For many, Bernie Madoff became the face of evil. And that is precisely why Halloween costume masks in the likeness of Bernie Madoff are doing pretty well this year. The New York Daily News reports that thousands have been distributed throughout the country, and that some people are more than happy to dress up as this infamous character. Some costumes even include orange jumpsuits and handcuffs.

While Bernie Madoff is not likely to outsell Michael Jackson costumes this year (there’s another celebrity with money problems), he’s still getting some play.

Are you dressing up for Halloween this year?

Image souce: Steve Rhodes via Flickr

Post from: EveryJoe

Scary Halloween Costume: Bernie Madoff

Index funds instead of actively managed funds

The idea behind actively managed funds is that there is someone — an “expert” — who chooses which stocks go into the fund. This expert is paid a fee for managing the fund. Managed funds often boast that they achieve such spectacular returns that it offsets the cost of the fees you pay. Unfortunately, this claim is not always true. Oblivious Investor makes this excellent point about earnings from the stock market:

Let’s imagine that over the next decade, all the publicly owned companies in the world economy earn a grand total of $800 trillion. As a result, the most that all of the shareholders of those companies could earn on their (stock) investments over the decade would be $800 trillion. Simple so far, right?

However, in reality, the total amount earned by the whole group of investors would be significantly less than $800 trillion. Why? Because of investment costs–things like brokerage fees and commissions, mutual fund sales loads, mutual fund operating expenses, and so on.

Managed funds can be among the most expensive investments. So, what if you cut out the middle manager and just picked your own investments? Well, stock picking is chancy at best. Instead, consider index funds.

Index funds

Index funds are basically funds that include every company on an index. There are funds that represent the the Dow, the S&P 500, indexes created to follow green companies and small-cap indexes that follow small businesses. And there are many more beyond these. There are innumerable chances for you to invest in index funds. And your returns are based on the overall performance of the whole index. This means that if you invest in an index fund that follows the Dow Jones Industrial Average, over time you gain what it does. And you pay fewer fees, since these aren’t actively managed funds.

Index funds are the ultimate in passive investing. You gain when the stock market does, and you can buy more shares when the stock market is lower. You pay fewer fees, and you don’t have to try and figure what which stocks are going to beat the market. On the other hand, you are unlikely to see really dramatic gains. But for a boring investor like me, big gains aren’t really necessary. All I ask is that I earn enough. And index funds provide me with more than enough.

Do you like index funds?

image source: Kowloonese via Wikimedia Commons

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Post from: EveryJoe

Index Funds, Not Actively Managed Funds

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