|PVAF MOTTO: make money through Knowledge acquisition....TODAY LEARN HOW TO INVEST IN MUTUTAL FUNDS TO BUILD WEALTH|
Posted by Champaklal Dajibhai Mistry on September 5, 2011
GET FINANCIALLY INSPRID BY
by his life-story as to how he
became a financial consultant
who is published in leading world media....
.....As per Andrew Hallam
this how he got started in investing....
| "When I was in college, I met a 47 year old millionaire while
I was working at a bus depot during the summer. He was a mechanic,
raising two kids on his own, and he suggested that I should choose a job
that I’d love doing—rather than choose a job simply because it paid
well. Inspiring me, he said that if I learned about money, I could earn
a middle class income and become a millionaire in my 40s, or earlier.
That was 20 years ago. I remember him trying to convince me to invest
money in the markets, and when I said that I couldn’t afford the $100 a
month he advised me to invest, he just laughed. He asked if I could
afford to buy a couple of Cokes and a couple of chocolate bars out of a
vending machine every day—if I really wanted them. I figured that I
could. Then he did the math: $100 a month was $3.33 a day. If I could
afford to buy a couple of Coke drinks and a couple of chocolate bars on
a daily basis, then I could afford to invest $100 a month. It was just
$3.33 a day.
So twenty years ago, I started investing a minimum of $100 a month. And
every year I increased that. To this day, I still increase the monthly
amount I invest, every year."
.....AND NOW GO
TO THE NEXT WEBPAGE...
at PVAF website which was self-born for you
to learn and share worldwide
to make you and your fellow life-travelers
reach for the stars to be wealthy and prosperous with
make your life happy
the way you wish
with your lifestyle choice based on
|by clicking on the next line to read some fundamentals you can learn
and adept in your own life from Andrew Hallam....where you would learn
about the Chinese proverb:
|"wealth doesn’t last
more than three generations:
There’s a generation that builds wealth,
a generation that maintains wealth,
a generation that squanders it"
....to make your tomorrow more wealthier than today....
simply because you educated yourself about
some basics of mutual fund investing today...
Hallam is, a
Canadian who teaches English and personal finance at Singapore American
School. He is the author of Millionaire Teacher: The Nine Rules of
Wealth You Should Have Learned in School. This is the second in a series
of columns based on his book
Andrew is a highly respected investor currently living in Singapore and
writes freelance finance articles. Nominated a finalist for two Canadian
National Publishing Awards, his writing has appeared in MoneySense
Magazine, Reader’s Digest, and L’Actualite. He has also been quoted in
three investment related articles for The Globe and Mail, and in The
Wall Street Journal—with a quirky plea to Warren Buffett. Andrew was born
in Nottingham, England, grew up in Kamloops, British Columbia, Canada.
He loves traveling with his wife, Pele, and living in South East Asia
gives them plenty of opportunities to see some amazing places.
(From Interview with Andrew Hallam at Invest It Wisely)
Could you pass this personal finance exam?
Globe and Mail:
September 4, 2011: Andre Hallam)
| Over the next few months, I will be building a
personal finance curriculum for high school students at an elite
international school in Singapore. Most of my students’ parents are
successful executives from Canada and the United States who yearn to see
their children excel financially.
This success is by no means guaranteed. A Chinese proverb says wealth
doesn’t last more than three generations: There’s a generation that
builds wealth, a generation that maintains wealth, and a generation that
Many of my students represent their families’ third generation of
wealth. Part of my job is to ensure that my students learn the tools to
build financial wealth, while avoiding the problems common among
Like most teachers, I design a course by working backward. I start by
asking, “What do students truly need to learn?” Once I’ve identified the
necessary skills, I construct a final exam to test those skills, then
build lessons to ensure students can pass the test.
Let’s see how you would do on a few of the key questions I have in mind
for the final exam.
Question: When selecting mutual funds, is it better to seek funds with
low costs or ones with the best track records?
Answer: Choosing funds with low costs gives you a higher chance of
success than picking funds with strong track records.
Most investors get this question wrong. They think that funds with the
best returns in recent years are the ones that have the best chance of
The evidence doesn’t bear that out. The fund-ranking company,
Morningstar, rates mutual funds based on a five-star system – four or
five stars for a fund with a great track record, and one to three stars
for funds with less impressive histories. Roughly 95 per cent of mutual
fund assets flow into Morningstar’s four- and five-star funds. But high
performance in the mutual fund world is rarely sustainable and many of
these funds go on to underperform the average.
Investors are better advised to seek funds with the lowest fees.
Cheapness is a far stronger predictor of future performance than history
– something even Morningstar admits. In a recent study, it found that
using low management expense ratios as a way to pick funds was more
effective than using high star rankings.
“If there’s anything in the world of mutual funds that you can take to
the bank, it’s that expense ratios help you make a better decision. In
every single time period and data point tested, low-cost funds beat
high-cost funds,” says Russel Kinnel, the study’s author.
|Question: On average, do mutual funds selected by financial advisers for
their clients outperform mutual funds selected by do-it-yourself
Answer: No. Experienced advisers may be able to add value to an
investor’s financial plan by helping with advice on asset allocation,
goal-setting, and taxable advice. On average, though, the mutual funds
that advisers select for people underperform the results of funds
selected by do-it-yourself investors. A Harvard Business school study
found that funds sold to investors via brokers between 1996 and 2002
lagged behind funds selected by individual investors.
Are individual investors smarter than most brokers? Not necessarily. But
many brokers select funds based on how well they’ll be compensated by
the fund company. And those funds are often accompanied by higher costs,
which hurt investment returns.
Question: Based on a recent study by Morningstar, what country has the
world’s highest mutual fund costs?
Answer: Canada. In fact, this country was the only one of 22 nations in
the Morningstar report to get an “F” on fees and expenses.
According to analysts John Rekenthaler and Benjamin Alpert, Canada had
the highest management expense ratios for equity funds, the
second-highest for bond funds, and was tied for the highest, with Italy,
for money-market funds.
The median expense ratio for equity funds was 2.31 per cent, more than
twice as high as the 0.94 per cent in the low-cost United States,
Morningstar said. The median fee for fixed-income and money-market funds
is more than 70-per-cent higher than in the U.S.
Paying an extra percentage point or so every year might look innocuous,
but over an investment lifetime, it can decimate a portfolio’s
If a 19-year-old invested $1,200 a year, making 9 per cent a year for 45
years, she would have $631,030 at age 64.
But if she was paying an extra percentage point a year, reducing her
annual return to 8 per cent annually, she would have only $463,807.
Investment costs matter. If you understand that, you’re well on your way
to getting an A on life’s personal finance exam.
More related to this story
......AND TO MAKE YOUR LEARNING
START KNOWING ABOUT
MUTUAL FUNDS AND INVESTING
BY STUDYING THE FOLLOWING....
.....just click on the names which
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