MONEYLETTER's fund suggestions paid off
By Dian Vujovich
I’ve been receiving the MONEYLETTER newsletter every month for years. They’ve been around since 1980. That’s 34 years. The 12-page letter focuses on mutual funds in a format that’s both easy-to-read and informative. Decide to follow the suggested portfolios that ML puts forth and one could actually make some money. Really. In stock funds, too. Double really.
Mutual funds definitely aren’t the hot investment topic they were three decades age. They’ve been upstaged by ETF’s and pooh-pohooed because of market volatility, too many market corrections and complaints about cost of ownership. Even so, it’s hard to find an individual’s qualified retirement account—like their IRA, ROTH or 401k— that doesn’t have a few mutual funds in it. Or, pension fund, variable annuity, etc. etc., …you get my drift.
For many of the lucky who have held on to their stock funds since the stock market’s recent crash that began in 2007, staying in a holding—instead of bolting—period has paid off.
Big caveat here: While I don’t have the figures reflecting how many, if any, equity funds lost their shareholders money over the last five years, it’s beating the market that makes investors happy. The threshold I’m using for beating the market is outperforming the Vanguard 500 Index Fund. Over the past five years $100,000 nearly doubled and grew to $196,458, according to ML data.
In each ML in addition to a listing of hundreds of mutual funds and their performances, you’ll also find three model portfolio suggestions. There’s one for the conservative, moderate, and venturesome investor all with asset allocation and fund pick ideas.
In February’s ML issue was a box titled “What $100,000 Grew to in Five Years (2008-2012)”? The top three rankings went to ML’s All-Family Venturesome portfolio—100 grand grew to $271,543 over those past five years; the ML, All-Family Moderate portfolio grew to $270.076; and the Fidelity Moderate portfolio grew to $266,243.
Of the 11 portfolios listed, the last was the Vanguard Conservative portfolio—its value at the end of last year was $183,500. Vanguard’s 500 Index Fund beat it by$13,000.
Again, while I don’t know if this publisher had any portfolio examples showing that $100,000 was worth less at the end of 2012 than it was when the counting began in 2007, that’s not the point of this blog.
Nope, my point here is to remind investors that running scared when the market turns from bull to bear isn’t usually the best way to make money over the long haul.
I know you’ve heard or read that little investing tidbit dozens and dozens of times throughout the years, and if you’re a typical investor, you either don’t believe it or can’t deal with it. But deal with it: Investing isn’t for sissies.
To learn more about the MONEYLETTER, visit moneyletter.com.
To read more articles, please visit the column archive.