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A comment on Staygg - new app lets you invest small amounts of money for free.

Re:Staygg - new app lets you invest small amounts of money f... by heyalexej on Tuesday February 24, 2015 @03:31AM (#9099425)
It makes me a bit nauseous whenever I read or hear that somebody wants to outperform the market with an actively managed fund that is resembling an index fund. Like draugadrotten writes, such an endeavor can't be free.

The rule of thumb for the targeted audience of such a startup should be exactly the opposite. To never pay someone to actively manage their portfolio that is.

"Data from recent decades demonstrates that the majority of actively managed large and mid-cap stock funds in United States fail to outperform their passive stock index counterparts."[0]

Edit:

No, seriously. What the kids they are targeting need is to learn to manage their personal finances[1] and invest very early in very boring things. With a very simple and boring strategy that takes a couple hours a year[2].

Most fund managers are essentially useless[3] and according to numerous studies very seldom outperform the market. Unless you have millions in spare change to give away to someone who gambles with your money, stay away from them.

[0] http://en.wikipedia.org/wiki/Active_management#Disadvantages...

[1] http://www.reddit.com/r/personalfinance/wiki/index

[2] http://www.etf.com/docs/IfYouCan.pdf

[3] https://www.youtube.com/watch?v=SwkjqGd8NC4

[ Parent | on HN ]
Re:Staygg - new app lets you invest small amounts of money f... by hodwik on Tuesday February 24, 2015 @10:40AM (#9101164)
"somebody wants to outperform the market with an actively managed fund that is resembling an index fund"

It sounds like you don't know what these words mean.

[ Parent | on HN ]
Re:Staygg - new app lets you invest small amounts of money f... by splike on Tuesday February 24, 2015 @04:22AM (#9099554)
I don't think it is promising to outperform the market at all

"Our fund aims to replicate the returns of the S&P 500."

[ Parent | on HN ]
Re:Staygg - new app lets you invest small amounts of money f... by heyalexej on Tuesday February 24, 2015 @05:16AM (#9099706)
Doing that reliably over a meaningful period of time is the problem. In my book (from the perspective of an investor) you'd need to "outperform?" the index to cover the costs of frequent trades and potential losses at no actual cost to the investor.
[ Parent | on HN ]
Re:Staygg - new app lets you invest small amounts of money f... by meric on Tuesday February 24, 2015 @08:57PM (#9104864)
It says replicate, not outperform.

Just buy the Vanguard index fund.

It's easy to replicate the returns on the index, you just use the dividends to pay the fees, since the S&P500 index includes only capital gains only and is not "Total Return" (include capital gains plus dividend).

[ Parent | on HN ]