TIPS OF GROW MONEY

• Buffett

  Build a moat

  In the constantly changing world of business, the key to investing success isn’t identifying companies that are growing the absolute fastest. Rather, it’s “determining the competitive advantage of any given company and, above all, the durability of that advantage,” Warren Buffett famously wrote.

  He coined the term “wide moat” to describe firms with products, services, or business models that can stand the test of time.

  You can own attractive wide-moat companies through Buffett’s Berkshire Hathaway, which Morningstar says is roughly 15% cheaper than the average stock in the S&P 500, based on its price/earnings ratio.

  For a diversified approach, buy Market Vectors Wide Moat ETF It tracks the Morningstar Wide Moat Focus Index, which over the past 10 years has beaten the S&P 500 by five percentage points annually.

  Or pick some wide-moat shares. Among MOAT’s holdings are Buffett-like stocks that dominate global markets, such as IBM, Coca-Cola, and General Electric.
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  2. Get Better Advice

  Invest in a team, not a star

  Even if you’re smart or lucky enough to find that rare stock picker who can consistently beat the market over time, there’s a good chance he will be gone before the long run comes around. The average number of years that an active manager stays with a stock fund is just 5.7.

  One simple solution: Stick with stellar funds run by disciplined committees, not a single manager.

  The nine-member group at Dodge & Cox Stock and the four-person team at Tweedy Browne Global Value have whipped the broad markets over the past three, five, 10, and 15 years.

  Put your adviser under a “BrightScope”
  When selecting planners, you want to know more than just their fees and disciplinary record. You also want to know their areas of expertise, typical customer, average account balance, and pay structure.

  Screen advisers in your area using all of these variables at Brightscope.com’s financial adviser directory.

  Pay next to nothing for basic help
  Asset-allocation advice has become a cheap commodity, so don’t overpay.

  New Internet-based advisers such as Wealthfront and Betterment charge annual fees of 0.15% to 0.35% in general.

  Vanguard’s new Personal Advisor Services will offer portfolio management and a financial plan for 0.30%.
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  3. Make Smarter Choices