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Step 12: Invest & Relax

July 3, 2014. Those who threw in the towel because they did not trust that prices are fair at all times, which causes the market to eventually rebound, have irrevocably hampered their ability to capture their share of the market recovery and capitalism. Long-term investors understand the merits of indexing. But unfortunately, even those investors are prone to emotional decision making. For this reason, the right passive advisor fulfills a critically important role in investment success.

Problems Investors “Go It Alone” Some passive investors get in their own way of success. As the legendary investor Benjamin Graham stated, “The investor’s chief problem, and even his worst enemy, is likely to be himself.”95 An investor may want to consider the fees paid to a passive advisor as a casualty insurance premium, insuring the investors against their own mistakes and lack of knowledge.

Commissions Create Conflict

A broker who receives a commission with every trade is acting in conflict with a client’s best interest, and therefore, not acting as a fiduciary for the client. In fact, in April 2005, the SEC set forth regulations that require commissioned financial professionals to include the following language on their advertising materials: “Your account is a brokerage account and not an advisory account. Our interests may not always be the same as yours. Please

Index Funds: The 12-Step Recovery Program for Active Investors  

This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...

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