the blog after interim

If someone invested $10,000 in the US stock index in January 1990 they would earn roughly 65,000

• you search vfinx on morning star and change the dates to start from 1990 and end in the present day

If someone invested $10,000 in the US bond market in January 1990 they would earn roughly 44,000

• you search vbmfx on morning star and change the dates to start from 1990 and end in the present day

Average return on investment markets vs. individual investors 

dollar cost averaging: investing a constant sum into an investment every single month

• When the market is high it buys you less units
• When the market is high it buys you more units

           We learned that on average an investor will only make about a third of what the market makes on their return  of investments.  This is because many investors feel the need to buy stocks when the prices are high and rising because they believe the stocks will continue to increase.  However what usually happens is that investors spend more money on a single unit than they need to and that bond loses value and in the end the person will either lose money or not make as much money as they should. To combat this, many knowledge investors will use the dollar cost averaging technique.  This is when a person invests a constant sum into an investment every single month.  Thus it ensures that you buy more units when the prices are low and fewer units when the prices are high even though you are investing the same amount every month.

Most people invest in the stock market through one of four vehicles

1. actively managed mutual funds
• most commonly used the stock market
• a collection of stocks that a fund manager trades on behalf of the funds' investors 
• a fund manager watches the economy and interest rates and tries to find the best stocks for his or her fund
• regulated by the securities and exchange commissions 
2. passively managed mutual funds
• these funds don't have fund managers that choose stocks based on forecasts or quality
• they own all of the stocks in a given market: the good and the bad
3. individual stock purchases
4. hedge funds
• 
  

Which performs better: passively managed or actively managed

1. After all fees and taxes, it is easy to find actively managed mutual funds that beat index fund over times 
• not by looking for past performers but by predicting future performers
2. After all fees and taxes, is is hard to find actively managed funds that beat indexed passive funds 
• not by the past performers but by the odds of future performers 

http://money.usnews.com/money/personal-finance/mutual-funds/articles/2012/10/12/study-active-funds-consistently-fail-to-beat-benchmarks 

According to these websites it is actually better, or there is a higher chance of success, to use passively managed funds than actively managed funds.  However, surprisingly more people are investing in actively managed funds.  I was curious to as why this is, and what I found out is that financial advisers earn substantially more when their client choose actively managed funds.  And after reading this I decided to discuss what types of funds we have with my parents.  And, unfortunately, I found out that we too have actively managed funds.  And again, it was because my parents were advised to do this by their financial advisers.  We then discussed the possibility of switching from actively to passively managed funds, and my parents said they would think it over but it was a definite possibility.  

The finance tracker is coming along well, but since I do not have an I-phone, I have to simply plug in my expenses on my desktop at home.  Thus my list is not as accurate as I would have hoped.  The groceries cost coupled with interim expenses have added up to a surprisingly large amount of money.