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Why I Like My Stockbroker Better Than A Mutual Fund

Sep 21, 2016
by Caroline Miller
broker fees, how safe do youneed to be with your money?, Vanguard Index Mutual Funds, Warren Buffett
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Warren Buffett, the second richest man in America, says  if he dies before his wife, she should  invest her money in Vanguard’s Index Mutual Funds.  That’s a conservative investment that isn’t likely to go far wrong but is it advice for everyone?  A danger exists in being too conservative. In the case of retirees, I understand why they want to  minimize risk.  As Allen Roth, columnist for Money notes, “The thought of flipping a switch and spending down that portfolio is very scary. “  (“Look Beyond High Yields,” by Allen Roth, Money Magazine, September 2016, pg. 38.)   Sticking to stocks in Standard and Poor’s, the Dow or the NASDAQ  keeps money on a par with the market, at least.

stock adviser

Courtesy of stocktwits@stocktwits.com

 Nonetheless, being too conservative gives an investor little chance to get ahead, particularly during a slide when value stocks like GE or Proctor&Gamble sell at bargain basement prices.  To take advantage of fire sales, a person needs a little cash.  Buying low and selling high extends the life of a retirement portfolio.  Dividends alone rarely can do that. 

Having the flexibility to follow turns in the market is a plus in my opinion and that’s why I choose to work with a stockbroker rather than park my money in an index fund.  During the Great Recessions of 2008-9, I didn’t panic when valuations tumbled.  Instead, I took my broker’s suggestion. I bought a few choice stocks.  Doing so left me well positioned when the market recovered.   True, I shell out a premium for investment advice, but I prefer it to making costly mistakes.  My broker isn’t  infallible.  No one is.  Over time, though, he’s earned his fees.   

Two questions are crucial when making retirement plans.   First, where is it safe to put your money?  Second, how safe do you need to be?  To answer the last question, a broker can help.  If he or she is honest and comes with good recommendations, I’d say don’t sweat the fees.  

 

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Contact Caroline at

carolinemiller11@yahoo.com

Portland, Oregon author Caroline Miller had distinguished careers as an educator, union president, elected official and artist/advocate.

Her play, Woman on the Scarlet Beast, was performed at the Post5 Theatre, Portland, OR, January/February 2015

Caroline published a serialized novelette, Marie Eau-Claire, on the website, The Colored Lens.  She also published the story Gustav Pavel,  a parable about ordinary lives, choice and alternate potential, on the website Fixional.co.

Caroline has published four novels

  • Ballet Noir
  • Trompe l’Oeil
  • Gothic Spring
  • Heart Land

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