Rebalance Investment Committee Member Burton Malkiel explains why he believes in Rebalance’s approach to investing, including broad diversification, low fees, index funds, dollar-cost averaging, and regular portfolio rebalancing.
Transcript
Burt Malkiel: I joined Rebalance because what it does is everything that I believe in. It believes in broad diversification, which is something I have believed in all of my life. It believes in low expenses. If you go to a broker and the broker tells you, “It’s okay. No commissions. We’re going to really take care of you, and we’ll have a so-called wrap fee of two percentage points.”
Well, that comes off in addition to the expense ratio of what that broker buys you or what that investment advisor buys you. So you get expenses plus expenses, and there’s very little left for the investor. What Rebalance does is exactly the kind of thing that I believe in.
Let me mention one other thing about investment advisors. Not only will they charge these extra expenses, but they are conflicted. When they want to put a mutual fund into your retirement account, many of the high-expense mutual funds will pay that advisor some extra amount to sell you that mutual fund. So they tend to be conflicted, and they tend to put funds in your portfolio that they get the most income from.
What I love about Rebalance is very, very low overall fees, using index funds, taking advantage of dollar-cost averaging, and taking advantage of rebalancing. It’s exactly the kind of thing that I believe in, and I’m delighted to be a part of it.
