In this day and age there are articles on a daily basis that come out about ponzi schemes, financial fraud, alteration of documents, ridiculous guarantees on investment returns, etc… It is vitally important to understand that the only person that is going to care the most about your portfolio, is the person in the mirror. No one else is going to take the time, the risk assessment, or prudent investing principles on your behalf more than yourself. Now understandably that is not always possible, as we have placed a lot of trust in people with the proper credentials in their respective fields that we expect will act in an ethical and well meaning manner. The problem with human beings and their psychology is these qualities are not predictable to always be in place. There is always a chance for an unexpected behavior to take place when someone else is in control of your finances.
Taking control and getting educated with your own personal finances, whether it’s from long term investing principles, tax strategies, or portfolio risk management the key is to understand the entire financial sector and adapt a strategy tailored to your needs. The technology in the last ten years has really made it realistic and possible for people to gain tremendous amount of knowledge with respect to investing. The affordable new brokerage fees, popularity with Exchange Traded Funds have allowed individual investors to participate in the stock market. Warren Buffet said it in simple terms, all a person has to do is purchase the S&P 500 main ETF index through a low fee broker on a regular basis (bi-weekly or monthly) and they will have better returns than over 90% of portfolio managers while keeping their costs very low with commissions paid and management fees saved not purchasing mutual funds (approximately 2%).
This simplicity is sometimes overshadowed with complex strategies available in today’s market place, from high frequency trading, to option derivatives, the list goes on and on with regards to complexities and new technological advancement for participation in the market place.
Posted in: Trades