Stop Your Money from Lining Someone Else’s Pockets
By Andrew Hallam
You probably moved to Mexico for at least one of three reasons: the weather, the culture, or the low cost. Mexico is affordable. So your pensions go further. Many expats also have investments. But their money ignores sound investment principles. Let me introduce myself. I’m not a financial advisor. Instead, I’m a personal finance teacher, financial journalist and author of the bestselling finance book, Millionaire Teacher. I also write two personal finance columns. One is for Canada’s national newspaper, The Globe and Mail.
For starters, you shouldn’t invest in actively managed mutual funds. I know… almost everyone does. And that’s a shame. Virtually every book or study discussing these products says the same thing. These are profitable for your advisor and his firm. But you make less.
Warren Buffett says you should invest in low cost index funds. Economic Nobel Prize winners William F. Sharpe, Paul Samuelson, Daniel Kahneman, Merton Miller and Robert Merton all agree. Harvard’s endowment fund manager, Jack Meyer says, “The investment business is a giant scam. It deletes billions of dollars every year in transaction costs and fees…You should simply hold index funds.” Yale University’s endowment fund manager, David Swensen says, “The U.S. government should stop the mutual fund industry’s systemic exploitation of individual investors.” Canadian mutual funds are even worse.
Don’t believe me? Google the opposite of what I’ve been saying: Actively managed funds beat index funds I promise, it’s an eye-opener.
Sadly, most of Lake Chapala’s full-time and part-time residents hold actively managed funds. They make less money in tax-deferred accounts. In taxable accounts, they’re even worse. Your advisor isn’t the only person who loves these products. So does the taxman.
I wrote The Global Expatriate’s Guide to Investing to show you one of two things. You could build a responsible portfolio of index funds. Or, you could find an ethical advisor to do it for you. The book is simply written. You won’t need any prior understanding about the stock market. Best of all, if you read it, you can stop people lining their pockets with your hard-earned money.
(Ed. Note: Andrew Hallam is a recent resident of Chapala. His book, The Global Expatriate’s Guide to Investing can be purchased at all online booksellers, in both e-versions and hard copy. Readers should be advised that the Ojo neither endorses nor disputes the suggestions made in this article.)
For more information about Lake Chapala visit: www.chapala.com