Don't Pay Full Price for College

Tuesday, 15 December 2009 16:46 Written by Kelly Noonan

According to the College Board*, tuition at four-year public colleges rose 6.5% this year while private colleges raised tuition 4.4%. So we thought a follow-up on Lynn O’Shaughnessy’s book “The College Solution” was in order.

Here are some of Lynn’s late-stage college strategies:

· Don’t believe the sticker price – public universities are discounting 15% and private schools 33.5% says the College Board
· Discounts do go to affluent families – you just have to know which schools will reward which kind of students
· Financial aid varies dramatically – some schools are generous on needs-based aid, some are not
· There are great online resources – 
     a. College Navigator (nces.edgov/COLLEGENAVIGATOR/): type in the name of the school to access a wealth of information 
     b. Common Data Set is posted on each school’s Website and has a Financial Aid section
· Get the best deal – select schools where the student is in the top 25% of grades & test scores (find stats on the Common Data Set)
· Test Score issues – a number of schools have test-optional policies (go to Fair/Test.org for the list of schools)

*The College Board is a not-for-profit membership association whose mission is to connect students to college success and opportunity. Founded in 1900, among its best-known programs are the SAT®, the PSAT/NMSQT® and the Advanced Placement Program® (AP®). The College Board is committed to the principles of excellence and equity, and that commitment is embodied in all of its programs, services, activities and concerns.

Tempted to Look for the Next “hot thing” in the Market?

Tuesday, 01 December 2009 17:06 Written by Bruce

Who’s the smartest of them all? We currently see ads and junk mail pieces from money managers saying they are the greatest because they sold out before the crash or bought (emerging markets, junk bonds etc.) just at the right time. Truth be told, facts are facts and though there are some really smart money managers out there, most are really smart at marketing, not investing money.

As a long-time advocate of passive rather than active management investment strategies we find it helpful to share with potential investors looking for the “next hot thing” how active mutual fund managers have actually performed in recent years. It is no surprise to us that actively managed stock and bond funds have shown a significant rate of non-survival over the past five years (though private equity and hedge funds have melted even faster than these mutual fund managers). Among the survivors, only a few have consistently outperformed their category benchmark.

Slide 1: During the past five years, the US stock market has experienced several years of moderate gains and one year of extreme underperformance (2008). As shown in this graph, 28.5% of the actively managed US equity universe (1,043 funds) disappeared during the five-year period through 2008. Most of this non-survival occurred in years when the market delivered positive returns.

Slide 2: Although 71% of actively managed US equity funds survived the five-year period, most funds did not outperform their category benchmark. This graph shows the percentage of funds in the surviving universe that beat their benchmark in consecutive years. In the first year (2004), 33.2% of the funds were winners, but by year five (2008), only 1.4% of the funds (38 out of 2,619 survivors) had consistently outperformed their benchmark.

Slide 3: Like active managers in the equity universe, bond fund managers have a significant rate of non-survival and underperformance as well. As shown in this graph, of the funds operating at the beginning of 2004, about 27% of the actively managed bond universe (458 funds) disappeared during the five-year period through 2008.

Slide 4: Fund survival again does not imply success. Although 73% of actively managed funds survived the 2004-2008 period, most did not outperform their fund category benchmark. This graph shows the percentage of bond funds in the surviving universe that beat their benchmark in consecutive years. In 2004, over 41% of the funds outperformed their respective category benchmark. By year five (2008), however, only 0.5% of the funds (7 out of the initial 1,670) had outperformed in all five years.