If You Want It Done Right............

      Maybe I am just getting grouchy and particular in my old age, but sometimes when I get "help" out in the garden, I am never satisfied with the results. My fellow gardener, who is 15 years older than me, feels the same way when I help him. Everybody has their own ideas about the way things should be done. I feel the same way when it comes to my investments. Nowdays, people have choices about how they go about tending to their nest-egg. One option is to have a "guy" who is supposed to act in your best interest and make you money. The fact is that this guy will make money regardless of whether you do. If you don't have the knowledge to invest yourself, how do you know he is selecting appropriate investments for you? Another option is to buy all mutual funds. Most mutual fund families actually hire an outside firm as advisor to select the investments for the fund. So your actually hiring a company who hires a company who hires some people to manage your money. Another choice is to buy a passive investment which tracks an index like the S&P 500. This can be a mutual fund or an ETF which simply buys the stocks contained within the index. When the market goes up you might make money and when the market goes down you lose. Your only decision is whether you should be in stocks or not. Another mutual fund option is the "fund of funds" portfolio. This is where your advisor sells you a mutual fund that contains other mutual funds, usually within the same family of funds. I believe in diversification but this is simply dilution and usually a losing position. My last option is to just do it yourself. It takes a little conviction and some homework but the rewards can be worth it. Picking your own investments can be profitable in both up and down markets. Selecting undervalued stocks when the overall market is high can limit your risk and provide income when the averages are declining. Knowing when to lighten up on stocks and select alternatives is something passive investing doesn't do. Most mutual funds are required by charter to have a certain level of stocks in their portfolio. I own some mutual funds, ETF's, passive investments, and even have a "guy" or two to lean on but I like the control I have by owning stocks that I selected myself. Tending to my portfolio is a lot like gardening. If you plan your garden carefully, buy good seeds and stock, then keep it weeded, it should produce good yields. Likewise, buy good stocks, monitor their progress, weed-out the losers, and reap the rewards.