Simple beats complex.
Beware of excess ingredients in your food and investment portfolio.
The popular children’s breakfast cereal, Froot Loops, is a case in point.
Kellogg’s sells its products in various countries. Fruit Loops provides a head-scratching twist.
Look at the label for the cereal sold in the U.S. compared to Germany.
Do you notice the differences?
The U.S. version contains seed oils and Food Dyes, while the German counterpart doesn’t. The German version gets its color from Carrots, Cherries, and Radishes, not chemicals.
While both contain too much sugar, one doesn’t have to be a nutritionist to observe the German Version’s superiority.
Many countries have deemed Food Dyes unsafe for consumption and banned them outright.
Consumer advocates and others press the Foodmakers to change their stance on Food Dyes.
According to the Wall Street Journal:
Calls for WK Kellogg to remove artificial colors from its cereals began mounting earlier this year. Jason Karp, a hedge-fund manager turned food entrepreneur, in March called on Kellogg to remove dyes from its U.S. cereals and accused it of marketing “inferior, toxic cereals for Americans while safer versions are sold abroad.”
The big food companies promised to extract dyes from their U.S. products nearly a decade ago.
The colors of Skittles and Trix were supposed to contain color with natural ingredients from healthier sources, such as radishes, purple carrots, and turmeric.
The companies backed off when consumers complained about the bland colors and taste changes.
Large processed food companies are not off the hook. In 2023, California ratified new laws banning six dyes from being served in the state’s public schools.
Investors face the same dilemma.
Unhealthy investment options are pitched to investors, while simple, cleaner options are widespread.
Here are a few examples:
- Leveraged Stock Positions: Juicing returns with sugary leverage can lead to catastrophic long-term results. Making 3x market gains sounds terrific, but the converse not so much. Food additives work in the same way. Sugar highs never compensate for long-term health. The same goes for your money.
- High-Cost Mutual Funds: Unhealthy additives aren’t clearly labeled or disguised as healthy alternatives. There is a reason common sugar has dozens of different classifications—the same for expensive funds. Corrosive fees hibernate in legalese found in the prospectus. Vague terms make it difficult to measure risk. Mis or improper labeling is a hidden cost no consumer or investor should pay.
- Celebrity Endorsements: Purchasing food based on questionable marketing practices benefits nobody except the peddler. The same applies to investments hawked by overpaid celebrities with enormous conflicts of interest. Promising market-beating returns without adequately disclosing the risks involved is an investment recipe for portfolio carnage. Many food and investment companies provide a lot of sizzle but little steak.
Fluorescent-colored food and over-hyped investments have something in common. Both use distraction as their chief selling point. Staying focused on the ingredients comprising your food and investments is time well spent.
Simple, healthy, low-cost index funds don’t contain damaging additives. Like your diet, neglecting to read the labels on your investment funds seldom ends well.
Food Engineers specialize in enticing children with harmful and addictive foods.
Why would you believe specific financial engineers wouldn’t have the same motivation regarding your hard-earned money?
