atans1

Importance of incentives (e.g. ministerial) & financial courses/ Dangerous to buying for yield

In Financial competency, Financial planning on 18/08/2014 at 4:40 am

Actively managed funds generate more fees for brokers which could explain a large part of their popularity. I’ve never once had a broker recommend a passive strategy and they look very disappointed when I mention it. Incentives matter.”—on “Practice makes imperfect”, August 9th 2014

Reminds me that tying ministers’ and senior civil servants, bonuses to GDP growth is problematic. The Chinese  have in principle stopped making GDP growth a KPI. They found that it skewers officials actions towards environmental degradation and urban sprawl because promoting heavy industries and building housing are the “betterest” ways to get GDP growth.

Crediting the classroom
New research shows that courses in finance at school can help reduce the harmful repercussions from taking on too much debt later in life

Danger of buying for yield alone

Even Neil Woodford, a star UK fund manager, has put the shares [HSBC] into his new income fund – it is the only bank in his top 60 holdings.

But the 12 per cent share price fall over the past year has wiped out more than double the value of dividends paid in the same period. That shows how dangerous it can be to hold shares for the dividend alone.

(FT’s Lex)

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