Featured among the San Diego County Library system’s free online offerings is the Morningstar Library Edition, a storehouse of data and guidance for that most popular of investment mechanisms: mutual funds.
But data without know-how, says investment educator Richard Loth, can be daunting. That’s why Loth, a Solana Beach resident, has made it his mission for the past four years to teach Morningstar’s ins and outs to the unaware mass of mutual fund investors—a number he puts at around 1 million living across San Diego. Through The Fund Investor’s Schoolhouse he launched in 2014, Loth gives free lectures at libraries and senior centers across the region, determined to empower his students with the tools to navigate, interpret and harness Morningstar’s analytics and investment guidance.
So with tax season and Financial Literacy Month upon us, Loth shared his vision for using Morningstar to steady one’s financial standing.
DMT: When did you first discover Morningstar, and how has it shaped your own investment strategies?
Loth: I’d been living and working in Venezuela for over 10 years when I returned to the U.S. (1983) and became interested in writing education material for individual investors. I bought my first mutual fund, having previously only invested in stocks, in 1986. Morningstar started a year earlier and I subscribed to one of its services.
DMT: What are some of the keys of teaching others to use Morningstar to its full benefit?
Loth: As is often the case with many fields of endeavor, the investing public is overwhelmed by an overload of information and the Morningstar Library Edition website is no exception. So what I do is to focus on just key fund investing tools—keeping things simple—that will allow mutual fund investors to make informed investment decisions. My lectures and accompanying guidebook, Exceptional Mutual Fund Investing Know-How From Morningstar, are structured to take a mountain of information and make it into a mole hill.
DMT: April being Financial Literacy Month is a vivid reminder that most people shy away from taking control of their financial security. Why is that?
Loth: People live very busy lives. People tend to stay away from subject matters they don’t understand. Investing is perceived by many to be complicated, risky. Procrastination—retirement is a distant place until you get there!
DMT: How does your method differ from someone who plays the stock market?
Loth: Playing the stock market is not investing. Investing wisely should include keeping things simple. Stock investing takes expertise, experience, and time; very few individuals have these credentials. The mutual fund is a relatively simple investment product, which can be understood by learning a few fundamentals and using Morningstar’s know-how. My mission as an investment analyst/educator is to promote Benjamin Franklin’s admonition that “an investment in education gives the best return.” There is a very big difference between having information and knowing how to use it. It’s the latter that I teach, and it’s badly needed.
DMT: Is prior investment savvy needed to use Morningstar, or can it be taught to someone who doesn’t know a mutual fund from a Roth IRA?
Loth: If you are investing in mutual funds, or intending to invest in mutual funds, and are not using Morningstar to identify, select, and monitor such investments, you are making a big mistake.
DMT: What’s the hardest part about convincing someone who has relied on professional investors to be confident that they can use Morningstar to achieve similar or better results?
Loth: Whether you are a do-it-yourself investor, a participant in a 401(k) type retirement plan, or working with an investment adviser, you need to know what questions to ask and understand the answers. Understanding how to access the right kind of information from Morningstar, being able to decipher what the data means, and applying it to your investing objectives will make for informed investment decisions.
DMT: How quickly do your students learn enough to go it on their own?
Loth: It all depends on the individual’s general level of investment literacy. However, if you stick to choosing a portfolio with a heavy weighing of index mutual funds, work with a top-quality fund company, and choose a selection of low-cost, high-quality managed funds, the fund investing process is not a lengthy process.
DMT: Why is Morningstar is so underappreciated, and what motivates you to be the person who can right that wrong?
Loth: That’s an excellent question! It drives me crazy to think how valuable the Morningstar Library Edition is … and it’s free … easily available from the comfort and convenience of one’s home with an Internet connection and a basic computer. I’m passionate about teaching investors the basic rule of successful investing—knowing what you own and why you own it. Using the Morningstar Library Edition’s content gives me the opportunity to give back to the community something of my 40-plus years of investing experience and expertise.
Richard Loth has lectured at the Carlsbad Senior Center since 2016 and last year became an educational instructor with the county library system, for which he’ll be teaching at the Poway branch May 23 from 11 a.m.-12:30 p.m. and at the San Marcos branch May 20 from 1 p.m.-2:30 p.m.
Learn more about Loth and The Fund Investor’s Schoolhouse at www.fundschoolhouse.org.