Friendly Reminder

[dusty]

Dusty you are right that was a over generalization and I agree with you most people are honest. It just seems like I keep finding the dishonest ones.

Like so many other discussions, the good guys tend not to be noticed while the rotten eggs get all the press. Good guys hardly ever toot their own horn. That alone sort of imbalances the scales.

[76winger]

FDIC only insures demand deposits, like checking and savings. Investments are not insured.

Correct, Investment brokers aren't protected by FDIC. They're protected by SPIC. Here's a blurb from my brokers site about it:
<my investment company> are members of the Securities Investor Protection Corporation (SIPC), and brokerage accounts maintained with <my investment company> are protected by SIPC, which protects brokerage accounts of each customer when a brokerage firm is closed due to bankruptcy or other financial difficulties and customer assets are missing from accounts. SIPC protects brokerage accounts of each customer up to $500,000 in securities, including a limit of $250,000 on claims for cash. Money market funds held in a brokerage account are considered securities. For more information on SIPC coverage, please review the brochure “How SIPC Protects You” available for free download at http://www.sipc.org

[76winger]

Isn't this the sort of decision for which one hires a financial manage? Or are we hearing about people who had financial managers who "made more money from themselves" than they made for their clients.

If a person want's to hire a Financial Manager to handle their investments, then they are going to give up varying amounts of their earnings to that financial manager in compensation for his/her management of their money. However I keeping your investment strategy simple and spending just a little time to learn about what your investing in (maybe pay someone a little to help you learn how make wise investment decisions), you can save those fees and invest more.

You basically still get this in Mutual funds, because each fund has a manager who oversees the investment choices of that fund and usually has a team of experts to research and ensure the fund stays invested in such a way as to meet its stated goals. The management fees you see on the prospectus of funds goes to pay this team of managers. You, the investor still need to know enough about the funds to make wise choices on which ones you want to invest in based on past history over the long term, management fees, dividends paid, etc.

[76winger]

When you say mutual funds are you taking of something like Franklin investment fund or are you talking of an annunity when you say the company must deposit enough money each close of business to cover the account balance? I think some annunities are like this but I don't understand mutual funds that well.

For starters here's a list of the 50 largest Mutual Fund companies:
http://genxfinance.com/list-of-50-largest-mutual-fund-companies-ranked-by-assets-for-2008/

In very simple terms think of a mutual fund as a group of people investing in a group of stocks (in the case of stock based mutual funds). For example there are 20 companies that you like and would feel safe investing in each of them. but you aren't financially able to invest in all of them at once. Say 9 other people are in the same situation as you. So now you have 10 people wanting to invest in 20 different companies.

The Mutual fund is created by a financial institution and invests in those 20 companies, in their "20-Company Stock based fund" and then breaks down their fund into 100 shares to sell off.

Now each of the 10 investors can purchase what ever number of shares in that fund are available. Investor 1 may buy 20 shares, Investor 2 may by 5 shares, Investor 3 buys 1 share, Investor 4 gets 10, and so on. In the end, through the Mutual Fund, each investor own a small portion of each of the 20 companies in the "20-Company Stock based fund".

Then as those companies stocks go up in value and pay out dividends, the value of the shares of the mutual fund goes up in value and pays our dividends. They go up and down in value like the underlying stocks, but offer the protection of diversification because if one of the 20 companies do badly or go out of business the fund hurt a little but not wiped out. And the funds managers job is manage the fund in such a way as to minimize the hurting the fund by selling of badly performing stocks and purchase better performing ones to keep the fund on track with its goals.

That's my "simple" explanation of what a mutual fund is. I don't know enough to get highly technical about them, but I know enough to be comfortable investing in them and making my own fund choices, which don't change often because I tried to pick good ones the first time.

I hope helps you understand them little better.
To learn more, just Google "what is a mutual fund" and you'll get more than you want to know!

[letterk]

There are also various levels of help you can recieve. At the one end of the spectrum is do-it-yourself and the other is a financial manager that decides your investments and charges a fee either as a percentage of assets or by selling you funds with load (built-in fees or early withdrawl penalties). Often the wrap fee is 1.5%-2% (plus the fees charges by the funds) of total assets, so when you consider your return is 6%-12% that can eat up a bit qucikly. Compare 6% for 30 year vs 8% and you'll see a big difference.

In the middle is someone like Vanguard how will do a one-time plan for a set fee (or free with enough assets) that reccommends what categories to invest in based on a survey and maybe a phone call. A step up is fee-only finanancial planner that you pay by the hour to give you a plan. And there are probably several other options in the middle too.
How hands on the adviser is can also affect your fee structure. Does the advisor do once a year plans, more frequently or so called day-to-day management?

[frank81]

When you say mutual funds are you taking of something like Franklin investment fund or are you talking of an annunity when you say the company must deposit enough money each close of business to cover the account balance? I think some annunities are like this but I don't understand mutual funds that well.

Anything that has a variable interest rate gets moved to seperate accounts.

Anything with a fixed interest rate stays on deposit in the company's general fund, therefore the company goes under you have some extra risk.

You can buy fixed or variable annuities, so it depends on the product. Variable will always offer a higher return all things held constant, but you bear the risk of market loss rather than the company you are purchasing from.