Weekend Reading: Where’s My Mansion Edition

It’s no secret that ordinary investors have been getting screwed over by the investment industry for decades. If you want proof, look no further than Fred Schwed’s nearly 75-year-old classic book, Where Are The Customers’ Yachts?.

This week I stumbled upon another gem, this one published in The Globe and Mail 10 years ago by a former mutual fund company insider. The article, titled “Where’s My Mansion?“, is about the rise of independent mutual fund companies in the 1990’s as investors fled GICs to get in on the mutual fund action.

The author, who worked for Global Strategy Financial, laments about how his initial $8,500 investment in the funds was still only worth $8,500 a decade later, while the company founder sold his stake to AGF Management for $289 million.

“The promise of mutual funds in the early ’90s was that they could give even the average person access to a world of investment options, and an expert fund manager could navigate among those options for you. But plenty of academic research shows that most fund managers don’t beat the relevant market indexes over the long term.”

Still, today, as investors begin to wise-up and switch to low-cost index funds and ETFs, old-school investment advisors continue to promote active strategies that claim to outperform the market, despite overwhelming evidence to the contrary.

And what happened to the idea that skilled managers can consistently beat the market? Canadian Couch Potato explains why alpha has become beta.

This Week’s Recap:

Monday marked our five-year anniversary and we’re celebrating all month with a HUGE giveaway contest. There are 63 individual prizes up for grabs worth a combined $5,000 in total value. If you haven’t already entered, what are you waiting for?

Everyone makes a few financial mistakes in their life and on Wednesday Marie discussed three costly financial mistakes to avoid.

On Friday we had a guest post from Richard Garand of Master Your Portfolio who talked about what you can do about the upcoming stock market crash.

Over on Rewards Cards Canada I talked about why charge cards have the power to earn big rewards.

Weekend Reading:

An interesting, yet strange tale of a man who flies around the world for free by beating the airlines and credit card companies at their own game.

Are all-inclusives worth it? When should I buy my airline ticket? Here The Washington Post answers your most frequently asked travel questions.

Travel expert Barry Choi lists seven travel fees and charges to avoid.

You know what really grinds my gears? All the payday loan shops that keep cropping up in my city. The payday loan industry profits off the poor and bleeds users dry. And it took a case of mistaken identity to make this Maclean’s author mad about it.

Fee-only financial planner Sandi Martin answers a common question: “I’m 22…do I need a financial planner?”

One-year after reaching his million dollar destination, blogger Frugal Trader sets off on a new journey toward to generate $60,000/year in passive income.

Mark Seed offers some ideas on what to buy with $1,000 to invest. Mark also shared his biggest investment mistake over on the 5iResearch blog. Look for my own contribution to the series later this month.

After a long hiatus, Mr. Cheap is back at Money Smarts Blog with a guide to cutting the cord. He also wonders how long until you’re able to retire off your savings?

Millionaire Teacher Andrew Hallam shares his thoughts on why millions of Americans should hope for a stock market crash.

A nice piece on Wealthing Like Rabbits author Robert Brown in the Winnipeg Free Press.

I wish MoneySense Magazine would publish more articles like this one, exposing real estate seminar scams, instead of this mutual fund industry propaganda:

Brox, a senior financial consultant at Investors Group, says the management fees for mutual funds are worth it for investors who want professional help.

“Most people don’t have the inclination or time,” she says. “They want to have a managed portfolio.”

Shocking, I know, coming from a company with a reputation for charging some of the highest fees in the industry today.

PWL Capital financial advisor Benjamin Felix says that if you think you need an options strategy, a hedge fund, or an active fund manager, you probably just need to revisit your time horizon.

A comprehensive study on Canada’s retirement income system looks at number of new stresses that have emerged in recent years: a decline in the coverage and quality of workplace pension plans, a prolonged period of low-interest rates and rising life expectancy.

Jason Heath answers a reader question about working while collecting CPP and OAS.

Over on the Findependence Hub, Pat McKeough discusses how RRSP meltdown strategies could jeopardize your retirement.

Are millennials better off renting? Here’s why young Canadians may want to put off home ownership.

Financial experts take it one step further, arguing that millennials should move back home with their parents to get ahead.

This millennial’s real estate dreams were dashed when she discovered what $500,000 would get her in the booming Toronto housing market.

Finally, here’s Squawkfox blogger Kerry Taylor discussing her unconventional ways to save money in this recent Tedx Talk:

Have a great weekend, everyone!