almost seems like an echo chamber in here.
We’re constantly talking about how index funds perform better and cost less than actively managed funds; now, we can safely say they’re less risky, too.
New research from Morningstar, which rates and researches mutual funds, has found that rarely is it worth the risk to invest in actively managed funds over the index, even when the active fund performs better.
According to the Wall Street Journal:
The study by Morningstar Inc. found that, over the past three years, while about half of actively managed funds outperformed their respective Morningstar indexes — which cover the nine different Morningstar investment styles — only 37% did on a risk-, size- and style-adjusted basis. The numbers are similar for five and 10-year returns.
Basically, if you needed more evidence to do simple investing in index funds, you’ve got it. And if you’re not doing it yourself, listen to this: “Not only should that be a warning sign for investors — because greater risk means greater volatility — but it also suggests that fund managers aren’t living up to what is expected of them.”
Remember, there’s a reason managers don’t want you to know this.
Having had my first child earlier this year, I enjoyed reading Can you afford NOT to have a kid? from MSN Money.
The headline may be a little deceiving (since kids really do cost a lot of money), but the article lays out all of the tax and saving advantages to having kids, as well as this little gem:
The U.S. Census Bureau’s American Community Survey 2007 found that parents tend to earn more than childless adults. Fathers are 13% more likely to earn $50,000 to $74,999, and 17% more likely to earn $100,000 or more than their kid-free counterparts, while mothers were 10% more likely to make $50,000 to $74,999 (though less likely to make more than $100,000) than women without kids, according to the report.
And it’s not just about higher bills (though that does matter).
“Childless couples tend to act as if there is less pressure. They are focused on themselves, while couples with children think more about the what-ifs: What if their children or grandchildren need their financial assistance? What kind of legacy should they leave?” says Michael Kay, president of Financial Focus in Livingston, N.J.
At Get Rich Slowly, Leo Babauta (of Zen Habits) provides 6 Steps to Simplify Your Financial Life. Number 5? Automate!
Finally this week, Jim at Bargaineering shines light on the financial incentives for winning the World Series. I had no idea the additional bonuses players on teams making the playoffs get. Did you?
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