Soft dollars, a decline in legal form, is a smart way can mutual fund managers get cheated. Corridors, in general, for the bribery of non-indexed mutual funds in the form of a rebate for the purchase of research, software and hardware.
You pay for these dollars soft! In recent years, the SEC estimated that soft dollar deals exceeded 1 billion U.S. dollars. In general, to pay about $ 1 for every $ 1.60 of brokerage commissions. Congress madeLegal corruption in 1975, when it passed the "Safe Harbor Act. The law allows fund managers to pay higher taxes than necessary, unless the excess return in the form of services or research that benefits investors.
The problem is that this is a mat that can be abused has been created. In 1998, the SEC noted that some operators have used soft U.S. dollars to pay salaries, office rent, and vacation! Think about it. Sales to run every day at workLivelihoods. You buy a fund to secure your retirement. Then the person who will protect your retirement is sipping margaritas in Cancun to discuss with their friends, where your home with the money comes out of retirement to buy!
The second problem is that many funds do not qualify for cost-efficiency in its operations, so that only you hold the soft-dollar can tap. Think that too. If you have enough money towork not having to spend much time looking for safe places with good return on your money. You do not waste money on things that his family was not otherwise, and therefore necessary.
Why then give money to the managers of investment funds that do not care if part of their retirement dollar falls, their impact on the back! The best way to limit these losses, not to mention their purchases of mutual funds in 401 (k) and try to avoid,only buy indexed mutual funds like the Vanguard 500 (VFINX).