Higher Returns and Mutual Funds

When the internet stock craze hit bottom in 2001, many investors burnt by heavy loses, turned away from investing completely. No short or long-term salves for devastated portfolios were in sight. Every estranged investor was sidelined, devastated and humbled. But now it’s time for investors wanting better returns than bank CDs and passbooks, to do some homework and get back in the game. Only this time, take some precautions and wear some protective headgear.

When I was working at Morgan Stanley near the end of 2000 I should have known the market was about to top out. A customer I was talking to over the phone opening an online account raised an ominous red flag. Morgan Stanley at the time was highly promoting their online account which was receiving tremendous media attention. The guy I was talking to was anxious to buy more AOL-pre Time Warner merger. He told me buying AOL was the easiest money he’d ever made. His words were a sure fulfillment of the investment axiom: bulls and bears make money but pigs get slaughtered. About a month later AOL started to decline; if he’d taken his profits he was sitting back smugly, otherwise he ended up like countless other investors waiting for stocks to come back to recoup menacing paper loses.

Waiting for stocks to return would have been one the worst investment strategies ever employed. Not only did untold stocks fail to come back, but many former internet IPOs (Initial Public Offerings) fell by the wayside. Daily, internet IPOs were bouncing faster than bottle caps at spring break. By then, unless you were in some type of hedge fund or positioned with protective put options, these were white knuckle times. Now, with all that in the rear view mirror, if you haven’t already it’s surely time to start taking financial inventory.

Today’s investor needs to be savvier. Today’s investor needs to learn the basics if they want to seek higher returns and still sleep. One of the best ways to increase returns is through Mutual Funds. Today there’s a boat load out there. But don’t let that intimidate you. If you simplify your objectives you can reduce the buffet to the tastiest items. Only two questions need to be asked: Are you looking for growth or income? And, do you want to be conservative, moderate or aggressive in your approach? Conveniently, all Mutual Fund guides monitor the performance of the many sector funds you may be considering.

Once you start learning more about what makes mutual funds tick, not only will your returns increase, but so will your knowledge of how markets work. There’s nothing better than being paid while you learn. And the next time you get taken to a slaughter house it’ll be because you invested in one.

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