June 27, 2011

Don't Throw Your Money Away

Why are you throwing your money away?  What do I mean?  If you are still using a stockbroker or financial advisor, thats exactly what you are doing!

There was a time when access to the stock market was limited and if you wanted to participate, you paid a stockbroker, period.

In 1975, Congress deregulated the stock market by taking away the power the NYSE had to force its members (the brokerage firms) to charge fixed rates.  This opened up the stock market to discount brokerage firms and Charles Schwab was the first.  Fidelity was not far behind.

Still today, some 36 years later, some people assume that if they invest, they must pay a stockbroker or financial advisor basically the same rates they did decades ago.  Wow.

Now with the aid of the Internet for research and access, there is absolutely no reason for anyone to pay someone else to invest on their behalf.

Just remember that a 1% fee on a portfolio of 100k will cost you over 200k over a thirty year span (thats with average growth of 8%).  If you like your stockbroker that much, great, buy him a car !!! (and save yourself a fortune). Better still, hire the person who cares the most about your money - YOU !!! (and save even more).

June 13, 2011

Misleading Investors

Misleading people to get them to buy is as old as the human race.

The investment business is no different.  I remember the early 90's telling people that they needed to buy this particular stock because well, it wasn't microsoft but similar knowing full well that similar is not the same thing but I cashed the check anyway.

I just read a wonderful article on wsj.com stating that a great deal of newsletter writers mislead investors regarding their record by comparing their record to the Dow Jones 30 or the S&P 500 without dividends.  That like me telling you I shot 68 yesterday playing golf which is true except I left out that I played only 15 holes!

Investors need to be very careful about who they allow to handle their money. I personally think the best person for the job is the person who cares the most about your money - YOU!

You can read the Wall Street Journal article here.