Just as there's no reason you can't manage your own portfolio, so there's no shame in seeking professional help in managing it.
How can you tell if you need a hand? Here are some signals:
How can you tell if you need a hand? Here are some signals:
- Big losses. If your portfolio lost more than 40% of its value from the beginning of 2000 through the end of 2002, then you did even worse than the dismal performance of the stock market itself.
It hardly matters whether you blew it by being lazy, reckless, or just unlucky; after such a gaint loss, your portfolio is crying out for help.
- Busted budgets. If your perennially strunggle to make ends meet, have no idea where your money goes, find it impossible to save on a regular schedule, and chronically fail to pay your bills on time, then your finances are outof control.
- Chaotic portfolios. All to many investors thought they were diversified in the late 1990s because they owned 39 "different" Internet stocks, or seven "different" U.S. growth-stock funds.
But that's like thinking that an all-soprano chorus can handle singing "Old Man River" better than a soprano soloist can. No matter how many sopranos you add, that chorus will never be able to nail all those low notes until some baritones join the group.
Likewise, if all your holdings go up and down together, you lack the investing harmony that true diversification brings.
A professional "asset-allocation" plan can help.
An adviser can help you get a grip on your money by designing a comprehensive financial plan that will outline how-and how much-you spend, borrow, save and invest.
- Major changes. If you've become self-employed and need to set up a retirement plan, your aging parents don't have their finances in order, or college for your kids looks unaffordable, an adviser can not only provide peace of mind but help you make genuine improvements in the quality of your life.
What's more, a qualified professional can ensure that you benefit from and comply with the staggering complexity of the tax laws and retirement rules.
- The Intelligent Investor, Benjamin Graham
