Managed funds

Last week we looked at fees that financial institutions charge you when you invest with them. So, what are you paying for?

Individual stocks are like the ingredients in a recipe.

Managed mutual funds, exchange traded funds, and all the other bundles of goodies you pay to invest in are the end products. Many different companies' stocks have been blended and baked together. You are buying the bakery's cookies or steamed hot chocolate, not raw ingredients.

This is important to remember when you are talking with representatives from financial institutions. They are selling products, not just pointing you to raw ingredients.

You are paying for the secret sauce.

Tune in next week to find out when getting professional help with your investments might be worth it, and when it might be a waste of money.

Sources

https://www.getrichslowly.org/history-of-index-funds/#:~:text=On%2031%20December%201975%2C%20paperwork,public%20index%20fund%20was%20launched.

The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)

Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor

https://www.investopedia.com/ask/answers/042715/what-difference-between-speculation-and-gambling.asp#:~:text=Speculation%20and%20gambling%20are%20two,conditions%20of%20risk%20or%20uncertainty.&text=Gambling%20refers%20to%20wagering%20money,risk%20in%20an%20uncertain%20outcome.