Our first financial advisor worked for a large investment firm and did O.K. for my wife and me during the bull market of the 1980s and 90s. Our retirement account (IRA) grew. But among the proprietary products that we bought into were some high-tech mutual funds. We lost a third of our assets in the “tech wreck” of year 2000. With 20/20 hindsight, I felt that I could have done that well on my own.
I opened an on-line brokerage account (e.g. Scottrade, Ameritrade, E*Trade, etc.) Then I subscribed to mutual fund newsletter. For a $150 a year, the investment analyst for that publication recommends at least one mutual fund every month. His reviews are clear and his reasoning supported with statistics and insights. His record for picking low-cost, high gain mutual funds is impressive so far. The reports are well written and even entertaining. Of course I wouldn’t choose an investment advisor based solely on writing style any more than I chose my wife for her great – well, she’s got it all (and she’s a good bookkeeper too).
Through mutual funds you can invest money in just about any market (gold, real estate, stocks and bonds). Some research and due diligence is still required on your part to tailor a selection of funds to your own goals and risks, but the monthly bulletin greatly narrows the field of funds down to the highly rated contenders. This particular newsletter also provides three investment models – conservative, moderate, and aggressive – on which to base your own portfolio. You pick from the regularly reviewed list of funds, and then just push the right buttons on your computer to buy or sell any of them. I keep only about eight or ten funds in my IRA account. I was satisfied with last year’s return and expect another good year although this month’s report has a defensive skew to it – along with some appropriate recommendations. The extra margin of return that a good mutual fund manager can provide over the general market easily pays for a subscription to any worthy newsletter that lists who those people are and which funds they manage.
My wife and I each also contribute to a 401k (any advisor will tell you that an employer match is free money), plus we keep another portfolio of securities with one of the large, reputable investment companies. Our financial advisor there is tax savvy and treats our modest account with the same respect that he pays to his high rollers. But if I could take only a single tack, I would well consider the self-directed route via on-line trading and a good newsletter. It’s a convenient approach that still leaves me with time to write for Helium and earn a few more cents on top of that.