If you are like many individuals looking to increase the value of your money in an economy where financial institutions pay only two percent on a savings account, but do not know where to invest your money please read further. I have been in the work force for many years but other than mutual funds, government bonds, investment certificates and other products available through my local bank manager or investment councilor at the same bank had no real investment knowledge.
Like many of us I have had the hot tip from a business colleague and bought stock to make a million only to see it crash and was out a few thousand, instead of on the way to easy street. I told everyone on my office floor about the stock and they purchased the warrants, even the vice president of marketing wanted to know what to do with them after a month. This is not the proper way to increase your worth through unknown commodities.
I then decided to contact a bank investment advisor at my branch, after consultation purchased an income mutual fund that had been a very good producer for 5 years but made me nothing. To be honest the market dropped and through no fault of the advisor I lost money. Not to complain about these branch individuals as they provide good information, but they really only sell products recommended by their financial institutions and in most cases are not privy to long term investment strategy other than what they receive from head office. Most banks are tied in with large brokerage houses but it does not benefit them to refer you in many cases because they lose the commission or bonus on your investments.
I was advertising a service in a local church bulletin and got a call from a parishioner who did not want my service but wanted to sell me his as an Investment Advisor. Being from a large brokerage I was skeptical but practiced the just say no before going to a meeting with him. Once at a meeting I was thoroughly educated in the various products including stocks, exchange traded funds, managed accounts, and research related websites out on the market that I was unaware of being a novice investor and not in receipt of this information from my bank. I was also made aware of the levels of investment risk associated with various products and although realized the stock market was volatile, I discovered that there were many opportunities that had a good upside and little downside. Afterwards I changed my investment strategies to include many of the ideas that were given to me through the meeting. I also discovered by using an investment advisor from a large brokerage firm that the commissions I paid over the course of a year were directly in line with what I was paying my bank to invest money in an income producing mutual fund. I had no idea that I was paying commission on the product to the bank because I was told there was no commission on any monies withdrawn. The fee was actually embedded in the expenses of the fund and came off the bottom line.
Being a novice I was unaware and should have asked if there were any fees associated with the bank product. The other item of importance which I believe is related to the stock market downturn is that brokerage firms have you sign off on all investments where risk is a factor a change to previous policies.
I am not recommending any stocks or institutions, but being a new investor and there are millions of us out there in all working age brackets, it benefits you to get advice from an independent brokerage house. If they do not provide you with the education to make a qualified decision regarding any amount of money you might want to invest, then say no to any suggestions. However, over the long term, getting the right advice can save you both time and money. After all, even if you have a degree in business, or watch business television regularly, it is difficult to rival a full time investment professionals knowledge when coupled with independent in-house research.