Most investors suffer high fees and earn low returns. There are no sure-fire solutions, at least for the second problem, although playing defense by way of investing in a broadly diversified portfolio across the major asset classes with low-cost index products is a good start. This isn't a silver bullet, but history suggests you can do quite well with this simple strategy. And if you add in a bit of rebalancing, you'll probably do moderately better still. Not tomorrow, necessarily, but through time the odds usually stack up in your favor with this strategy. This basic advice drives the financial industry crazy because it sounds incredibly easy and doesn't cost much. It's hard to charge a lot for a strategy that requires no skill or forecasting prowess. But the results speak for themselves.
Several times a year I like to check in on how passive allocation compares with a broad spectrum of multi-asset-class mutual funds and ETFs, most of which are actively managed and charge a comparatively high fee. As usual, a majority of this group trails the Global Market Index (GMI), an unmanaged value-weighted mix of the major asset classes that's the standard benchmark on these pages. Reviewing results for the 10 years through the end of April 2013, GMI ended up at the 70th percentile of performance vs. 1,100-plus funds.
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