How to get returns greater than 10% yearly
Over the past 10 years, many mutual funds have underperformed and have produced on average 7% after fees and many funds are flat. What we have been told is to purchase mutual funds for diversity and safety and when the fund managers cannot achieve the returns they projected or in some cases, they lose money their typical response is “You are in it for the long term”.
How many times have we heard this from fund managers as an excuse for underperforming? But regardless of if you make money or not, the fund managers are always making their commission. Money management is the only business in the world where the managers can lose money for their clients and then collect their fees.
The average fee for mutual funds is 1% per year so if we stop purchasing mutual funds and start buying stocks directly, our returns will then increase to 8%. But unless you are an investment professional it’s difficult to know which companies to purchase. The answer is with the mutual funds as each fund typically lists the top 10 holdings which usually make up over 80% of their holdings.
Instead of purchasing the funds directly, you can open up a self-directed trading account and mirror the fund’s top holdings which will save us the management fees. Next, we need to know which funds to follow which is quite simple. Run a search on all funds that are returning on average 9% to 11% per year over the past 10 years. What we are looking for is a company that has consistent low volatility returns, so no year should vary by more than 3% such that if a company averages 10% over the past 10 years, each year is between 7% and 13%.
What this will do is avoid any specialty funds that are in a bull market and ready to crash and also avoid any funds that are over-conservative. Now that you have identified which fund to follow, go start investing 10% of your money directly into this fund, the other 90% will be used to invest into their top holdings. What this does is reduce the fees to 0.1% and you will also receive a statement from the fund quarterly on their holdings. Now with this information, every quarter adjust your investments to mirror the strategy listed above.
EVAULM is a software-based company that uses its proprietary EVM software to value investments based on underlying value assets. EVAULM is extremely diversified in Canadian Banks, Global Equities, Currencies, Commodities, and Crypto Currencies. Our investments have returned an average of 14% constantly. To learn more about our business, please go to www.evaulm.com