ETFs & Annuities vs. Mutual Funds for Retirement Nest Egg Control

The one thing I found I needed to do was to find some way to get control of my retirement nest egg. Giving my hard earned money to a financial planner who then gave it to a wealth manager, who then gave it to several fund managers, some of whom could then give it to other fund managers to manage means you have no control of my nest egg at all.image

No wonder the returns are so poor when you have all these people eating at the trough.

When I was in a managed fund they told me it took up to three days to calculate the unit price. Why? See the note opposite posted on one Mutual Fund Site. I’m not singling them out I just want to make the point.

So you may not really know your financial position at the end of the day. In a fast moving market I find this intolerable and open to possible manipulation since it is not transparent.

This article, “Why ETFs Beat Mutual Funds By A Mile” present the case well.

Fund Managers will tell you that you are investing for the long term so daily fluctuations should be ignored. But if the market drops 2-30% in three days and it takes up to three days to find out the unit price it makes it hard to control your nest egg.

In an earlier post I spoke of the revival of Annuities in these times when baby boomers are looking for regular income. But at the same time some risk is necessary on a part of your nest egg to offset inflation and provide for higher returns when the market offers them to you.

Mutual Funds just don’t make sense to me anymore. No transparency, no control and with a buy and hold strategy based on slow response to market reality and conditions and a long term faith that the returns will be there when you retire.

Unfortunately the computerised world has information moving so fast the mutual funds are becoming the dinosaurs of the financial world. Wealth Managers need slow moving cash mountains in order to invest to their advantage.

You need to be nimble and quick-footed if your nest egg is going to survive in this “wired-world”. In a minute a rumour in London can cause a massive sell-off in New York. Then when the facts come out there is a massive buy-back. This is 21st century investing done at the speed of light.

Unfortunately you pay for each transaction and may pay capital gains tax on them too. Your transaction are they same as they were in 1980. But you never get that details of the trades. All you get is a unit price “some time later”.

ETFs are a good alternative to mutual funds because they are priced at the market and can be bought and sold on market. At any point in the day’s trading you will know the price. If you invest directly in ETFs you will have control too.

Here is an article that lists “Seven Advantages of ETF’s over Index Mutual Funds

Money & Markets have a great article “ETFs for Every Investor” which I recommend you read for a quick overview.

image

Here too is a web site ETF Master Trader where you can sign up for an educational series called, “Riding the ETF Mega-Trend“. It’s FREE as is the ETF MegaTrend Book opposite.

What you need is information and information from people who are successful investing/trading ETFs.

However as with all these things you have to evaluate the information for yourself and for your circumstances.

But knowing about ETFs and how they might compliment one of the new style annuities giving you control over your nest egg has to be a good thing.

Leave a Reply

CommentLuv badge