FICTION vs FACT
What Wall Street wants you to think and what we want you to know:
FICTION: They want you to think that investing is complicated – that only a very few can do it successfully.
FACT: PowerHouse Assets knows that women want to know and understand what they are investing in. We take the time to share with you our approach to investing and will provide many opportunities throughout the year for women to gather to discuss investments.
FICTION: They want you to think that you need to buy and sell securities constantly to make a good return on your money.
FACT: Research has shown that high trading costs and high turnover do not correlate with higher returns for you – the investor. More trading often leads to you paying more commissions and often higher taxes as gains are incurred in taxable accounts. In fact, a well-diversified strategy with periodic rebalancing returns more money to the investor over the long term. Keeping costs low is better for you.
FICTION: They want you to believe paying the higher management fees to a money manager means that you will outperform the benchmarks over the long term.
FACT: Actually, most managers fail to outperform their benchmarks despite the higher costs you – the investor – pay to them. And, identifying the top managers before they have had their run of good performance is nearly impossible. According to Standard & Poor’s Indices versus Active Funds Scorecard Mid-Year 2011 Report – In the past three years, 63% of actively managed large cap funds were outperformed by the S&P 500; 75% of mid-cap funds were outperformed by the S&P 400 MidCap 400 and 63% of small-cap funds were outperformed by the S&P 600.
FICTION: They want you to think that by following their advice, you can correctly “time” the market. They want you to believe that as market timers, they can successfully predict the future direction of market prices.
FACT: We believe it is impossible to predict the best and or worst days in the market consistently. By being out of the market on just a few of the days when it moves sharply, an investor misses out of the big positive moves that are often concentrated in a relatively small number of trading days. No one can time the market or beat the market consistently.
FICTION: They want you to think that good past performance must mean good future performance. They want you to think you will do as well in the future because they did well in the past.
FACT: There is little evidence to suggest that a past high performer will continue to be one of the better performers over the long term. Often, by the time they are identified as having the “best” record, too much money flows their way and they cannot continue to “outperform”. We believe that the better approach is not to “chase” performance but rather let the markets work for you, rebalancing when appropriate so that you buy low and sell high.
AND SOME MORE FACTS:
- According to the National Center for Women and Retirement Research, as many as 9 out of 10 women will be solely responsible for their finances at some point in their lives.
- Women who save are more likely to find aging better than they expected and they are more optimistic about their financial future than non-savers.
- Once women engage in investing, studies show that they are better investors than men, so we want you to get engaged in your financial future!