| As a financial planner I was asked that question | | | | If I were to answer the above question with a |
| quite often. It was often phrased more like, "do | | | | simple two-word answer, 98% of the time the |
| you recommend that I invest in stocks, or bonds, | | | | answer would be "mutual funds." Let me explain |
| or would mutual funds be better investments for | | | | why. |
| me?" | | | | The vast majority of investors should invest in |
| As a salesperson that gave me a good (and | | | | both stocks and bonds. In what ratio will depend |
| honest) lead in, and the opportunity to tell new | | | | on individual circumstances. The problem is that if |
| clients how I work with people and what it is that | | | | you need to ask this question, odds are that you |
| I do. I would explain that my first job was to get | | | | lack the knowledge and experience needed to |
| to know my clients and their financial goals. My | | | | select individual investment issues and manage a |
| second job was to then make investment | | | | portfolio of securities. |
| recommendations and offer financial products to | | | | ENTER, MUTUAL FUNDS. These investor |
| them that are appropriate to their specific | | | | packages are not an alternative to the other two |
| circumstances. | | | | investments, but rather a way to invest in them |
| In order to determine which investment(s) is best | | | | with professional money managers making all of |
| for you, it is necessary to first have your financial | | | | the investment decisions for you. |
| needs and objectives clearly in mind. Then, you | | | | My suggestion is this. First, get a good sound |
| can find investments that fit you. | | | | understanding of stocks and bonds. Then, invest in |
| This is difficult for most folks to do without | | | | mutual funds that invest in these securities. You |
| professional help, since many of them don't know | | | | won't necessarily beat the stock market in this |
| stocks from bonds from mutual funds. They tend | | | | manner, but with a little effort you should end up |
| to view these as three totally different and unique | | | | with a well balanced investment portfolio. |
| investment options, which is not the case. | | | | |