Archive for April, 2009

Does The Right Advice Make You Money?

Published April 20, 2009 Finance , Financial advice , Money management Leave a Comment

By Douglas Goldstein, CFP®

Consider the difference between advertising and advice: An advertiser wants you to buy his product, regardless of whether it’s correct for you; an adviser tries to give you suggestions customized to your situation. Unfortunately, the two often get confused.

Losing Money with the Wrong Investment

Many people are becoming more and more aware of the fact that investments can, and sometimes do, lose money. This doesn’t mean that the investment is necessarily bad; it may just mean that the sector of the market in which it’s involved isn’t doing well. If you buy a mutual fund whose stated goal is to own stocks, and the stock market goes down, then it’s to be expected that the value of the portfolio will drop. This drop in value doesn’t necessarily make it a bad fund. On the other hand, if you have put all of your money into the fund but your financial plan doesn’t call for this particular type of asset allocation, then you could consider the fund a bad investment – for you.

Buying the Wrong Fund

If you see an ad for a fund that had a great month or year, then you need to be careful. The fund companies should write on their promotional materials that “past performance is no guarantee of future returns.” Why do they write that? It’s because it’s true. Just because they may have had a good run, that doesn’t mean they’ll repeat it. Those ads are a sign of a marketing person at the fund trying to attract your attention. Instead, speak to your adviser and/or look a lot more closely at the mutual fund. You need to consider the risk/reward ratio and how that fund fits in with your overall plan before buying it.

It’s never easy to choose investments, and just because something comes with a flashy title or attractive picture, that doesn’t mean that it’s right for you. Go to the “education” tab at www.profile-financial.com to learn more about financial planning and what advisers can and should do for you.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.

When Should You Adjust Your Portfolio?

Published April 20, 2009 Finance , Financial advice , Money management , aliya Leave a Comment

By Douglas Goldstein, CFP®

The recent market drop has done more than shrink many investors’ portfolio values. It has also shifted the asset allocation balance inside individual portfolios.

Asset allocation may contribute more to your portfolio’s well being than choosing an individual stock or timing the market, so maintaining a correct allocation becomes even more important during turbulent market periods. Proper asset allocation means the most effective division of your capital among stocks, bonds, cash and real estate and making the right changes based on your age, risk tolerance and goals. What might have been a suitable asset allocation five years ago may no longer be the most advantageous way for you to divide your assets now. Furthermore, many investors are nervous about keeping money in stocks, even if that’s the place where they have determined they should allocate some of their funds.

What Should You Do?
Adjusting your portfolio for today’s market doesn’t necessarily mean selling out and keeping everything in cash. There is a fine balance between an investor’s current risk tolerance and future comfort level. Meeting with a qualified financial adviser can help you establish your risk level and establish a proper asset allocation. If you haven’t reviewed your portfolio in the past half-year, now is time to scrutinize your holdings, and if need be, promptly implement any changes.

Updating your asset allocation often means selling stocks and/or making purchases. While “buy low, sell high” may be tried and true fiscal advice, you aren’t alone if it’s difficult to “bite the bullet” and invest in a depressed market. On the other hand, some hold onto their losers in hopes of regaining their losses. Others don’t want to sell stocks at a loss because it’s an admission that they made a mistake.

While losing money is never pleasant, it’s important not to dwell on the past, but prepare for the future. Decide what your ideal asset allocation is now, and adjust your portfolio accordingly. Aim to own a portfolio of assets that have the potential for solid gains. And, when market conditions or your goals change, make sure to adjust your asset allocation accordingly.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.