FYI: How do you stack up against the typical person who owns mutual funds?
Mutual fund owners tend to reflect a cross-section of America. They're doing OK in terms of income and wealth, but they are not in Donald Trump's or Hillary Clinton's swanky neighborhood.
The median value of mutual funds owned by U.S. families was $120,000 in 2015, the most recent year for which the Investment Company Institute has data. The ICI is a mutual fund industry trade group.
Regards,
Ted
http://www.investors.com/etfs-and-funds/mutual-funds/how-do-you-compare-to-the-typical-mutual-fund-owner/
Comments
I'm a sucker for presentations that are in the heavy weight statistical category. I'm often surprised by the survey numbers. That was again true as I read the referenced mutual fund owner report.
Not much to my surprise, I'm doing quite well on a comparison basis. I am more than comfortable on an absolute basis. I'm not surprised that the so-called GI generation is at the bottom of the curve in terms of mutual fund ownership. That industry was just making a positive market penetration during our meaningful earning and saving decision years.
I was a very lucky and fortunate soul during those years. In a totally random event, I was introduced to Jack Bogle. He is a very convincing advocate and salesman. He won that day and continues to win.
The most surprising statistic for me is that the median fund owner only has 3 funds. That's a basic minimum for portfolio diversification. I typically have a fund number that bounces around 10. But I also have a portfolio,size that greatly exceeds the averages presented in the survey report. I trade infrequently and am very much into cost control. I suspect many MFOers practice the same general policy.
Best Regards.
"The median value of mutual funds owned by U.S. families was $120,000 in 2015."
"Half of all households have fund balances higher than $120,000 and half have lower balances."
See below a chart from that article. It shows that roughly only 45% of US households own any funds.
Now I'm certainly not great at math. But if more than half own nothing at all, then they must be included in that "half have lower balances." If so, that would seem to skew that "median value" well to the low side, suggesting that those on the high side must have balances hugely in excess of $120,000.
If the 55% who own no funds are not included in the "half have lower balances", then I question the entire premise of the article, and it's value for much of anything.
Shame, shame, shame
OJ - without checking the ICI data, my guess is that the IBD column was poorly written. All the bullet item data apply only to households owning funds. It is almost certain that this restriction to fund-owning households also applies to the data above the bullet list (such as median balance of $120K).
As you correctly state, if more than half the households own no funds (so their fund balance is $0), then the median of all households must be $0.
You noted:
"The most surprising statistic for me is that the average fund owner only has 3 funds. That's a basic minimum for portfolio diversification. I typically have a fund number that bounces around 10. But I also have a portfolio,size that greatly exceeds the averages presented in the survey report."
>>>Three funds won't kill an investment portfolio, eh?
1. For U.S. exposure (includes foreign earnings of U.S. companies)
---VBINX, 60/40 U.S. equity/bond
---VWINX, 40/60 U.S. equity/bond
2. For international, ex-US
--- no favorites here, but 60/40 or 40/60 would fit the basket. An ex-U.S., balanced holding.
If one chooses to expand beyond these 3, then the portfolio obviously becomes more select and personalized, eh?
You indicate about 10 funds for your portfolio. I may presume this is the number needed to satisfy your consideration for diversification. Cool !
From where ever the statistics have been gathered, as to individual monies held in 401k/403b type investments. Sadly too many folks have pretty crappy choices in these programs. One should consider these folks have chosen the best 3 with which they are comfortable.
Lastly, I don't find that portfolio dollar value necessarily has any overwhelming consideration for one's available choices. I'm not less happy with the long term returns of a VWINX than the neighbor who has a $100,000 account in the same investment.
Thanks for the heads-up. I indeed misquoted the article by substituting the word average for median. Sorry for the error. I have corrected my original post. I try to be as accurate as possible, but errors do inadvertently happen.
I really appreciate your careful reading of my posts. My main purpose for posting is to be informative and bad information generates bad investment decisions. I know that's a glittering generality, but it is true in this instance.
Thank you once again.
Best Wishes.
Recall doing the mean, median, average and likely other identifying words for math questions with our daughter in middle school.
Now, the median age of our and 9 neighbor vehicles is 8 years. Some of us have more repair items and dependability problems than others. Do you need more info?......
Lastly, if you see Mr. Stumpf cruis'in around town; please give him the appropriate Italian salute from me........
Take care of you and yours,
Catch
The term glittering generalities has been with us for a long, long time. Here is a Link that discusses some of its history:
https://en.m.wikipedia.org/wiki/Glittering_generality
I'm surprised that you are not familiar with it. I was introduced to it in a high school math class. The instructor cautioned us to be aware of constraints and limitations that likely apply to all "glittering generalities".
Take care.
Best Wishes.
Your recent attempt at subtlety totally escaped me,
indeed it was wasted on the wrong person. I am by training and practice an engineer. A failed design is not an option. Consequently, I attempt to be very direct and linear in my communications. To be somewhat trite, I say what I mean and mean what I say. There is surely enough uncertainty when investing to unnecessarily add communication misunderstanding to the mix. Clarity is a primary goal in my postings.
I sure was not expecting subtlety from your submittal. You have strong opinions and clearly document them. In the past you were precise about specific word selection and challenged a few MFOers on their choices. Nothing subtle about that.
Every submittal,or a portion of it, need not be a powerful truth or carefully nuanced insights. The MFO membership has a diverse set of investment wisdom and experience. What is trite for one member might be a revelation to another
I learn whenever I access these postings. I am a happy warrior and want to contribute. I sometimes wonder if that disturbs some MFO members.
Best Wishes..
Don't think I've heard that one before. And, to tell the truth, it doesn't do a damn thing for me. Wonder who concocted such a bland meaningless phrase?
I stand corrected. The linked article attributes the phrase to Rufus Choate. Well, with a name like that, glittering generalities starts to sound better.