Dear Mark,
As a supporter of your ministry, I read your article in the June Levitt Letter and wondered whether “bond funds” would fall under the category of funds you warn about. My broker wants me to purchase a bond fund rather than another bond. Is a bond fund similar to a stock mutual fund? Any general information you might be able to provide would be greatly appreciated. —Thank you, D.H. (Springfield, MO)

Dear D.H.—
Thanks for supporting ZLM and taking an interest in my article. Please see others in the “Wise As A Serpent” archive (toward the bottom, after our theologians’ archives). You may know that I’ve never been a financial advisor or stockbroker. Having been thoroughly burned by a stockbroker, however, I relay pearls of wisdom from experts who warn about the investment industry’s systemic conflicts of interest. For example, most high-commission investments benefit the salesman more than the client.

wise_2013-08_01Diversification, diversification, and diversification are the magic bullets of investing in stocks and bonds. Stock funds and bond funds are collections of individual stocks and bonds. Provided that their expenses are low enough, they can offer safety over the long haul with their extensive diversification.

The Vanguard Group denounces both timing the market and cherry-picking individual stocks or bonds. Vanguard advisors systematically assess your financial situation, including age and objectives such as retirement. Then they gravitate toward allocating your portfolio between: 1) stock funds in small, medium, and large companies, 2) various bond funds, and 3) foreign and domestic funds, mostly domestic.

Business columnist Scott Burns routinely reminds readers that they can earn higher net returns than just about any high-commission investment by putting their nest egg in a low-fee proposition like Vanguard Total Stock Market Index Fund. Just remember to hold back savings to cover at least 4 months’ worth of bills.

If my Vanguard advisor and I resided in a special section of heaven for wise financial serpents, then maybe I’d get to shine his shoes. When you ask whether you should listen to your broker, I wonder whether he is serving you as well as himself. At Vanguard, unlike traditional “full service” firms, the broker advising this ministry has no incentive to hustle us into a fee-laden proposition. Business headlines are much less dramatic for those who ride the ocean that’s rising over the long-term than for the gamblers who constantly guess which wave to catch or what minute the tide will come in.

For an article that pertains to overpriced stockbrokers like the one I fired at A.G. Edwards, see “You’re Paying Too Much for Investment Help” at Its author would have no beef against firms like Vanguard, which are essentially co-ops owned by their investors.