Portfolio returns are usually pretty unpredictable. You can never forecast what return you will end up getting. So you should just throw your money anywhere and pray for the best right? Wrong. There are a few variables which the investor has full control over.
* 1st. Portfolio manager selection- If you’re investing in mutual funds you can always read up on the manager and look at his/hers past performance. Look at what stocks he/she buys and sells, what his/her past long term returns were (8+ years), and what the managers philosophy is.
* 2nd. Expense costs-This is one thing that can really make or break your return. If your return for the year was 15%, but you have a 4% expense cost then your return shrinks to 11%. Expense costs are needed because you paying for peoples educated guesses and management fees. Studies have shown that low-expense funds are more likely to outperform more expense funds overtime. So definitely shop around.
* 3rd. Taking on the risk- No risk, no reward, right? Well sometimes risk can just be dumb. I always believe in sticking with the stuff you know. If you want to be in developing markets and extremely high risk ventures, more power to you. I’ll be just fine sticking with the markets I know. For example: My mutual fund portfolio does have an international fund, but always lags behind my other funds. Just because some international markets are doing well for a few years does not mean they will always do great. Overall the S&P has always outperformed international markets long term returns.
More control factors coming up soon. Do you have any that aren’t currently listed?
http://www.usatoday.com/money/perfi/columnist/waggon/2005-08... Go to main site http://www.eFIPO.com for further explanation.
Things You Can Control#1
October 24th, 2006 at 08:24 pm
October 24th, 2006 at 08:51 pm
October 24th, 2006 at 09:09 pm
BTW - I'm assuming you are talking Mutual funds here and not a portfolio manager who is managing your private assets.
October 24th, 2006 at 09:57 pm
2nd Link is provided in article above. *Sorry the links are provided at my main website, and when I copy and paste everything over it doesn’t work*
Like most financial planners, I still recommend putting in about 5-10% to international funds. I know they seem like the hot stocks now, but you know there will be a long and hard cooling off period.
October 24th, 2006 at 10:08 pm
October 25th, 2006 at 03:29 pm
October 25th, 2006 at 04:55 pm