Lately I have been wondering how to do a better job of helping investors protect themselves from toxic sales pitches that pretend to be helpful advice — pitches that are really about generating income for the salesperson. What I’m about to say is harsh, but I believe it: Wall Street has become addicted to all the money it can make from confused and uneducated investors.
Far too many investors don’t realize they are willingly helping Wall Street — and some people in the financial media — rob them of billions of dollars every year. That’s right, billions. The outrage on my mind lately is load funds, mutual funds that require investors to pay a sales commission for the “privilege” of owning portfolios with too-high taxes, too-high operating expenses, and dubious active management. After slick sales presentations that fail to mention these drawbacks, people commit themselves to investments that will almost certainly underperform the very stock market they are trying to beat. If you’re reading this article, I suspect you know better than to squander your own money this way. But if you understand what’s going on, perhaps you can help a friend or relative avoid this trap. So let me take you through a scenario that works brilliantly …
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