Past performance is a poor predictor of future mutual fund returns

Investing in mutual funds based on 10-year historical outperformance of the S&P 500 reduces the probability of future gains. A financial advisor's fee is typically around 1%, meaning the fund must outperform the market by at least that amount to justify the cost.

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retirement planning

Claiming Social Security at 62 could mean a 30% cut now — and a 23% cut later

A retiree who claims Social Security at 62 could see monthly benefits slashed by about 30% compared to full retirement age. That cut could deepen by 2032, when Social Security’s trust fund is projected to run out. At that point, benefits may be cut by another 23%. For someone already receiving reduced payments, the combined effect could leave them with less than half the monthly income they would have collected by waiting until 67. The earliest age to claim Social Security is 62. But for those born in 1960 or later, full retirement age is 67. Waiting until then — or up to age 70 — increases monthly benefits. Dave Ramsey has long advocated claiming at 62, arguing that taking payments early maximizes lifetime benefits if a person dies sooner than expected. He also suggests investing the early payments to grow wealth. But many retirees need Social Security to cover basic living costs and cannot afford to invest the money. For those who live longer than expected, the reduced checks become a growing burden. The Congressional Budget Office projects the Social Security Old-Age and Survivors Insurance (OASI) Trust Fund will run out of money by 2032. Without legislative action, the program would only be able to pay about 77% of scheduled benefits. A retiree who claims at 62 and faces a 23% cut in 2032 could receive monthly benefits reduced by nearly half compared to full retirement age.

Dave Ramsey recommends using an advisor to identify funds with a long track record of beating the market. However, data shows that mutual fund performance does not reliably persist. A fund in the top quartile of its category has a 29% chance of being in the top quartile after three months, but that probability drops to 25%—the same as a random selection—after one year.

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personal finance

Financial secrecy in marriage exposes spouses to undisclosed debt and asset loss

A spouse who lacks visibility into marital finances cannot determine if their name is attached to undisclosed loans or if home equity is available for their use. This risk is exacerbated when one partner controls all accounts and handles all major bills. When a partner refuses transparency, the non-controlling spouse is left unaware of how much their partner owes and what they would be entitled to if the marriage ends. In cases where a spouse is not listed on a mortgage, any built-in equity may be inaccessible. If the controlling spouse is underwater on business loans and files for bankruptcy, the home equity can be seized. The result is a spouse left without the means to support themselves during a marriage breakdown.

Over the long term, the probability of beating the index is significantly lower. Between 85% and 98% of actively managed funds underperform their index over a 20-year period. This underperformance is compounded by higher turnover costs and advisory fees, which are deducted from returns.

Low costs are a better predictor of long-term performance than past performance.

Related Brief3d ago

retirement planning

Claiming Social Security at 62 could mean a 30% cut now — and a 23% cut later

Related BriefJust now

personal finance

Financial secrecy in marriage exposes spouses to undisclosed debt and asset loss

Low costs are a better predictor of long-term performance than past performance.

Past performance is a poor predictor of future mutual fund returns

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Higher inflation means no rate cuts — and an expensive stock market just ran out of safety net

ARK Invest swaps $10.5 million in AMD shares for $11.15 million in Palantir

Past performance is a poor predictor of future mutual fund returns

Read More Analysis

Higher inflation means no rate cuts — and an expensive stock market just ran out of safety net

ARK Invest swaps $10.5 million in AMD shares for $11.15 million in Palantir

The Ledger Morning

Read More Analysis

Higher inflation means no rate cuts — and an expensive stock market just ran out of safety net

ARK Invest swaps $10.5 million in AMD shares for $11.15 million in Palantir

The Ledger Morning

Read More Analysis

Higher inflation means no rate cuts — and an expensive stock market just ran out of safety net

ARK Invest swaps $10.5 million in AMD shares for $11.15 million in Palantir