What is better: ETFs or Mutual funds?
Is there any proof as to what performs the best? It seems like ETFs given their lower fees would be better and they are more liquid?
Answers | 4
Passive investments generally have lower fees than active ones. This does not imply that they offer a greater ROI. For that we need to look at the other side of the equation.
This is a question I often get::
Client is half way into a 20 yr plan. Client requires an 8% CAGR and only getting a 4% CAGR
*CAGR is Compound Annual Growth rate (this is not the same as average rate of return)
There are 4 solutions to this problem;
1). Increase your time (maybe add 20 yrs onto your retirement age)
2) Increase your contributions (double (more out of pocket-maybe double it)
3). decrease your lifestyle expenses (maybe cut them in half)
Those are the financial planning solutions
Yes,Ii said there are 4 solutions. The other one is the Investment Management solution:
4), Double the rate of return to 16% CAGR. this is the mathematical solution and the one that we prefer.
We have both integrity and experience in this field. The choice is yours. always do what is in your best interest.
Lastly, charging a fee for "modifying" your plan that obviously isn't working is not a solution.
It's not what you make, It's what you keep that determines your lifestyle.
Send me a message to discuss. No obligation