Today all eyes are on the economy. Many people have lost money in their retirement accounts, not to mention personal investments because of the stock market losses as well as dramatic losses with respect to mutual funds.
On average people across the country have watched their portfolios drop by about 25%.
At the center of many investments are mutual funds.
What are mutual funds?
Mutual funds are simply funds run by financial managers made up of financial instruments often stocks as well as bonds.
When you look at the fact that most savings accounts don’t yield much in the way of growth it is necessary to get into larger yielding investments. How do you do this without repeating past errors?
Ask questions! There is no such thing as a stupid question.
Remember that you are talking about your money and that you owe no one an explanation.
An up-front broker will welcome questions because they do not want misunderstandings later and further they should be working for you. A broker who acts disturbed by your inquiries should be dropped because they will act the same way when there is a problem and you must have explanations.
What questions should I ask?
Basically the questions you want to ask are the way your money is going to act and process once you let go of it.
For example some questions you might ask would consist of: “Why is this investment good for me?” “How will this investment make money?” How much will management fees cut into the profits?” What happens to this investment during a recession?”
Whether it is a mutual fund or a brokerage firm you always want to know what they are charging you and how they stack up against their competitors.
You always examine the company you are considering doing business with.
How long have they been in business; have they had SEC complaints; who are a couple of their long-term clients and what are their fees are just a few questions that you can use as guidelines.
Always set up a regular and effective system of reporting as well as provable methods of checking how your money is doing. Major problems occur when communication is lost or when financial people put you off instead of giving you answers.
Problems may arise. You have options starting with the agent then moving to the branch manager. Further you can go to the company’s national headquarters.
In the worse case scenario you can inquire of and complain to the Office of Education and Advocacy of the SEC.
They are effective and firms do fear them.
Your money is important and yes, investing can be risky. However you can minimize that risk if you know just some basic rules.
“Ask Questions,” Brochure, Pub. No. 001, Rev. (09-07), SEC