An awful lot of hot air has been blowing lately about trust and believability. Now that it?s the morning-after, maybe we can recover from all the campaign ads and go back to pondering the usual scoundrels. I have the secret to success, however, at least when it comes to investment safety. Follow these principals and you?ll avoid most of the ways you can be skinned alive.
- If it sounds too good to be true, IT IS. Not like I haven?t said this before, but look beneath the hood of any scam, and you?ll find our own personal greed has something to do with it. No, we?re not smarter or cleverer or luckier than the next guy and that nice man isn?t keying you in on a privileged deal?not a legal one, anyway. If you are truly in on an insider deal, well, I hope your mug shot looks good on the front page of the Wall Street Journal. But for most of us, guaranteed returns better than the return of the specific market are a sure sign you?re talking to a crook?unless it?s a federally-insured savings account, and you?re not going to make any money at all on that one. Ask investors in David Lerner (or many other) non-traded REITs?you can?t get an 8% return in this market without getting more than a whiff of fish.
- Just because he?s nice doesn?t mean he?s honest. If you?re selling some crap, especially something that?s hard for the consumer to evaluate, you?d better be nice or you?ll be eating cat food. But there are some professions where ?nice? doesn?t count as much as an honest answer and advice based on expertise: doctors, attorneys, accountants, and financial advisors. Get a Lab if you want nice. Similarly, just because he belongs to your church, or says he loves older people, or graduated from an Ivy League school doesn?t mean he?s honest or competent. In fact, that?s one of the best ways to scam people with their guard down.
- Understand what you?re buying. If you don?t know how it will make money, what will cause it to go up or down, and why you should include it in your portfolio, don?t buy it. You don?t know what you?re doing, and probably neither does the ?advisor? if they can?t explain it to you. And why is he selling it to you? Is there a monthly bonus contest going on?
- Know what it costs you. You have to pay for advice?no one works for free. If you get ?free? info off the internet, you?ve probably just gotten either a)something worth what you paid for it or 2)good background but not specific enough for your personal situation. If you just went to a ?free? lunch at Maggiano?s and the nice young man told you that they were fee-based and didn?t generally collect commissions, you are about to pay four or five $$?figures for that lunch. Any reputable fee-only advisor can tell you exactly what you?re going to be paying, whether hourly or based on assets-under-management fees. Know how someone gets paid and you?ll know where their interest lies. Management fees and fees on retirement plans can be jaw droppers once you find out how high they really are.
- Educate yourself. Read more than the sports section or the movie reviews. Every day, every newspaper, magazine, and a myriad of financial websites run articles on annuities, asset allocation, target funds, emergency funds, and on and on. Force yourself to read at least one article a day. Jeez, just read this blog! You can eat the elephant one bite at a time?you don?t have to know everything instantly, but over time you?ll find you?ve begun to get a grip on even the most complex issues (I nominate annuities for that title).
- Don?t leave it all up to your spouse. Two heads are better than one, and after years of ignorance it?s very hard if you suddenly have to go it alone.
Follow these principles and Bernie Madoff wouldn?t have been padding around in custom embroidered velvet slippers. My clients wouldn?t be bringing me portfolios full of A, B, and C shares, IRA accounts with 29 different mutual funds, 57 varieties of annuities, and life insurance they didn?t need at 3x the cost of term. With decent planning and a healthy dose of skepticism, they?d enjoy far greater prosperity and some peace.
Source: http://www.figuide.com/investing-who-can-you-trust.html
marian hossa philip humber red sox white sox chuck colson ufc 145 results orrin hatch
No comments:
Post a Comment