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Investment Advice on Ipad

Mutual Fund Education

Impact of Investment Advice on Portfolio Returns

David Dierking Dec 12, 2017



In case if you are wondering whether mutual funds are right for you at all, you should read why mutual funds, in general, should be a part of your portfolio.


Why Professional Financial Advisors Make Sense


The use of robo-advisors has grown considerably over the past decade, as investors seek out ways to obtain financial advice at a fraction of the cost of a traditional advisor.


The Appeal of Robo-Advisors


Robo-advisory appeals to much of the Millennial generation, which wants to operate online and keep costs as low as possible, but it’s also pulling in older generations, who are drawn by the low-fee structure. Investors today are identifying expenses as the key consideration in selecting funds for their portfolios.

The rise of robo-advisors has been a positive industry change for investors. To learn more about how they have risen to prominence, click here.


Challenges at the Fund Level


Turnover can also be an issue. Funds that do a lot of trading can trigger added commission costs and tax consequences that investors may prefer to stay away from.

We’ve also seen an increasing number of funds adding non-traditional assets, such as real estate, commodities and derivatives, in an effort to juice risk-adjusted returns. While they offer added return potential, they can also be risky, illiquid and inconsistent with investor goals.


How the Department of Labor Regulates the Financial Advisory Space


To learn more about the Department of Labor’s fiduciary rule and how it affects you, click here.


Key Considerations When Choosing Investment Advice


  • Fees are the biggest factor that investors can easily control. According to Vanguard, focusing on low-cost index funds helps keep overall fees low, and allows investors to enjoy better returns.
  • Keep emotions in check. Market downturns can be scary and worrisome, but they are part of a normal market cycle. Stick to your long-term objectives despite short-term fluctuations, and understand how your advisor can help minimize risk during challenging times.


The Bottom Line


Be sure to check our News section to keep track of the recent fund performances.

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