| A Financial Planner On Retirement Planning With Mutual Funds |
| Articles - Retirement |
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Many investors try to play the game of picking individual stocks rather than picking solid mutual funds and then often wonder why they experience both difficulty and stress making money in the stock market.
Many investors try to play the game of picking individual stocks rather than picking solid mutual funds and then often wonder why they experience both difficulty and stress making money in the stock market. Funds are not just another investment option; they represent the best way for most people to invest in investment securities. When I was a financial planner a prospective client once asked me, "should I invest in stocks, bonds, IRAs, or mutual funds?" That question told me a lot about the lawyer asking it. He needed a financial planner, and also needed access to a good basic guide to investing as well. I explained that mutual funds were the easiest way for the average investor to invest in stocks and bonds, and that this could be done in either an IRA and/or in various other types of accounts, like in a joint account with his spouse. Mutual Funds can also possess much more risk than you thought you were encountering. Here's what I think you should consider doing. First unless you are a real expert, consider buying Index Funds, as opposed to investing in funds that carry a high load, or sales charge associated with them. If you pay a big commission, you simply have less dollars in the investment to work with. Studies show that for most mutual funds, the commission or load simply is not worth it. Don't let a good or even a great salesman talk you into a load fund, unless you have checked for yourself, that the returns over several different periods of time have been outstanding. People who invest in Funds lost 50% of their savings when the market crashed. While many people certainly lost much of their portfolio's value thanks to the recent market crash of 2007-2009, funds actually offer enough different flavors of funds that smart, properly diversified investors would have lost much less than nearly any other type of investor. Between high yield investments, money market funds and specialty asset class funds, investors can find properly diversified investments for any and every need they may have. There is an abundance of selection; one does not need to be limited to domestic stock market-linked investments. Young investors who are just starting with a savings program will find that their friends, family and advisors will almost all have different views about how one should start to invest their money. For some, recommendations will come along the lines of buying real estate that can be flipped or rented out to generate monthly income and long-term capital appreciation. For others, it will mean putting as much money away as possible into a low-paying CD or maybe even mutual funds. Commodities operate in a little different fashion than stocks. Buying a commodity means you actually own something, or in the future you will own something, whether it be so many bushels of corn, pounds of gold, or barrels of oil. You are dealing with real goods, not the performance of a company. Typically, you are buying a contract for a future buy or sell of these goods. And it is a contract you never expect to complete. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Visit: http://financial--advisor.com/FeeBased.aspx or Fee Based Financial Advisors |