salvador dali lobster telephone

According to the 2014 Investment Company Fact Book, last year there were over 7,700 mutual funds in the U.S. alone, with $15 trillion invested in them and almost 265 million shareholder accounts. Of these funds, 1,158 were classified as “Index” ETFs, with about $1.6 trillion invested, leaving the vast majority of funds and monies involved in the “actively managed” category. (For more figures and variations on the theme, see

Most people, hence, are still pursuing essentially a dream, despite the numerous and almost constant bombardment of evidence which says it does not pay to invest actively (for many reasons, but the principal being the fees involved). There are exceptions to this rule, but they are… exceptions: the word implies a strong amount of uniqueness, so one could reasonably conclude that these unique cases, whatever they are, almost certainly do not total 6,500+. (Again, in the U.S. alone.)

So what are we to do with our savings? An often-advocated course of action is the so-called “do-it-yourself” approach. This is just fine, as in this case we can pick and choose among alternatives in order to obtain average market returns. But there is an insidious presumption underlying this method: that we actually know what to do. Do-it-yourself in finance  – as in many other endeavors – can be perilous to your health as you decide essentially on matters which can impact your returns far more dramatically than any combination of active managers can (positively or otherwise). These matters include the asset allocation best suited to you and your objectives, and what type of vehicles or instruments you need to invest in.

There is a test you can apply to decide if do-it-yourself is suitable for you: if when you are ready to take action you don’t know what your first call is about or whom you should make it to, then you likely need help before you continue. You can get this in three ways: through a trusted person or an advisor, by educating yourself in the subject of investing, and/or by using a web-based automated portfolio management offering.

Photo Source: Wikipedia; Salvador Dali’ “Lobster Telephone”, 1936