Dan Solin's Newsletter, January 11, 2017

Follow these tips and you will be well on your way to meeting your retirement goals:

1. Avoid market-beating brokers

They will tout their ability to “beat the market” through stock picking, market timing and fund manager selection. They will try to sell you complex products likely to underperform. They don’t have to put your interests above theirs. I can think of no reason to use them.

2. Avoid actively managed mutual funds

They are likely to underperform their benchmarks. Buy low management fee index funds instead.

3. Avoid alternative investments

I have never seen one of these “investments” that didn’t benefit the sellers and managers and harm investors. Avoid them.

4. Ignore the financial media

They feature supremely confident “investment gurus”, making all kinds of predictions and stock picks that are wrong as often as they are right. It’s all about ratings and revenues. The financial media is often a source of misinformation, harmful to investors.

5. Dividend stocks

There’s no evidence dividends should be a factor considered by investors. Focusing on these stocks will cause your portfolio to lack diversification. Tax treatment could change in the future to your detriment. I don’t see the appeal.

6. Investment clubs

Investment clubs are a good idea if you are seeking social contacts. There’s no evidence groups of like-minded people can successfully select outperforming stocks.