Personal Finance, Part 14 — Low Investment Expenses

Getting help in investing is a tough decision.  Who is worth the money that you will pay?  Precious few.  In equities, I could probably come up with a dozen “long only” managers that have real skill, and are worth their fees with decent probability.  With hedge funds and private equity, the questions are harder, and would have a harder tme judging who has a sustainable competitive advantage.

With bond funds, the answer is simple.  Go to Vanguard.  Almost all bond managers earn roughly the same amount before fees. Over a long period of time, fees make up most of the difference in performance.  In general, low fees work with equities, but with more noise.  With index funds, the lower the fees the better, they are generic.

Now there are a few places where additional money might help.   Getting a good financial plan done can be worth the money.  For those that are wealthy, advice in limiting tax liabilities is usually worth it, though be careful when things get more complex than you can understand.  Also, insurance products can be useful, but don’t let someone sell you what is convenient for them.  Get advice from someone who won’t earn a commission, and then buy the products that you truly need.

Be careful, do your research, and buy what you want to buy.  Don’t buy what someone wants to sell you.