+ where active investing makes sense & cheaper alternatives to healthcare insurance
Hope you had another financially successful week! In this week’s edition of the Gist, we’ll talk about some ways to be more productive throughout the day at work, share with you our latest findings on active vs. passive investing and discuss cheaper alternatives to health insurance.
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So here are your questions for today’s edition:
I’ve read somewhere that the #1 skill required to thrive on any job is to have focus and be productive. Any quick tips on how to be more productive at work?
Does active investing have any merits any more? In what cases does it make sense?
I’ve recently quit my job and am evaluating my health insurance options. What are some alternatives to traditional health insurance plans?
Let’s give you the summary first.
A simple trick to get more stuff done at work is to put your cell phone on airplane mode for the majority of your work day. Do not connect to WiFi. Also, check your email only at designated, predefined times. More tips in the Deep Dive section.
A recent Morningstar study confirmed what we already know— actively managed funds have failed to survive and beat their benchmarks, especially over longer time horizons. That may be even true for the highest-net-assets active funds: Fidelity Contrafund (FCNTX) and American Funds The Growth Fund of America (AGTHX). Below is the active fund success rate by category and investment horizon.
If you’re looking for cheaper alternatives to traditional health insurance, you may want to take a look at healthcare sharing ministries, such as Medi-Share, Liberty Healthshare, and Samaritan Ministries. More on those in the Deep Dive section.
Here are some other work productivity tips besides putting your cell phone on airplane mode and checking your email at predetermined times. Do the following:
Set self-imposed deadlines;
Quit multi-tasking; focus on one thing that you need to do;
Minimize meetings & interruptions;
Use your commute time for planning and brainstorming;
Work in 60-90 minute intervals and take regular breaks.
You can follow & join the discussion on work productivity here.
Per Morningstar, 23% of all active funds topped the average of their passive rivals over the 10-year period. Active funds did relatively better in market segments that have more fragmentation (e.g., small-cap growth), and/or that are less known to the average investor (e.g., foreign small- and medium-size companies). Success rates also spiked among bond funds, especially corporate and high yield bonds.
So where does active investing make sense then? If you’re investing in domestic, large-cap stocks, you may want to go with index funds. Where long-term success rates are generally higher is among foreign-stock and bond funds—so you may want to consider active alternatives there. But even if you do so, check out the funds’ cost—the cheapest active funds are twice as likely to succeed in beating the benchmark than the priciest ones.
Once you find your target investments, use AskFinny comparison tool to find out how they have performed relative to their benchmark funds.
If you don't have health insurance, you may want to take a look at healthcare sharing ministries, such as Medi-Share, Liberty Healthshare, and Samaritan Ministries. They each have different pros and cons, but here is how they work:
Instead of paying a monthly premium, you will pay a monthly participation 'share', based on your age and the number of family members covered.
There is an Annual Household Portion (AHP), which acts like a deductible. The higher the AHP, the lower the monthly share will be.
You will pay for all medical expenses out of pocket until you reach your AHP.
Costs are kept low because there are some restrictions when it comes to pre-existing conditions.
You can apply to join whenever you want, since there is no open enrollment period. Read here how a family of 6 can pays only $332 per month with an AHP (‘deductible’) of $8K.
That’s it for this edition. What would you like to hear about in our next Gist? Ask us a question here.
The AskFinny Team