Forex Digest

A DEGREE IN RISK MANAGEMENT WILL MAKE YOU A BETTER CANIDATE...

2009-04-16 22:34:46 by thedynasty09

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I don't have a lot of understanding of how it all works out, but I've heard since I was in middle school that I should invest. There's mutual funds and there's buying stocks from companies. I know what the difference between stock and bonds are, I just want to know what is the best way to invest? It would seem that mutual funds are the way to go, since they're investments in different companies, but there have to be some cons.

A stock broker will charge you commission on trades, which may be several percentage points of what you invest. The commission fees generally make this an unacceptable option when you are investing small amounts of money. You have to remember with a stock broker that the broker doesn't make money unless he's making trades for your account (unless there is a fee arrangement of some sort). For small amounts of money, mutual funds are probably more reasonable. The pros of mutual funds is that they are a generally low-cost way to invest across several different companies, and there are professional investors who get paid well to make good investment decisions. The cons to mutual funds is that they also charge high fees, generally 1-2% and often have really high turnover which can leave you with a hefty tax bill. Further, it is proven that professional investors rarely beat the stock indices (S&P 500, Russell 2000, etc) over the long term. My best advice for you would be to explore low cost ETF (Exchange Traded Funds) products that would give you exposure to the market. Vanguard is well known for a very low cost fund that tracks the S&P 500, which is roughly the largest 500 stocks by market capitalizaiton. There are also funds that track bond indices, like the Lehman Aggregate index, but assuming that you are younger, you don't really need to have much exposure to bonds right now. If you can't invest directly with Vanguard or a similar firm that offers low-cost exposure to the market, then you could open an account with a low-fee online broker like Etrade or Ameritrade and then buy broad market ETFs that track something like the S&P 500, etc. You would also want to consider putting about 10% of your portfolio (assuming again that you are young) in international stocks, which could also be accomplished through low-cost ETFs.
This probably sounds kind of confusing, but the key point here is that stock brokers and mutual fund companies charge high fees and rarely beat the broad market indices. If you are being charged 2%, then your fund needs to return 2% more than the market for you to come out ahead. That's much easier said than done.

2006-11-16 20:21:01 by Daniel C

I have an account with Edward Jones and the broker there will not email me anything. I travel a lot and in many cases I am not available to talk by phone and miss opportunities to buy bonds because the broker will not email me a Prospectus. This is the same on Mutual Fund recommendations. I am told they call only talk on the phone or in person. Why is this?

The rules and regulations states that the prospectus must be physically delivered to all potential investors, e-mail is not considered being physically delivered (Per the Securities & Exchange Commission).
E-mail is not considered secured, therefore it can not be done. These rules & regs have been tested and they stand up - no e-mail.

If you have been buying new issues through any B/D, is it really imperative that you read the prospectus in that great of detail, especially if you're buying from a reputable B/D and buying bonds in a major corporation or a bond with a very high rating or even insured.

You could have the B/D mail the prospectus to you're home address or business address and when you get the chance, read it. But take a few minutes and make the phone call to your broker

It is also a rule that the office manager of all B/D must read and appove all correspondence sent by any and all employes, using e-mail is not managable by managers therefore most reputable firms do not permit sales reps communicating with clients by e-mail.

Edward Jones is a very respected firm, and they should be admired for complying with the rules & regulations rather than trying to placate a customer.


Effandt's response was not that bad and it was much better than
Gompy US's whose response is off the wall.

2008-08-11 05:38:29 by Darrel M

I am looking in to becoming a financial advisor. I am trying to calculate a potential payout. I know it varies significantly by firm depending on payout levels etc. I also know if varies depending on type of investment (stock, bond, mutual fund, annuity, etc).

However, how much PRODUCTION would you expect to make by bringing in a new $1 Million client? (I can then calculate actual payout based on that production level). I am guessing that the average production level of $1 million is somewhere around 1-5%, but would like a more accurate estimate. Thanks!

Wow even in the independant firms you would never ever get anywhere near 5%! If you brought in a million dollars, and invested them in a variety of different products, that million dollars will likely resulted in a gross commission of 1% (and that's generous, its actually closer to 70bps). So that million dollars results in 10,000 in annual gross production. Of that 10,000 you can expect to bring in anywhere from 35%-90%(depending on the type of firm you work for). So anywhere from 3500 to 9000 for every million. But keep in mind starting out you'll likely start on the low end of that payout scale. My point to survive in the industry you need to have a significant amount of assets under management to even make decent cash!

Also to correct the above poster, you would not recieve any bonus for any performance above benchmark, that would be if you a research analyst or a portfolio manager. A financial advisor doesn't recieve anything like that, as a matter of fact the SEC Rule 205-3 under the Investment Advisor Act of 1940 does not permit sharing in your accounts profits unless you meet very specific exceptions, and a financial advisor does not typically qualify for any of the exceptions. The only thing good performance helps with is increasing the assets under management to make your 1% off of. The only area where you could recieve a performance fee is in the hedge fund industry, and some institutional portfolio managers.

So if your goal is to make $50k a year you would have to have to have somewhere between $20-$50 million is AUM depending on your payout.

2008-02-25 14:46:04 by keyblast1

From the looks of things, I have narrowed things down to Etrade and Scottrade. Looking for advice from other educated investors.

I do not need an actual broker or advisor for any of my transactions. I am my own advisor. I'm educated in finance and am ready to diversify and reallocate my capital.

I am looking at possible account balences from anywhere between 5,000-20,000.

I am only looking to buy stocks (no bonds or mutual funds) as I am 21 and am seeking growth instead of value.

As for account fees:
-I am looking for very low transaction fees.
-I do not want maintenance fees or inactivity fees.
-I would prefer a broker with normal bank balences so that my idling non invested money doesn't sit and not earn anything. I wasn't sure if Scottrade had that or not.
-I do not want fees due to number of shares/transaction.
-I am also looking internationally and would like little if any international exchange fees.

Any advice will be appreciated!

This site will provide all the information you are looking for.

http://www.picktherightbroker.blogspot.c om

There are many good options. My favorite is TradeKing for several reasons, but there are a variety of excellent discount brokers. Zecco, Just2trade, and Sogotrade are a few other viable options. All of them are detailed further on the site. Good luck!

2008-05-09 15:49:11 by pain taker