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Here is a funny story for you about day trading.  (Day trading - buying and selling stocks very quickly...not holding them for a long period time.):  I was told about a contest that was once held among 10 highly trained stock brokers.  They were all given $50,000 and told to use day trading techniques over the next year and when that time was up, they would allow the brokers to keep any money they made above the original $50,000 that was given to them.  Remember that these 10 people were the best brokers out there.  Anyways, after the year was up, there was only one broker that was up money.  The other 9 had less than what they started with.  The moral of this story is that if 90% of the best professional brokers can't day-trade, don't think you will be able to time the market better.

Advice 1: Don't think you are going to time the market right.  You don't necessarily have to by a stock and hold it for life.  But, buying stocks and selling them quickly will most likely lead to you losing money.  There are also tax advantages to holding on to stocks for certain periods of time. (another day and another article)

 (July 19th, 2009) Advice 2: You ARE smart enough to run your own retirement account.  You found this site and information didn't you?  I even give you free stock picks.  I always get disgusted when I here about the money people pay so called professionals for services which are unneeded in today's times.  It is very easy to set up brokerage accounts online.  It literally takes 5 minutes to set up and fund an account.  Don't pay someone $300 to $1,000 to tell you where to put your money and that you need a ton of unneeded insurance.  Their job is to up-sell you things so the company makes money.  They then put you into a mutual fund that is most likely managed by them, thus making more money off of you.  (Check your funds and you might be surprised)  Then on top of all that, they charge you a management fee for that portfolio.  This is usually around 1-2%.  So, if you have $100,000 in an account, then you need to recoup that $1000 to $2000 that the fund manager takes out every year.  For example you make 10% over 5 years and have this happen: (Year 1  after the 10% gain = $110,000 - $2,200 fund management fee...you will not see it, but it is there...leaving $107,800)   (Year 2 after gain and fees = $118,580 - $2,370 = $116,210) (Year 3 $127,831 - $2,556 = $125,275) (Year 4 $137,802 - $2,756 = $135,046) (Year 5 $148,550 - $2,971 = $145,579) 

This fund will advertise a 10% return but that is not what you actually earn.  After 5 years, you have a respectable $145,579 from an initial investment of $100,000.  But you can easily match up portfolios by yourself at home.  The next figure shows what this is worth to you for doing your own investments.

(Year 1 = $110,000 and no fees taken out!) (Year 2 = $121,000) (Year 3 = $133,100) (Year 4 = $146,410) (Year 5 = $161,051)

The above situation is investment in the same exact stocks by yourself without have a "professional fund manager" take care of your money.  Your portfolio after 5 years is now worth $161,051 compared to $145,579.  Is it worth you giving someone $15,472 just to watch your money?  And I don't want to take this situation out to 20-30 years, because it would be in the six figures. 

So next time you run into a financial advisor and you see them drive away in a brand new Jaguar to their million dollar home, know that there is something you can do about it.  Invest your money by yourself!

I will be back to write some more advice in a little bit.

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