Why is it that even financial advisors can't tell you which MUTUAL FUNDS are money makers ?
Question:
Answer:
Even the very best of financial advisors can not predict the future. No one can. Can you?
No one knows what the market will do, there are all kinds of variables that effect the market. Even the best educated advisors are unable to account for everything that can happen that effects businesses and investments. Even fund managers can't do that.
With any investment there is always risk. Such is the world we live in. You do the best you can at the time and that is all you can do.
Businesses that funds invest in are effected by weather, politics, the whims of other investors, employees, costs, supply, demand and numerous other variables. This is why it is important to read over the prospectus before investing in anything. But even under the best circumstances there will always be risk.
Use Morning Star's ratings 5 being great and 1 telling you to pass. Even this rating is basically telling you the most likely senerio although there is a chance of failure. Historically 80% of mutual funds either can't beat or just track the SP 500 over the long haul. BRKA is probably the most famous mutual fund around that keeps beating the SP 500 (but it's around $106,000 a share now, but you can get BRKB which is around $3,500 a share). SPY is an ETF run by a mutual fund company that tracks the SP 500.
Unless your financial advisor is working for a fee they are being paid by commissions. As such they have a vested interest in the funds that you buy and will recommend the ones that will pay the most for them. Thus, they will recommend load funds, which are not the way to go. If you want a prediction, go with Dodge and Cox International Fund.
I can tell you for FREE.
I am a Portfolio Manager.
More Related Questions & Answers...