Is Your Actively Managed Mutual Fund Performing Up to Par?

Is Your Actively Managed Mutual Fund Performing Up to Par?

When it comes to the stock market, the past six years or so have been pretty great. But according to a study commissioned by S&P Dow Jones Indices, if you own an actively managed U.S. equity-based mutual fund, more likely than not your portfolio hasn’t seen any measurable growth - or at least nowhere near what the stock market has actually returned.

I believe the study’s findings give investors who own actively managed mutual funds something serious to consider because, generally speaking, the whole idea – and for that matter, the purpose and selling proposition – for owning an actively managed fund (as opposed to their passive/index counterparts) is to get returns that are superior to what the market generates. Not to mention that you generally end up paying a bit more in management fees to own an active fund.

One cannot and should not lump all actively managed mutual funds together in such a generic manner. So I’m not suggesting that you shouldn’t get yourself one, or as many of them as you’d like if that is, in fact, what you believe will lead to your financial promised land. However, it is worth noting that to date there hasn’t been any definitive proof to the contrary that actively managed mutual funds generate superior returns, compared to index funds.

As an investor, you’ll want to make sure that if you’re going to pay a fund manager “extra money” to help you “beat” the market and get you far superior returns, that you do, indeed, end up getting your extra money’s worth. The findings of this study seem to be adding to the considerable body of evidence in favor of owning low-cost index mutual funds.

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Want real, fact-based information that will give you the financial serenity you're seeking? Contact us so that we can help you to evaluate your current situation and make a plan that you can live with. Visit LaserFG.com or call 877.656.9111 right now to book your complimentary session.

Treat Your Retirement Savings Like Your Health - Get an Annual Checkup!

Treat your retirement savings like your health - get an annual checkup!

Setting aside money toward your retirement in some sort of account is a step in the right direction. But much more than that is necessary to ensure you’ll be set for the long run. You must also make sure that the specific investment vehicle you are using is, indeed, delivering the results required to turn your contributions into the income you’ll need during retirement.

That makes sense, right?

Just because you are making contributions into to a 401(K) or some other account doesn’t, in and of itself, necessarily mean that your retirement is all set. For all you know, your portfolio may be headed in the wrong direction. In fact, even if your account’s balance seem to be increasing from one statement to the next, you could still be moving in the wrong direction. You wouldn’t want to get all the way to retirement, years later, only to discover that you got the short end of the stick, would you? Not to mention that by then it might be too late for you to fully recover.

So, on a scale of 1 to 10 — ten being the most — how much attention would you say you are really paying to what’s happening with your retirement savings?

Obviously money and health are not the same, but let me attempt to draw an analogy. It is wise to ensure that you keep up with your annual health evaluations, even if you feel great and healthy, simply because feeling great — or even believing that you are healthy — doesn't necessarily mean everything is going great in your body, health wise. You should view your retirement in the exact same light, and get an independent confirmation from a trained, qualified, and honest advisor annually.

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Want real, fact-based information that will give you the financial checkup you need to be sure your retirement account is doing what it needs to do for your healthiest financial future? Contact us so that we can help you to objectively evaluate your current situation and make a plan that will yield the results you want. Visit LaserFG.com or call 877.656.9111 right now to book your complimentary session.

Buyer Beware: A Traditional IRA Could Be Your Worst Tax Nightmare

Buyer Beware: A Traditional IRA Could Be Your Worst Tax Nightmare

Tax season is once again upon us and, among other things, it's that time of the year that experts give us so-called tax saving strategies. Of course there are some great ideas that may end up benefiting you, but in my humble opinion – which is based on real-life experience with real people facing real situations – some of these tax saving strategies may, in fact, end up doing the exact opposite and instead cost you big time in the long run.

One of the notoriously popular yet equally dangerous strategies is encouraging everyone to fund a traditional IRA in order to “save” money on your tax bill. Sounds good, but will it really save you money?

While it is true that contributions to traditional IRAs are deductible, and the gains you make during accumulation years are not currently taxable, that's not the end of the story by any measure.

The more compelling story is what happens down the road when you begin accessing money from your traditional IRA during retirement. Every single cent of that money will be subject to income tax at whatever tax rate is in effect at that moment in time – and who knows where tax rates are headed?

As I explain in greater detail in my books 5 Mistakes Your Financial Advisor Is Making  and Is Your 401(k)  a Trap?, the indisputable fact is that with a traditional IRA, you are simply making a decision to pay taxes in the future, which would be a good decision only if you knew for a fact that your tax rate would be much lower than it is today, something I think we can both agree that even the President of the United States doesn't know – not to mention that he cannot honestly promise anything in this regard. So, in effect, it’s a complete gamble.

Here’s the piece that seems to allude the so-called experts. Even if today's tax rates do not change, there's still the real possibility that you'll end up paying more taxes when you retire, simply because you'll most likely have fewer deductions and exceptions than you enjoyed during your working years. For example, your dependent children will likely be adults by then, your mortgage would likely be paid off or almost paid off, and you’ll no longer be making deductible contributions into a 401(k) or your traditional IRA. All of which will imply one thing – a potential increase in your taxable income, even though your gross income may have dwindled. Talk about the perfect storm for getting clobbered by taxes.

This is something I see happen to real people in real life every single day. I'd like to suggest a very simple way for you to test the potency – and also the shortsightedness – of this strategy. Find someone who’s retired and followed this kind of advice and ask them how their tax situation is panning out in retirement. Are they actually saving money on their taxes? Also ask him or her if, given the chance of a do-over, he or she would go the same route.

If you are really looking to reduce your tax bill in the long run, you may need to look beyond a traditional IRA. Hopefully you are hearing me loud and clear.

Happy retirement.

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Want real, fact-based information that will give you the whole picture, rather than assuming the IRA is your best option? Contact us so that we can help you to objectively evaluate your current situation and make a plan that will yield the results you want. Visit LaserFG.com or call 877.656.9111 right now to book your complimentary session.