{"id":14532,"date":"2023-02-28T15:36:39","date_gmt":"2023-02-28T21:36:39","guid":{"rendered":"https:\/\/johnsonwim.com\/?p=14532"},"modified":"2024-01-29T11:36:45","modified_gmt":"2024-01-29T17:36:45","slug":"why-investing-in-mutual-funds-could-jeopardize-your-retirement-plans","status":"publish","type":"post","link":"https:\/\/johnsonwim.com\/why-investing-in-mutual-funds-could-jeopardize-your-retirement-plans","title":{"rendered":"Why Investing in Mutual Funds Could Jeopardize Your Retirement Plans"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"14532\" class=\"elementor elementor-14532\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-40a35f36 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"40a35f36\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5815c50b\" data-id=\"5815c50b\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-12e53644 elementor-widget elementor-widget-text-editor\" data-id=\"12e53644\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p>Unfortunately, since many financial advisors working today entered the business in the 1980s and 90s, during the best stock market in US history, they became stock market specialists, favoring growth instead of income. Many of them also became heavily focused on mutual funds. Mutual funds, in general, are a murky pool of investments that only publish their holdings once a quarter. That means in the middle of the quarter, you don\u2019t know what stocks your money is invested in. And when you do find out, you may not always be getting an accurate picture. That\u2019s because sometimes, fund managers will engage in something known as \u201cwindow dressing\u201d. Here\u2019s how this tactic works:<br \/><input name=\"gform_field_values\" type=\"hidden\" value=\"\" \/><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-efb6914 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"efb6914\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-7f711ad\" data-id=\"7f711ad\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-98ba926 uael-gf-ajax-true uael-gf-style-box uael-gf-input-size-sm uael-gf-enable-classes-no uael-gf-button-left uael-gf-btn-size-sm 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the best stock market in US history, they became stock market specialists, favoring growth instead of income. Many of them also became heavily focused on mutual funds. Mutual funds, in general, are a murky pool of investments that only publish their holdings once a quarter. That means in the middle of the quarter, you don\u2019t know what stocks your money is invested in. And when you do find out, you may not always be getting an accurate picture. That\u2019s because sometimes, fund managers will engage in something known as \u201cwindow dressing\u201d. Here\u2019s how this tactic works:<\/p>\n<p>Let\u2019s say that during the quarter, a particular stock that the fund owns drops in value significantly and receives bad press. The fund manager may not want to sell it because its price is down. However, he might go ahead and sell that stock just before the quarter ends, so he doesn\u2019t have to disclose that it was in the fund \u2014 but then he\u2019ll go ahead and buy it back again when the new quarter starts. This is window dressing and it\u2019s one of the problems that can result from the lack of transparency in this murky pool of investments.<\/p>\n<p>A Bigger Problem<br \/>\nAnother problem with stock mutual funds is that they are geared toward growth and not income. This could be a big problem if you are retired or nearing retirement and the growth you are counting on turns into a loss or a series of losses. The reason most stock funds are geared toward growth is that they are all judged against the performance of the stock market, typically the S&#038;P 500 Index, which doesn\u2019t have a particularly high dividend. So, fund managers are all trying to beat the S&#038;P 500, or at least trying not to underperform it.<\/p>\n<p>If these fund managers were to focus on high-dividend-paying stocks (which is a strategy that typically makes more sense for most investors in retirement or near retirement age), then in some years they would likely outperform the S&#038;P, and in other years it will underperform it. But fund managers know investors have short memories. So even if their fund experiences a couple of good years in a row and then has a year where it underperforms the S&#038;P 500, investors may leave the fund. This is why fund managers are always trying to avoid underperforming the S&#038;P 500 by focusing more on growth instead of income.<\/p>\n","protected":false},"author":1,"featured_media":16525,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"elementor_theme","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[4,5],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why Investing in Mutual Funds Could Jeopardize Your Retirement Plans - Johnson Wealth and Income Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/johnsonwim.com\/why-investing-in-mutual-funds-could-jeopardize-your-retirement-plans\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why Investing in Mutual Funds Could Jeopardize Your Retirement Plans - Johnson Wealth and Income Management\" \/>\n<meta property=\"og:description\" content=\"Unfortunately, since many financial advisors working today entered the business in the 1980s and 90s, during the best stock market in US history, they became stock market specialists, favoring growth instead of income. Many of them also became heavily focused on mutual funds. Mutual funds, in general, are a murky pool of investments that only publish their holdings once a quarter. That means in the middle of the quarter, you don\u2019t know what stocks your money is invested in. And when you do find out, you may not always be getting an accurate picture. That\u2019s because sometimes, fund managers will engage in something known as \u201cwindow dressing\u201d. Here\u2019s how this tactic works:  Let\u2019s say that during the quarter, a particular stock that the fund owns drops in value significantly and receives bad press. The fund manager may not want to sell it because its price is down. However, he might go ahead and sell that stock just before the quarter ends, so he doesn\u2019t have to disclose that it was in the fund \u2014 but then he\u2019ll go ahead and buy it back again when the new quarter starts. This is window dressing and it\u2019s one of the problems that can result from the lack of transparency in this murky pool of investments.  