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Competition between fund providers continues to result in lower fees on exchange traded funds (ETFs).

A very good thing if you are a proponent of cost minimization when investing.

I read a short article that discusses this subject and makes a couple of useful side points. 

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Invest in passively managed index funds, not actively managed mutual funds.

A constant theme of mine for individual investors.

Today, a short video courtesy of The Motley Fool. 

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ETF Expense Ratios Between Countries

On 05/17/2013, in Exchange Traded Funds, by Jordan Wilson

“I am considering buying an iShares S&P 500 tracker exchange traded fund. In the United Kingdom where I live, the annual total expense ratio is significantly higher than the exact same fund if I buy it on an American exchange. Why does an identical exchange traded fund (ETF), from the same provider, have a different expense ratios in different countries?”

That is a question recently posed by a reader. A very good question.

A few thoughts in response. 

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Tips to Diversify Your Portfolio

On 05/12/2013, in Investment Strategies, by Jordan Wilson

Diversification is crucial for long-term investment success.

Proper diversification, that is.

Today, how to better diversify your investment portfolio. 

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ETFs Versus Mutual Funds

On 03/11/2013, in Exchange Traded Funds, Mutual Funds, by Jordan Wilson

Exchange traded funds (ETFs) versus open-ended mutual funds.

In general, I prefer ETFs for investors.

The exception tends to be for extremely small investors. It may be more cost-effective to pay higher annual expenses, but no transaction fees, with a no-load mutual fund, than to pay commissions on minimal ETF acquisitions. Also, many no-load mutual funds allow for very small purchases of funds and reinvestment of distributions.

Today, three graphs comparing the current state of ETFs with open-ended mutual funds. 

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A well diversified investment portfolio is a key requirement for long-term investing success.

Diversification is important. But sometimes too much diversification can negatively impact portfolio performance. It can be a fine line in getting it right.

Today, a look at indications your portfolio is overly diversified. 

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In the U.S., the Standard & Poor’s 500 stock index (S&P 500) is up 12.6% year to date 2012.

That is the good news. The bad?

Your mutual fund is likely not meeting or exceeding this benchmark.

Why the underperformance against investment benchmarks? 

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Vanguard Investment Funds

On 12/03/2011, in Exchange Traded Funds, Mutual Funds, by Jordan Wilson

I like Vanguard investment funds for long term individual investors.

Especially investors who follow a passive management style.

As I am not directly or indirectly compensated in any way by Vanguard I recommend them based solely on their merits.

That is not to say that other funds are poorer choices. I recommend a wide variety depending on a client’s investment objectives, desires, and available offering in their home jurisdiction. I believe in a “best of breed” approach for clients, not what is best for my revenue. And within the “best of breed” options, Vanguard funds pop up with regularity.

Why is this so?  

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For most individual investors, I believe that a passively managed, well diversified investment portfolio is the best approach for long term success.

I do not believe that paying higher fees for active management brings superior results over the long run. Instead, minimize investment costs and stick to index funds for the majority of investments. Let portfolio returns compound in your investment account, not in the pocket of an investment advisor or financial institution.

I have written extensively as to why I believe in this strategy.

Today, a little more evidence that a passive approach outperforms an active one. 

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Money Making Mistakes

On 06/01/2011, in Investment Strategies, by Jordan Wilson

Some interesting examples of money making mistakes courtesy of CNNMoney.

Superficially, they each provide decent advice for individuals.

But they also provide deeper lessons for investors.

And an overall moral that applies to all examples. 

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