Chasing returns is big business. The financialmedia continually perpetuates the desire, and the need, to pick“the next Apple” or “the next five-star mutual fund.”
But unfortunately, chasing the next high flyer has been shown tobe a fool’s errand. In a Wall Street Journal articletitled “Investors Caught with Stars in Their Eyes,”the newspaper went back to 1999 and studied the 10-year subsequentreturns of those who bought five-star funds. What did theyfind? “Of the 248 mutual funds with five-star ratings at thestart of the period, just four still kept that rank after 10years.” I guess fund managers mean it very literally whenthey say “past performance is not indicative of futureresults!”
So just how do you create better performance in your retirementaccounts if predicting the future is not your gift? Eliminateexcessive fees.
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