Advice For The DIY Investor
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by: MattCBA
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If you are a do-it-yourself investor and are using mutual funds, how could you do it better? Look at lower-cost alternatives to mutual funds, and use ETFs (exchange traded funds).
You could go from trading mutual funds to investing in individual stocks. I’ve known folks (but they are rare) that have done just fine getting in and out of stocks over time and taking a long-term view of the market.
Unfortunately, I’ve seen way too many folks trading stocks with results far below an index like the S&P 500, the NASDAQ or the Dow.
Expertise is the first roadblock to trading stocks. The second? It takes a ton of time. You’ve got to stay on top of the research. You’ve got to stay on top of the trends.
Of course, if you are going to buy-and-hold, you could argue that there’s no time involved in that. And sure, if you don’t mind being on a roller coaster ride once in a while, you can sit there and not worry about it and tell yourself, “Hey I bought this blue chip, and it’s going to do fine in the long-haul.” I’m pretty sure Enron was a blue chip at one time – and we all know what happened there. Which is why you need to stay on top of things.
The last roadblock to trading stocks (vs. mutual funds or ETFs) is…more volatility!
One stock vs. a basket of stocks, is going to be much more volatile. And that means a roller coaster ride. And for the most part, I don’t know a whole lot of folks that are comfortable not paying attention to how much money they have or how much risk is involved.
So what’s another, less stressful alternative? Hire a professional to handle it for you. One that uses low cost investments, like ETFs, as opposed to high cost mutual funds. A professional has the expertise you don’t, the time you don’t, and can keep you from being a victim of your own emotions, keeping you off the roller coaster and on the path to steady growth.
http://www.BrianFricke.com
About the Author
About Brian L. Fricke, CFP®: Brian Fricke is the Author of “Worry Free Retirement, Do What You Want, When you Want, Where You Want”. For the last 6 years in a row Brian and his company – Financial Management Concepts – have been named one of America’s Top Wealth Managers. Orlando Business Journal has named his firm one of the top financial planning companies in Central Florida. Financial Advisor magazine – an industry trade journal- has recognized him as one of the leading financial planning firms in America. If you’ve been in Central Florida over 10 years, you may have heard him on the radio. He used to host his own show on WDBO radio. He’s also served on the City of Winter Springs Board of Trustees Pension Fund. Brian is a Certified Financial Planner. His firm – Financial Management Concepts – is a Fee Only Financial Planning firm. They currently manage over $98 million of investment assets for a select community of clients. Brian and his team have worked with retirees and pre-retirees from companies like AT&T, Sprint, Harris, Lockheed Martin and Siemens/Westinghouse. For more information, please visit http://www.BrianFricke.com
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