The Online Investing AI Blog

After watching those financial shows and listening to a few financial “advisors”, I have come to the conclusion that they don’t really know what they are talking about. Yes, it’s true that the words are pieced together to creates some meaning, but there is no value.

Here’s a clip from Stock Watch.

Most of the time, they say something like, “If this happens, then that will happen.” And I think, “OK, that’s nice. But it doesn’t really help me.”

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Internet, Investing, Money advisors, experts, Investing, Money, mutual funds, video

After reading this great post at Early Retirement Extreme, I was reminded about the low quality of financial advice that most people accept. Not only do they accept it, but they actually pay for it!

Mutual fund companies make billions of dollars from unsophisticated and naive investors who buy mutual funds and hold them. What most of these would-be investors don’t realize is that each year the mutual fund managers take some of the money for themselves. It seems like a small amount, only about one percent.

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Internet, Investing, Money, Success advisors, buy, hold, Investing, Money, mutual funds, retirement, stocks, Success

After reading this post over at Monevator, I considered buying shares myself. I don’t really think the time is right for me, but there were several interesting points I got from the post.

The first point is that often when everyone else is selling, it might be a good time to buy. Just looking at the US markets after the massive selloff at the end of 2008 makes me wish I had bough stock then. Although there is no guarantee that the market will recover right away, there is a good chance that it will if the problem that caused the selloff is short lived.

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Investing, Money, Success, US Economy advisors, Investing, markets, retirement, Success

This is Top Investing Mistake #16. For the other 15, see below.

Top Investing Mistake #16: Not Taking Responsibility

Have you ever heard someone say the following?

My accountant handles that.

The idea of letting someone else manage a complicated part of our lives is not new. We often use experts in the fields of finance, taxes and health. When we are sick, we go to a doctor. At tax time, we let the tax preparer do the work. And for investing, many people rely on their financial advisor.

Getting great expert advice in these fields is a great idea. But it carries with it a certain danger.

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Investing, Money, Success advisors, experts, Investing, Money, social security

The Financial Industry has been hit hard in the past few months, rocked by scandals and poor performance.

I don’t want to be another person jumping on the pile, but it’s become clear, just like Dorothy, the Tin Man, the Cowardly Lion, and the Scarecrow, we’ve been granted an opportunity to look behind the screen to see that these Financial Wizards aren’t nearly as impressive as we once thought.

In fact, they look a lot like you and me.

So, how did we come to believe that certain people could master the market and control our financial world better than us? Simple, like our Oz invaders, we were impressed by the smoke, mirrors, and theatrics of these wizards. We were so impressed that we were led to believe things about them (and us!) that weren’t true.

And the financial industry, which employs most of these Financial Wizards, created a mystique with lies, half-truths, and complexity. These lies are used to promote a victim mentality that allows these wizards to become the sole masters of one’s investment portfolio and, therefore, one’s financial destiny.

We’ll take a look at these lies this week and uncover how you can take an active role in determining your financial future.

Here are the seven lies financial Wizards want investors and traders, like you, to believe.

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Business Strategy, Investing, Money, Online Investing AI advisers, advisors, brokers, finances, financial industry, lies, stock market

For many people, investing means choosing what to do with their 401(k) or IRA accounts. When it’s time to make a choice, a would-be adviser chooses some mutual funds to invest in. This is the most common method of investing in America. And it’s also one of the worst.

One of the main reasons that mutual funds do not serve us as investors is because they are designed to make money for the advisor and the company that provides them. For most advisors, it’s their job to sell mutual funds. And that’s what they do. That’s how they make a living. But these mutual funds are quite poor for the people who buy them.

Although the investor takes 100% of the risk in mutual funds, on average, they only receive 20% of the profits. This means that 80% of the profits goes to the financial advisor and the company who sells the mutual fund. This money is taken away from the investor in the form of fees. The fees are described in terms of a few percent. Since a few percent sounds like a small amount of money, most people don’t even realize just how much is being taken away.

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Internet, Investing, Money advisors, control, financial success, fraud, Investing, Madoff, mutual funds, risk