For homework we were supposed to read chapter three of Mr. Hallam's book, Millionaire Teacher. Then we discussed it in class. I learned that 12B1 fees were basically used to pay for advertising, so I think that might be why actively managed funds are more popular than passive funds. Also, we learned that active funds are not very predictable, they might look successful or have five stars on morningstar.com, but then they might just fail all of a sudden. They also usually don't last more than 15 years. Actively managed fund managers sometimes invest in passive funds because they know they're better, but they encourage investing in mutual funds because they earn more money. If you hire an investor, he will probably convince you that mutual funds are better because they will get him more money.
I was reading this, and it said that mediocre passive funds usually still do better than 75% of active funds and that active funds are so popular because most people won't settle average returns. Active fund managers try to trick people into thinking that they are beating the index by showing the profitable funds in the past and they merge their funds with others. Sometimes funds don't even release all their performance data, only the ones that show success.
This weekend I spent around $29.70 which I don't think is very much so I think I'm doing alright. I decided to switch from recording my personal finances in a notebook to recording them in excel. I just don't think the notebook was really working, and since I already use my laptop all the time, I thought it would be a lot easier.
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