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He actually had a good point with the supermarket comparison. Here's how it goes:
but generally the more expensive goods/ services are the better they are. but the general rule for fund management is that the more expensive it is the lower the likely returns.
i would say giving fund managers money is more like going into a shop and handing over a couple of grand for a big cardboard box filled with air.0 -
No it doesn't, because retail charges for most things are the equivalent of initial charges, not ongoing annual management charges.He actually had a good point with the supermarket comparison. Here's how it goes:
I don't have to pay retail costs of a lawn mower or a pint of milk for the entire time I own them - once I've bought it, that's it.
A more appropriate comparison would be something like ongoing software licensing charges, where you have to pay each year to be able to continue using the service - but most retail software isn't sold like that, it's more for commercial software.0 -
No it doesn't, because retail charges for most things are the equivalent of initial charges, not ongoing annual management charges.
I don't have to pay retail costs of a lawn mower or a pint of milk for the entire time I own them - once I've bought it, that's it.
Yes I think a car would have been a better analogy. You pay an ongoing cost to keep it running, if you don't, it will stop being able to run.
Most cars have an initial charge but they all have an ongoing cost associated with them to keep them running, repairs etc.A more appropriate comparison would be something like ongoing software licensing charges, where you have to pay each year to be able to continue using the service - but most retail software isn't sold like that, it's more for commercial software.
Anti-virus software is an exception for retail software. I pay £25-30 a year for mine (I try an extend my subscription whilst it's on offer
) 0 -
Going off topic but Microsoft Security Essentials is the best AV at the moment, and best of all if you're a home user and not a small business user it's free.The free versions of AVG and Avast are also very good.Anti-virus software is an exception for retail software. I pay £25-30 a year for mine (I try an extend my subscription whilst it's on offer )
So that's me saving £25-30 a year, compounding at 7%, I can be a millionaire if I keep this up!0 -
I believe a new fund is coming onto the market soon that's based around value property that's worth a look into? It's called Providence Funds.
Does anyone else have experience with property funds and how they perform?
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Yes I think a car would have been a better analogy. You pay an ongoing cost to keep it running, if you don't, it will stop being able to run.
Most cars have an initial charge but they all have an ongoing cost associated with them to keep them running, repairs etc.
but with car maintenance you can at least sometimes see what the garage is doing for their money. while with fund charges it appears that the consumer is getting nothing for the ongoing charges?0 -
That's likely to be true for tracker funds, though it's not certain because things like tracking error vary and can cost more than the explicit charge difference. It can also be true for non-trackers, depending on the particular fund. Paying more for the distribution for exactly the same fund would certainly reduce gains.doubleJackD wrote: »but generally the more expensive goods/ services are the better they are. but the general rule for fund management is that the more expensive it is the lower the likely returns.
For a supermarket selling normal consumables they are equivalent of ongoing charges, not initial. How are you going to get Tesco and their distribution people to agree to stop charging you for their food service after you pay them an initial charge? You're using it on an ongoing basis and paying on an ongoing basis, just as you are for the fund manager service. Unless you plan to buy food once and stop eating once that purchase runs out.No it doesn't, because retail charges for most things are the equivalent of initial charges, not ongoing annual management charges.
The lawn mower is an initial charge if you're buying them infrequently. The milk is an ongoing charge unless you've come up with some way to make the single milk purchase last for longer than it normally takes to drink the milk.I don't have to pay retail costs of a lawn mower or a pint of milk for the entire time I own them - once I've bought it, that's it.
I agree that that would be an easier to understand comparison. People don't tend to recognise that their regular purchases from a particular retailer are effectively paying that retailer for an ongoing service. Retailers do, though - the lifetime value of a customer can be quite important to them and why they will pay to acquire customers.A more appropriate comparison would be something like ongoing software licensing charges, where you have to pay each year to be able to continue using the service - but most retail software isn't sold like that, it's more for commercial software.0 -
doubleJackD wrote: »but with car maintenance you can at least sometimes see what the garage is doing for their money. while with fund charges it appears that the consumer is getting nothing for the ongoing charges?
Erm eh? There are employees running the fund. Employees don't just set up the fund a leave it, they have ongoing changes, analysts looking into new and existing companies. Portfolio rebalancing etc.0 -
A more appropriate comparison would be something like ongoing software licensing charges, where you have to pay each year to be able to continue using the service - but most retail software isn't sold like that, it's more for commercial software.
Or mobile phones. You can buy the handset and pay your monthly fee for usage. Or you can get the handset free and pay a higher monthly fee to offset the handset cost.
No-one should really be paying initial charges anymore unless you are getting advice. ANyone else should be using fund supermarkets to get the charge set to zero.Remember the saying: if it looks too good to be true it almost certainly is.0 -
Employees don't just set up the fund a leave it.
Hey, imagine if there was a garage where half the cars they serviced came out better than they went in, but on the other half they made them worse. The net effect would be the same as having left all the cars alone, but the garage would still be giving everyone an invoice!I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0
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