This little ditty may give some of you investors a look into the truth about investing in mutual funds versus individual stocks. And by all means avoid annuities at all costs, they are the worst investment on wallstreet, including the maligned "pink".
"Mutual Funds are designed to be confusing, particularly when it comes to their costs. People believe what they want to believe and it is often difficult to help them. Let's start with the most basic and important concept: "Free" Does Not Exist on Wall Street!" Repeat that ten times daily and you'll avoid a lot of disappointment on the 'Street of Dreams'"
OK. You're thinking: he's wrong, he's wrong. What about 'No Load' Funds? For once, just for once, read the prospectus! The managers of most popular no-loads are paid millions. The companies that sponsor them make millions. The offices that house the fund headquarters are marble covered palaces! Where does all this money come from? Right, The Investors! Truly believing that no load funds are cost free is like buying an EZ-Pass (pre pay) tag and telling your friends that the Governor lets you use the New Jersey Turnpike for free! Commission free, yes. Cost free, no way."
"No Load Funds have many ways to charge investors. 12-b(1) Marketing Fees, Fund Expenses, and Trading Costs are the big three. These don't include things like the trips to Europe, etc., and other executive perks that fall into a miscellaneous category. 12-b(1) fees and fund expenses are described in the prospectus. You may have to dig more deeply to find the trading expenses (commissions), which are generally hidden toward the back somewhere. Your investment performance is what remains after the deduction of all of these fees and expenses. It is not uncommon for a no load fund to have total fees in excess of 3.5%. Got it? or is it Gotcha?"
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So just because you are not paying a commission to your broker or Financial Planner doesn't mean that you are getting free investment management, free trading, or free anything. Remember, "Free" Does Not Exist on Wall Street!" And, unfortunately, neither does "Truth", but we'll talk about that some other time. For now though, just one mot of truth is all you need. and don't repeat it above a whisper. The Stock Market is "up" through the third quarter of '04, as it has been since early in 2000...and don't believe anything else.
