Two things I want to explain before I leave this discussion. May take two posts but here goes.
First, if you do invest in the 'stock market' by buying mutual funds you MUST never panic. Things are never as bad as the news media say they are. And you MUST do the opposite on what would be considered common sense actions. I've read people on TBN saying, "oh yeah, I had a 401K but the market dropped and I lost all my money and so I took the penalties and got out of it."
IDIOTS !!!
Sorry but I've had several cups of coffee this morning.
When the market drops and everybody is gloom and doom and everybody had lost all that money (on paper) THAT is the time to tighten your belt and triple how much you are putting in. Or stop taking out as much and keep your shares. Because the market ALWAYS COMES BACK. And when it does come back the more shares you have the more money you will have (on paper). Am I making sense? Buy cheap, sell high! Not buy when everything is going gangbusters and sell when the bottom drops out and everything is cheap.
I bought a thousand shares of PBHG back in the nineties at $60 a share. Stuck way to much money in it because it had doubled in a year or so. Then the bottom dropped out of the tech market. The last I sold brought $6........ So I learned a bitter lesson and watch things a little closer now. Also don't follow fads. I learned to keep a balanced portfolio, spread everything out in different sectors. Even is some which seem to be underperforming at the time. (Have an acquaintance who put everything in silver, he actually did the right thing and held his funds until it came back but boy, was he scared for a while).
Am I making sense?
The lady I talk to at Fidelity did tell me, advise me, that they expected a big correction the last part of 2014, first part of 2015 and if I wanted to buy a big ticket item like a new vehicle to take the money out when shares were high. So I would be selling fewer shares then than later when the market, and share prices, dropped. So I bought a new truck. My old truck was bought new in 1993 and had served me for 21 years but that is another story.
Buy mutual funds, not thru a local advisor but with a large firm that has an online method of keeping up with things. That keeps somebody from taking a cut from your earnings. I do have an advisor that I talk to every three or four months or so but she is not on commission. Said she does get a bonus based on how well her clients do and on surveys her clients fill out. Her advice is more general and not specific. For example she was predicting the 2016 correction for a year or so before it happened. Said it was way overdue and suggested moving things to safer funds. I ignored her advice, more from laziness than intelligence, and came out ahead.
But I need to get back on the message. I want to be in control of my finances! I don't want an advisor who is looking to make a buck off me controlling my finances for the rest of my life. Their first loyalty is to themselves and their families, not to me and mine. If an 'advisor' controls my money it will be placed where THEY get the most reward.
Don't mean to step on anybody's toes with family in the business but that is just fact.
RSKY