Is the key to investment profits picking investment advisors or, perhaps, knowing which to avoid? If you are picking investment advisors because you are looking for investing tips, remember that the most successful investors commonly do their own fundamental analysis. Put this advice in the “no free lunch” category. Picking investment advisors should be done to gain good investment advice and should never be done without maintaining oversight and control of an investment portfolio. In addition, the best, and most impartial, investment advisors are those who are not selling a product such as a mutual fund or their own hedge fund. That having been said, if you already have a stock broker whose advice you trust don’t go picking investment advisors whose only function will be to add to the commissions that your broker charges for making the same investments in the same investment vehicles over and over again.
What Comes Before Picking Investment Advisors?
If you are going to invest start by paying off credit card debt, buying your own home, and funding your IRA and or 401 K to the maximum. Then consider the amount of risk that you are willing to take in order to reach for a better rate of return than a bank account or US Treasury bills. Then consider your time horizon. If you are in your 20’s think of investments that will grow and compound over the years. If you are in your 50’s think of investments that will still be there in your retirement years. Diversification is important in investing. That includes buying your own home, having money in the bank for six months of income, and a mixture of aggressive and conservative investments. Now that you have decided the general direction that you want to go, comes the task of picking investment advisors.
Picking Investment Advisors and Then What?
If you have come into some money and think that you should do more than just put it in the bank you are on the right track. But, learning how to invest comes before making big investments. The odds are that you will not lose out on a lot of investment income if you do, in fact, bank your money while you think about what you want to do. Some time back we wrote about how to invest 10 000 dollars. Let us take the same tack and think about common stocks. A good investment advisor should be able to help you pick a reasonable mix of aggressive and conservative stocks, corporate bonds, junk bonds, penny stocks, and big cap stocks to balance a portfolio. Don’t rely on an investment advisor to do all of the work. Learn about investing. Follow the market, especially regarding stocks in sectors about which you have unique knowledge. And, expect to see positive results from picking investment advisors. If you don’t see good results put your money back in the bank and begin picking investment advisors again. The point is that an investment advisor is not there to teach you the rudiments of investing. He or she is there to track the market, know fundamentals, and put you in long term profitable investments.