Financial planners?

[Ben]

Anyone here in the business? What do you make of a day like yesterday (11/7)?

I don't know much of that world, but, we get the Wall Street Journal at my course, and I read the Money & Investing section. Its really depressing me these days. I'd recently set up a mutual fund account with a good firm (one of the members at my course is upper management and he helped me out). Anyway, took that huge hit yesterday. Well, I just checked the account and at least I made a baby step forward today. Last night I felt like I was kicked in the chest, then the throat, and then the mouth after I checked it.

[Shindig]

Anyone here in the business? What do you make of a day like yesterday (11/7)?

I'm not in the business, but I don't think you should worry about the short term, even for a day like two days ago. Hopefully, you're investing long term, not to get the money for a vacation in January.

[KIDDEREK]

Financial planners are actually pretty clueless regarding markets. They're salesmen more interested in their bottom line.

Mutual funds are a safe bet (depending on the specifics) that move up and down with the economy. As the above poster said, if you're in for the long run, you should be okay.

[hackerdave]

If you can't take the volatility, you should do the following:
1) Buy only index funds, such as the Vanguard Total Stock Market fund -- these hold essentially the entire market with very low fees
2) ignore the advice of your "financial advisor" and so forth, they are more interested in looting your wealth and generally have no more experience than a used car salesman
3) don't look at your statements every day. Your net worth will go up and down a few percent every day, but if you look at it only once in a while you should notice a general upwards trend. That said, it's possible to see stocks go down 20% over a 1-2 year period.

[alf174]

The portion of my 401K that I allocated to the European market is up 36% this year; takes the sting off the portion affected by the weak dollar.

[Ben]

Hey guys thanks.

Yeah, this is a long-term retirement fund. Just chaps my hyde to watch it fluctuate so much. But, I am ranked at moderately aggressive. So, I get what I deserve. And like you mentioned alf, I've made sure I'm heavy on my world market section.

[chigolf07]

Hey there,

I was a financial advisor until about a half year ago, in which I went more into the trading side, in which I do full-time now.

Kidderek was somewhat right in saying that advisors only carry about their bottom line, which is essentially what about 85% of the people in my line of work do. The other 15% do care about you and your money, but are becoming more scarce nowadays. The business is more and more sales-oriented now, which is partly why I left.

Anyway, you shouldn't be too worried about the market volatility in the past few months. If you're trading on a short-term basis (like I am), then you obviously do need to worry about it. If your outlook is 10, 15, 20+ years out, the market always does better than safer bonds, Treasury bonds, and savings accounts, but of course you have to ride through the volatility. One tip is to only check your accounts monthly at the most, as to avoid the daily flucuations.

My tip to you is to keep dollar-cost-averaging, meaning put new money into the market as you keep saving monthly, weekly, or however often you save.

[Ben]

Thanks chigolf. I like the tip about continually adding money. I haven't done that yet because I have the notion of just letting see what my original deposit will do. Part of why I check the account everyday. As funny as this may sound, it feels like a video game to me. I suppose its the right thing to do though. I've just gotta place in more tournaments I guess...

On side note, how's things in Chicago? I've been there a few times and love the place. I can spend hours on end just walking around downtown. If it weren't so terribly cold there in the winters, I'd definitely consider a move.

[chigolf07]

Thanks chigolf. I like the tip about continually adding money. I haven't done that yet because I have the notion of just letting see what my original deposit will do. Part of why I check the account everyday. As funny as this may sound, it feels like a video game to me. I suppose its the right thing to do though. I've just gotta place in more tournaments I guess...

Just don't get too worried and upset about the short-term movements, because it will drive your life crazy. Chicago's nice. We had a lot of cold weather (in the 30s) last week, but it was nice today (great day for golf) with it being in the 60s and low 70s. Downtown is great, lot of things to do there for both out-of-towners and locals. Winters are a really sucker, especially if you have to drive in the city. Still a nice place though. -Chris

[Ben]

Today hurt! But, as mentioned already, I shouldn't worry about the short-term... However, since last year when I started this thread, the mutual fund I set up is down over $1000.

[Fraser]

I worked in the business and look to get back into it, worked closely with financial/investment planners (the people in the corporate office that do all the hard work) and financial advisors (the people in the branches who schmoosh you).

There are a lot of clueless financial advisors out there just in it for the money. I spoke with many on a daily basis when I worked at one of the largest retail brokerage firms in the country and was shocked to see how dumb people were looking after $150m-$200m of client assets. HOWEVER, there are still a lot of good and smart people out there and when I got my own FA I was at least able to assess whether he was up to snuff or not, and I didn't tell him for some time who I worked for

Mutual funds are a safe bet (depending on the specifics) that move up and down with the economy. As the above poster said, if you're in for the long run, you should be okay.

Hopefully they are safe, but that's what the annual fee is for

Vanguard and Fidelity have a good selection of no load index funds but might take money out in other ways.

Anyone here in the business? What do you make of a day like yesterday (11/7)?

Well the last year +100 pt drops on the ^DJI and similar percentages on the S&P500; have been almost par for the course

If you are in for the long term you've got little to worry about. Look back on charts for how the Dow performed, most recently after 9/11 and you'll see it does come back.

Anyway, you shouldn't be too worried about the market volatility in the past few months. If you're trading on a short-term basis (like I am), then you obviously do need to worry about it. If your outlook is 10, 15, 20+ years out, the market always does better than safer bonds, Treasury bonds, and savings accounts, but of course you have to ride through the volatility. One tip is to only check your accounts monthly at the most, as to avoid the daily flucuations.

DCA is a really good strategy. One of the things I worked in specifically was helping people with large slews of stock options and we always suggested DCA. In addition to that, a few basics:

Diversification - have a mix of asset classes. Some international, some emerging markets, maybe precious metals, some bonds etc. Try to avoid holding more than 3% of any one particular stock. I watched Mad Money last night and woman about to retire called in in a bit of a mess as most of her life savings were in Lehman Bros and AIG and she wanted to know what would be a good strategy! Don't panic sell - I'm watching my life savings dwindle a little each day too but with any luck if you have diversified sufficiently they won't end up worthless. Remember you've never made a loss until you actually sell it I'm only 24 so have plenty of time to recover and flourish, it sounds like you are in the same bucket. My investments were set up for long term performance so I'll give them a few years before judging them!

[Shindig]

Today hurt! But, as mentioned already, I shouldn't worry about the short-term... However, since last year when I started this thread, the mutual fund I set up is down over $1000.

I'm just about to add significantly to my market commitment. I'm getting a raise at school, and I already put aside money into short- and long- term savings. My plan is to stick to my budget from last year and put the difference into an IRA. On top of that, I started a 401(K) at my summer job.

You and I are on the buying side of this. The lower prices help us significantly. The same money I was planning to put in gets me that much more of the index funds. It just helps me to buy low and sell high because the IRA pieces aren't being sold for a good 35 years at the minimum. My apologies if I sound like a jerk to anyone who has been hurt by the big market turn down, especially if you're looking at retirement soon. But there is a huge silver lining in this for me.