Morningstar determined that Janus and Putnam were the two largest "wealth destroyers" during the decade, losing $58 billion and $46 billion, respectively. "Janus and Putnam rode the growth wave more than anyone else," Kinnel says. "They had some very aggressive funds that put up big numbers that got huge inflows." After the tech bubble burst, the funds that were most heavily invested in these types of holdings experienced huge sell-offs, which made it difficult for these funds to attract inflows through the remainder of the decade.
According to Morningstar, American Funds created about $191 million in wealth for investors during the decade, followed by Vanguard and Fidelity. Since American Funds generally employs a more value-oriented strategy, the firm was largely able to avert the first bear market of the decade. "The 2000 to 2002 bear market was all growth and tech, and American barely touched that, whereas they had lots of value, dividend payers, and bonds, which did very well," Kinnel says.
Recently, the tables have turned for American. In 2009, it lost the most of any fund family (more than $25 billion). No fund family, including American, was able to avoid the bear market of 2008. The same strategy that allowed American to bypass most of the first bear market failed because many well-known dividend-paying companies, like big financial firms, experienced huge losses.
Looking back at your life, you will find that as you have earned more you have spent more. You wonder how it is that you lived on so little money way back when. Sure, grocery and fuel prices have gone up and rent too, but deep down you know that if you are not smart, you will do the same thing again. Last week I covered the simple formula for managing money effectively: 1. Work out what you have to do 2. Spend less than you earn 3. Align your choices to your life goal's to keep you motivated and do it! This week we are focusing on the first step: work it out Track Your Expenses For a few weeks minimum, write down every single dollar you spend. Don't forget about the bank fees, direct debits or credit card. Work out where you have been spending your money. If you feel you don't have time to track your money, you could use our simple service, My Money Tracker for You for only $22 per month. Don't forget about the Irregular Expenses It is so easy to forget about the expenses you have only every now and then. Car registration, service, your driver's licence or the dog vaccination. I was surprised when I realised that it used to cost us $35 per week for our car registration once a year and service every quarter. These things can sneak up on you and completely blow your budget. Add Up All Your Debts Write down all the debts you have. The reason I highlighted all is because I really want you to be honest with yourself and include everything that you owe. You are going to have your credit cards, personal loan and car loan, but don't forget to include things like the money you promised to repay your parents or $20 for your flat mate. You will never be financially free until you are honest with yourself about your money. Total It Add it all up to calculate how much it is that you need to meet your current commitments, repay your debts and live. Once you know this total you will know how much you need and if you are living within your means. Do you need to earn more to
