How to Make Your DIY Retirement Savings Garden Grow

A revolutionary, conflict-free, research model focuses on the obvious – Do what’s best for the investor.

Many opinions hit the news daily about the best approach for retirement savers to take. Unless you’re managing Yale’s endownment, it’s not an easy decision to make.

A recent Morningstar article (February 12, 2013, by Dan Culloton) cited that Mr. David Swensen, Chief Investment Officer of Yale University, stated in an active and passive discussion last year:

a few hours yields diy retirement savings blossoms

A few hours yields DIY retirement savings’ blossoms

“If you can’t bring the same kind of time, expertise, and resources Yale does to bear on the task of selecting managers, don’t bother,” he said. “Just index everything. There’s almost no chance that you’re going to pick an active fund that’s going to beat the market over a 20-year period.”

Plant the right retirement savings seeds

In the same article, Morningstar concluded:

“…despite Swensen’s blanket dismissal, [of low-cost, competently managed active funds] they do exist. The average actively managed mutual fund, like the average American, can look pretty gross. It charges higher fees than passive funds for sub-par returns with more volatility and tax headaches. But just as not every American is an obese, soft-drink swilling couch potato, not every actively managed fund is a bloated, risky, shareholder-gouging mediocrity.”**

A little time today will make your retirement savings garden blossom

We agree with Morningstar. Don’t settle for an index fund. Your future is worth a couple hours of your time to review Not On My Nickel’s research to find the small amount of actively managed funds that outperform the index over the long term, after fees. Morningstar is correct, they do exist (and you don’t need to be managing Yale’s endowment to do it right).

In addition, research has shown doing it your self drives better mutual fund performance

A 2010 research study concluded that “do it your self investors” would drive better portfolio management in mutual funds, thus potential higher returns.*

“We also predict and find strong evidence that mutual funds targeting performance-sensitive, do-it-yourself investors will invest more in portfolio management.”


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