Before you read this post, make sure you had read this:
Why Mutual Funds Are Lousy Long-Term Investments
I couldn’t agree more with the article. For your information, I am a big fan of Robert T. Kiyosaki. I read most of his books.
The article concludes that “are you an active investor or passive?”.
If you are an active one, unit trust is really not your piece of cake.
If you are a passive investor, is there any other better choice than unit trust?
Besides the initial 3-7% service charges which most contribute to the consultant’s commission and incentive trip for agent, there is trustee fees and management fees charged every year and calculated daily. Unit trust company earn big portion from the management fees – normally 1.5% p.a. depends on fund type.
In order to make better gain and profit, unit trust company must increase their fund size or asset under management, which is through:
1. increase fund size by making more sales through their agent force.
2. launch new fund to attract more investors.
3. make sure the existing fund grows with proper investment strategy.
I consider it i a win-win situation. When the funds appreciate, investor wins with higher return, unit trust company also wins because they can earn more management fees.
It is true to say that unit trust company makes more but the investor contribute the capital and bear all the investment risk. Let’s think about McDonald for a minute. McDonald is a very profitable company, while franchisee contribute the capital and bear all the investment risk, even the consumers bear the health risk! All businesses should make big profit, don’t you agree?
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Got pros and cons.
Small investors can achieve stock diversification easily with fund.
They do not have the capital to do so directly with stock.
I think it depends on one’s strategy and goals (and maybe know-how and know-who).
HI there !
For your information i already do online switching.Actually unit trusts today is more than that and everytime i had the Best fund from many reputable company for me to offer, equip with asset rebalancing .
Hi Joey, where are you from?
How about for people who never know how to invest in stock market? They will scare to death (heart attack)….keeping the money in the bank is the ’safest’ place. But over the long term, inflation will win the race: Money value will depreciate. (FD ~3% – Inflation of ~5% = neagtive ~2%)
HOW to overcome this problem? Mutual fund, over the long-term is considered a liquid investment tool to hedge (or at least keep the money value). The most important KEY: DIVERSIFIED your portfolio (FD, UT, Stock, GOLD, house, KNOWLEDGE, etcs)
I am a fan of RK but his article on “Mutual funds as lousy investment” is misleading.
Article is misleading. The claim that the mutual fund company is keeping 80% is misleading. FYI, the average NET of fee return is 8%. It should read that in this example, the investor is missing out on 80% of the possible return over this time period. The mutual fund (according to this example) is getting 2.5%… not 80% of the potential return. It’s simple math. Also, it is misleading to say that indexes are better than funds. Some are, but most are not. A mutual fund that consistantly underperforms against its index will eventually be closed due to lack of investors. In reality, it is not difficult to find a mutual fund that consistantly outperforms its respective index. Keep in mind, when you buy an index fund, you buy the bad with the good. Most mutual fund do an excellent job at screening for quality companies. Finally, some mutual funds have expenses illustrated in this article. Many do not, they are much lower. Regardless, who cares what the cost is as long as there is a better than average net return on your investment. For example: If you had a black box, and on one end of that black box you were able to put in a dollar and after a year on the other end of the box it spit out two dollars. Now I ask you, do you really care what happened inside of that box? Not as long as twice as much money continues to come out of the other end. Mutual funds are not different. Mr. Kiyosaki, I’m a fan. But I am extremely disappointed in you for publishing this article.
so now what are the best way or place to invest?
can you all decide by read all the articles….
i agree with you.. the article from RTK is just for those who expert on stock market only.
for normal investor, mutual fund is the best investment
just my 2 cents