(This article originally appeared on The DIV-Net) I have recently completely relocated my family from our comfortable lives in Canada to a much different life in Norway. My company has moved me and so far it has been the experience of our lives. Many new sites, things to do, and cultural experiences to learn from. Like any move, whether it is down the street or to a completely different continent 1000’s of kilometers away, there are always issues that come up. One such issue has been the set up of our internet service and keeping a secure connection

Norway is a very technically advanced country. In many ways I believe they are many years ahead. Banking is a good example. The entire banking system here is a seemless well oiled machine. There is absolutely no paper involved and things just work. However, my internet connection has not been as reliable, primarily because of some faulty setup of our modem. Completely at random, we continue to lose the connection to the internet and my blogging activities and ways to be connected with home disappeared - we use VoIP as our phone which means that when the internet is down so is our phone. However, as I was reflecting on the post I needed to write for this blog as the deadline was looming, one thing occurred to me - it was actually nice not to have to look at the market or even think about investing for a couple of days! And you know what, nothing happened while being disconnected and my stocks ebbed and flowed as they always do.

The lesson for me in all of this, is that it is ok not to watch the market all the time and worry about how your positions are doing, especially if you are a long-term investor. Stocks are going to go up and down. Your portfolio is going to go up and down. If your portfolio is well structured and you have a balanced asset allocation, then things will turn out just fine. Overactivity can actually be an investor’s downfall - fees, emotional reactions etc. Disconnect yourself for a while and you will see!

Now I am going to go pick the kids up from school and take them to the beach to enjoy the sun.

My employer pension plan is a large and increasingly growing part of my overall asset allocation. In fact, it will soon become one of the largest pieces of my portfolio. Each and every month my employer and I contribute to my pension plan through various funds. Over time I have adjusted the amount I invest in the fund choices available to manage my holdings to meet my target asset allocation goals. I have recently done just this and believe that it will further help to diversify my portfolio.

As my portfolio’s asset allocation is in line for the most part of where it should be, I am now in sort of a maintenance phase. I no longer need to direct all my pension money to one fund or another due to shortfalls in various areas. Instead, I can now simply buy pension funds across all my large asset allocation areas. Here are the funds I will now be buying on a regular basis:

1. Bond Index Fund
2. US Equity Index Fund
3. Canadian Equity Fund
4. International Equity Index Funds

These are the big parts of my overall portfolio. They make up the bulk of my portfolio. I still need to continue to add to my smaller asset classes as money comes in from other sources so that they do not get too far out of line. In addition, I will supplement my Canadian and US classes with dividend stocks as I identify quality stocks at excellent prices. However, the structure of a good portfolio is a consistently applied asset allocation and I believe that I am now set up for that.

I am sorry I will be unable to post my usual weekly roundup today. I am still having problems with Norwegian internet provider Get! and there long lead times for service and seemingly unwillingness to help me get a stable internet connection at home.

Thanks for your patience and continuing to read The Dividend Guy!

(This article originally appeared on The DIV-Net) While listening to the podcast over at SoundInvesting.com, I was referred to an article by famed investment columnist Jason Zweig. In this article he spoke about the difference between what the mutual funds present as their investment returns in market materials and what individual investors actually made. To get to the point, here is the crux of the argument: The returns earned by mutual fund investors is much lower than that of the posted total returns.

Before I begin, I want to ensure you that this is not yet another bash the mutual fund post. I have enough of those over at The Dividend Guy. To prove this, have a look at this image from one of Zweig’s articles that talks about this difference in market returns versus individual investor returns. The difference is stunning!

With respect to mutual funds, the difference in individual investor returns is also much different than the returns touted as total returns.

Stunningly, while the average fund generated a 5.7% annualized total return over the four years, the average fund investor earned just 1%. In every category except two (equity income and utilities), investors earned less than their funds did.

The main question from this research is why is there such a huge discrepancy between what mutual funds earn and what their investors actually achieve while invested in those funds. In my mind, the answer is very simple.

It has everything to do with individual investor behaviour and trying to chase those hot mutual funds. You know how it works - you go over to Monrningstar or MSN Money and do some extensive searches for mutual funds that have been kicking butt over the past 3, 5, or even 10 years. You arrive at a list of the best performing stocks and you invest in them, thinking that your returns are now going to match the returns of that fund. Guess what - on average your returns differ from those total returns posted by the fund by about 4.7%. Over a number of years that can translate into differences of thousands of dollars.

As investors, we need to change our behaviour and stop chasing the hottest mutual funds or the hottest dividend stocks. We also need to ensure that we do not get suckered into a fools game of trying to match those marketed returns of the mutual funds. We will not match those returns, no matter how hard you try or how lucky you get.

My suggestion is to avoid mutual funds altogether. The fees charged by these funds make it even harder (impossible) for you to earn the same posted returns they advertise. Instead, focus on building a core portfolio of internationally diversified index funds and if you want add some dividend growth companies, but only if you have the time and inclination to track those stocks. And most importantly do not get discouraged if your returns don’t match the returns of what seems like everyone else’s portfolio. Over the long term your returns will begin to match that of the market. The key is consistency and a long term focus.