What do I think about Financial Advisors/Planners/Brokers, mutual funds, portfolio managers, etc?
My primary source of income is my engineering career and as everybody else, I work hard to earn it. So why not work hard to use my hard earned money to invest it the way I want, the way I like, and not get biased by somebody else. I know what is important to me and what has relevance to me. I fail to understand how can an outside advisor tell me what is good for me. The whole investment industry works on fees and commissions, and hence the likelihood of swaying away from your own investment goals is very high. Additionally, the historic data seems to suggest that majority of the mutual funds (or portfolio managers) are not able to beat the general market indexes. So why should I pay fees, commissions, loads, etc. for this under performance. Why I shouldn’t just buy the low cost index fund? I read an article sometime back (forget to bookmark it) that one investor had significant reduction in value of its mutual fund holdings, but had to pay short term capital gains tax. While devil is in the details, but I thought that was little contradictory to me. To me, if one charges a fee for the service, I expect some level of quality behind that service. Perhaps financial advisory/planning/brokerage is the only industry, which does not stand behind its product (or service). Would you buy anything when the service provider or seller tells you upfront, that he cannot stand by it or held accountable because of such and such risks? Sorry, I don’t buy such products. Continue reading rest of this article…
Reflecting on My Investment Year 2008
Reflecting back on Year 2008, I think it will go down in history as a very significant turning point in the global economy. I also think that, due to events in Year 2008, other developed economies and emerging economics will evolve in different way. By different way I mean with reference to how it interacts with US economy. For the last few decades US economy was the engine of growth for global economy. US economy with its ingenuity, entrepreneurial business environment, innovative mindset, institutions, and rule of law was the global consumer. The other economies were happy being the supplier. Moving forward, this status will be challenged depending upon how US policy makers deal with the aftermath of events in 2008. While US business environment is still very much entrepreneurial, it remains to be seen how it will adapt to the new economic environment. History shows it has always adapted. Time will tell if it does this time also? By no means I am professing dooms day scenario, all I am saying is things will be different than what/how it used to be. How different, I do not know. Continue reading rest of this article…