Weekend reading: Fidelity or infidelity?

My regular roundup of the week’s best money blogs and financial articles.

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One post that’s had a lot of comments this week is The Pros and Cons of Being Wealthy. The upshot is we’d happily take our chances! I also wrote about house price and food inflation,  and about companies paying dividends early to beat the new higher rate taxes.

My blog post of the week is from My Money Blog. Jonathan looks at how a reader’s holdings have been analysed by Fidelity’s portfolio review service, and finds that they’re basically being stuffed with a higher cost, lower return alternative to index funds:

Over the past 5 years, the Fidelity Portfolio Advisory Service managed to construct a portfolio that lagged a simple index fund portfolio by 1.70% annually. That’s a huge difference over time. Use any compound interest calculator and stick in two numbers that differ by 1.7%, and you’ll see the effect of compound interest working against you for a few decades.

Why did this account perform so poorly relative to its benchmark? Isn’t it supposed to beat the benchmark?

The moral: Never give anyone else control of your money. Most financial advisers are after your cash. They’re not half as interested as you in growing it.

More highlights from the personal finance blogs

• Gold, oil, stocks, and bonds overvalued? – The Digerati Life
• How tax money funds profits at Goldman Sachs (told you!) – DINKS Finance
• Barclays’ scandalously low profits – Stumbling and Mumbling
• Conventional wisdom leaves much to luck – Financial Samurai
• A value-based asset allocation strategy – UK Value Investor
• Are index funds really passive? – Oblivious Investor (by MoneyNing)
• There’s no such thing as passive income, anyway – Fiscal Fizzle
• …oh yes there is! – Planting Dollars
• Dividend investing after the slump – Engineer your Finances
• Easy ways to improve your memory – MBA Briefs
• And easy ways to combat overconfidence – Consumerism Commentary
• Google Shopper: Price comparison tool for Android – MoneyWatch

Interesting financial newspaper articles

• Buy-to-let returns 187% in the decade – FT
• …while cash savers who switched saw 70% returns – FT
• Obscure way to buy China cheap (but risky!) – FT
• The (supposed) sovereign debt domino effect – The Economist
• Tories planning big income tax shake-up – The Telegraph
• Investment reads: A new UK aggregation site – Investment Reads
• Debate: Is investing gambling? – The Motley Fool
• Dueling economists and their letters to The Times – BBC
• Stamp duty rise hits mortgage borrowing – BBC (Via Andrew)
• Sex at work: Weapon or repression? – BBC

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