Birgit Kuester January 20, 2020 Mutual Fund
Always review the experience and performance of the fund`s managers. When you buy a mutual fund, you are actually investing in the experience, skill, and savvy that the manager brings to the table. When the manager leaves, the fund performance generally goes with him. How many years has the manager been leading the fund? The longer (if generating strong results), the better. And keep an eye out for the gurus. The industry`s better managers are well-respected, high-regarded, and often quoted in the press. You will find multiple articles and even manager profiles published in the popular financial magazines and newspapers.
The four-letter word that no business can live with out and is referred to as the lifeblood of any business is CASH. Accordingly, the individual investor is better served when they think like a business and create cash flows to deploy with leverage into arbitrages. What did he just say? If these terms are foreign to you and you claim to be an investor you better go look them up because they are as old as salt in the financial world and are the best investment advice three self-made billionaires on Forbes 400 ever heard. If you do not know how to enlist cash flow, arbitrage and leverage into your investment plan then seek out a firm that does before it is too late.
Seek consistency Evaluate a mutual fund`s performance beyond just the recent year. Any fund can get lucky, but it`s the rare firm that prove themselves year after year. Examining a fund`s long term performance can answer the question of consistency. If the performance was good, was it repeatable due to skill - or merely a spike due to dumb luck?
Index funds provide a static and very transparent investment portfolio. They also offer very low turnover of securities due to less buying and selling. This allows them to keep operating expenses at a minimum and usually substantially lower than their managed counterparts. The fact that they represent the entire stock or bond holdings of the index provides great diversification, which can also be a disadvantage.
However, having real property as an investment does not mean you do not manage it. What do I mean? You have to be responsible and manage your equity that your home accrues and if you have investment properties, you have to manage those properties like an investment portfolio with precision planning so that it does not create a negative cash flow because cash is king. In the business world, businesses that fail to manage their cash flow properly often fail to survive. Similarly, where individuals or families fail to manage their cash flows properly they end up in the same place, bankruptcy court.
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