Brokers and Advisors

When it comes to the selection of a broker or investment advisor for personal investments

, many traders became confused. The first thing that a potential investor has to remember is that whoever you chose as your broker will not care about your investments. A broker does not get paid from profit you receive. He or she receives commission from each of your trade if you trade actively on the stock market or he or she makes monthly commissions from a portfolio manager if you are investing in some mutual funds or other pools managed by a portfolio manager.

Now, when you know that any broker does not really care about your portfolio good being you may understand why most of them are very pushing when you came first time to them. They are regular sales persons. The more customers they have the bigger profit they receive (no matter whether their customers are successful in their investments or not). Once I held an investment advisor license. From the name of this license many may assume that the people holding these papers are professional in the analysis of investments, that they know what to buy, when to buy and when to sell. The job of an investment advisor is to sell an investment and they sell whatever their branch manager tells them to sell. And as a rule he or she tells them to sell whatever brings more commissions. Try to think how an investment advisor can analyze stock market if he or she spends all day looking for and talking to the potential customers.

So, when it comes to a selection of a broker or an advisor my preference is to invest by myself. I consider that people are capable by themselves make a better financial choice by simply spending some time on some research and select ion of where to invest. It is not difficult to learn simple investments strategies that are used by professional portfolio managers. If there is still not enough time even for that, than the simple investing in the indexes (S&P 500, DJI, Nasdaq 100, Russell 2000, etc) and their derivatives (QQQQ, SPY, DIA, IWM, etc) could be a simple solution. I have not seen mutual funds that would outperform indexes over long term. There are hedge funds that are doing better, yet they use riskier investment tools.

When you come to the stock market you have to remember that it is your money are on the table. If you trust somebody to make a financial decision instead of you better be confident in what you are doing.

Brokers and Advisors

By: Viktor Ko

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