A Bigger Problem Another problem with stock mutual funds is that they are geared toward growth and not income. This could be a big problem if you are retired or nearing retirement and the growth you are counting on turns into a loss or a series of losses. The reason most stock funds are geared toward growth is that they are all judged against the performance of the stock market, typically the S&amp;P 500 Index, which doesn\u2019t have a particularly high dividend. So, fund managers are all trying to beat the S&amp;P 500, or at least trying not to underperform it.  If these fund managers were to focus on high-dividend-paying stocks (which is a strategy that typically makes more sense for most investors in retirement or near retirement age), then in some years they would likely outperform the S&amp;P, and in other years it will underperform it. But fund managers know investors have short memories. So even if their fund experiences a couple of good years in a row and then has a year where it underperforms the S&amp;P 500, investors may leave the fund. This is why fund managers are always trying to avoid underperforming the S&amp;P 500 by focusing more on growth instead of income.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/johnsonwim.com\/why-investing-in-mutual-funds-could-jeopardize-your-retirement-plans\" \/>\n<meta property=\"og:site_name\" content=\"Johnson Wealth and Income Management\" \/>\n<meta property=\"article:published_time\" content=\"2023-02-28T21:36:39+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-01-29T17:36:45+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/johnsonwim.com\/wp-content\/uploads\/2023\/02\/Johnson-Wealth-and-Income-Management-Why-Investing-in-Mutual-Funds-Could-Jeopardize-Your-Retirement-Plans-1.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1000\" \/>\n\t<meta property=\"og:image:height\" content=\"1295\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Johnson Wealth &amp; Income Management\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Johnson Wealth &amp; 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Many of them also became heavily focused on mutual funds. Mutual funds, in general, are a murky pool of investments that only publish their holdings once a quarter. That means in the middle of the quarter, you don\u2019t know what stocks your money is invested in. And when you do find out, you may not always be getting an accurate picture. That\u2019s because sometimes, fund managers will engage in something known as \u201cwindow dressing\u201d. Here\u2019s how this tactic works:  Let\u2019s say that during the quarter, a particular stock that the fund owns drops in value significantly and receives bad press. The fund manager may not want to sell it because its price is down. However, he might go ahead and sell that stock just before the quarter ends, so he doesn\u2019t have to disclose that it was in the fund \u2014 but then he\u2019ll go ahead and buy it back again when the new quarter starts. This is window dressing and it\u2019s one of the problems that can result from the lack of transparency in this murky pool of investments.  A Bigger Problem Another problem with stock mutual funds is that they are geared toward growth and not income. This could be a big problem if you are retired or nearing retirement and the growth you are counting on turns into a loss or a series of losses. The reason most stock funds are geared toward growth is that they are all judged against the performance of the stock market, typically the S&P 500 Index, which doesn\u2019t have a particularly high dividend. So, fund managers are all trying to beat the S&P 500, or at least trying not to underperform it.  If these fund managers were to focus on high-dividend-paying stocks (which is a strategy that typically makes more sense for most investors in retirement or near retirement age), then in some years they would likely outperform the S&P, and in other years it will underperform it. But fund managers know investors have short memories. So even if their fund experiences a couple of good years in a row and then has a year where it underperforms the S&P 500, investors may leave the fund. This is why fund managers are always trying to avoid underperforming the S&P 500 by focusing more on growth instead of income.","og_url":"https:\/\/johnsonwim.com\/why-investing-in-mutual-funds-could-jeopardize-your-retirement-plans","og_site_name":"Johnson Wealth and Income Management","article_published_time":"2023-02-28T21:36:39+00:00","article_modified_time":"2024-01-29T17:36:45+00:00","og_image":[{"width":1000,"height":1295,"url":"https:\/\/johnsonwim.com\/wp-content\/uploads\/2023\/02\/Johnson-Wealth-and-Income-Management-Why-Investing-in-Mutual-Funds-Could-Jeopardize-Your-Retirement-Plans-1.png","type":"image\/png"}],"author":"Johnson Wealth &amp; Income Management","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Johnson Wealth &amp; Income Management","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/johnsonwim.com\/why-investing-in-mutual-funds-could-jeopardize-your-retirement-plans#article","isPartOf":{"@id":"https:\/\/johnsonwim.com\/why-investing-in-mutual-funds-could-jeopardize-your-retirement-plans"},"author":{"name":"Johnson Wealth &amp; 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