I am a certified series 36* with Wu-Tang Financial and I urge all of you to diversify yo bonds, n-words *chambers
You're thinking of REITS. RIET is the acronym of my favorite CNBC personality- Ron Insana & his Ex Toupee. I work for a major financial services company and give presentations/seminars on advanced planning topics to financial advisors (and occasionally clients). My time is split between traveling and working internally on strategic initiatives and product development (corporate talk for sitting in meetings and doing nothing).
Sorry, I got you a little off track: Actually, I meant to say that he said I could move my retirement stuff into some of their funds or whatever - just that I would pay a fee or percentage. I respect that as an option. I just don't know that it's the best option for me. The argument made by the index crowd is that hardly anybody beats the market long-term, and paying somebody to try to do it is foolish. Obviously a lot of people in the financial world believe that they can do it, and short term success can give them a lot of empirical evidence to back up their belief. The odds are that a certain percentage of people are going to do that by hard work and luck. I really don't know which crowd to believe. As far as your second point goes - I'm in IT. I'm a programmer, not desktop support, but people would be happy to have me fix their computers for free as well. So financial advisors aren't alone in that boat.
As it happens, my Simple IRA is invested in American Funds. Question: So at what point does an extremely popular fund family have what programmers would call a recursive feedback loop? (It's popular, so a lot of money goes into it and the shares it owns...which increases it's performance, which makes it more popular, and so on) It sounds to me like an extremely popular fund could also be a really bad place to be in a bad bear market.
1. Just because money goes into a fund, does not make the performance better. If this was so, Fidelity Magellan would have been the best performing fund for a long time. It does allow a fund to have scale which can make it less expensive. 2. Being popular does not affect how a fund does in a bear market. You have to look at the underlying holdings. 3. One of the biggest drawbacks of an extremely large fund is its inability to be nimble. For example, let's say Fund X owns Enron. More money flows into the fund and it buys more Enron. Enron starts collapsing and everyone tries to get out. Fund X has a billion shares and has a hard time selling their position. 4. If you have a SIMPLE IRA, you must work for a small company. Whether or not you need a financial advisor is a personal decision. This is my test: If I were a client, I would ask any prospective advisor - Other than just buying an investment, how else can you help me? Will you help me develop a plan? Will you help me with strategies to minimize taxes? Can you help me with estate planning? Are you a financial planner or someone that just does transactions (investments, insurance, etc.)? What do you bring to the table other than just buying a product which I can do myself? Some people have advisors just to hold their hand and convince them not to do something extremely stupid (like market timing) which in itself can be valuable. A financial advisor can offer value in many different ways. What is important to you may not be important to your neighbor and there is no one strategy that is right for everyone - despite what people read on CNN Money or Yahoo Finance or the Motely Fool. A good financial advisor should be knowledgeable, non-judgmental, and sincere in doing what's in the best interest of their clients. If you want to be really sneaky, you can ask them a technical question like, explain Net Unrealized Appreciation.
Riet made a very good post. I would just add, that if you are willing to spend some time to learn a little about stocks and put some energy once in a while, your return will be much better than investing in most mutual funds. I'm not even saying you'll invest smarter or make better choices, but the difference in investing $100k-200k with having to pay commissions and fees vs. not adds up to several million over 30 yrs (after interest and reinvesting profits etc). I would further add, if you do become an independent investor such as myself, do not focus on making profits. Focus on reducing risk.
