Jon Stewart spotlight on CNBC is a is a good read . It is so interesting that the experts did not see the market downturn coming. But those who manage your money blame the market that your portfolio is down because the market is down. But when the market is up they take credit for "themselves" and fail to give credit to the market, and the investors are so blind-sighted to notice it because the portfolio manager highlights the returns as his individual capability and not that of the market. For instance, if the market is up 12% and your expert-managed portfolio is 13%, that is one-percent credit to the expert and not 13%.
John Galbraith at the London School of Economics in June 1999 called "The Unfinished Business of the Century" in his speech at the London School of Economics:
"We have far more people selling derivatives, index funds and mutual funds (as we call them) than there is intelligence for the task. I am cautious about prediction; I discovered years ago that my correct predictions are forgotten, the others meticulously remembered. But some things are definite; when you hear it being said that we have entered a new economy of permanent prosperity with prices of financial instruments reflecting that happy fact, you should take cover.
A well diversified mutual fund can weather many storms. It is important to get the right diversification mix of stocks, bonds and cash with expert guidance at the start and then leave things alone unless there is a change in family circumstances. In times of downturns, it is important not to flee the bear but miss the bull? Lots of ordinary investors who hold individual stocks "sell nothing" in the bull market. What they see is their paper gains wiped out during a bear market leaving them with little or no cash to buy in a bear market when 'stocks are on sale." In the case of mutual funds (and if you have a few of them) the portfolio managers does sell and reaps gains for the funds during a bull market or buys on the lows in a bear market. Of course, holding mutual funds means that you have to pay taxes when the funds issues distributions. In my thinking, it is better to pay the tax and recover the gain. The benefit of mutual funds is that you can also put it on auto-pilot. Have your bank send in monthly or quarterly investment payments and reinvest the distributions from the mutual fund.
Most ordinary investors can create their own investment plan with ease. However you can also call 800-547-3332 on business days from 8 a.m to 8 p.m., Eastern time and talk to the financial planning service at Vanguard to get financial planning advice for a modest one-time fee. Once Vanguard establishes your plan you are in full control and can sit back and relax. Other investment companies also may offer similar advice, Fidelity, among others.
Disclaimer:
References to Personal Finance are strictly for "educational purposes" and does not hint or offer any specific financial or tax advice. For financial advice, please seek the advice of a professional if you feel unable to handle your own finances/taxes
If you are looking to invest in India, and looking for financial advisor on personal or online, you can refer to PersonalFN.com
Posted by: Financial Planning Services | June 30, 2010 at 02:07 AM