Posts Tagged ‘mutual funds’

From the Mailbag


I know they say not to sell stocks when the market is low. Should I be making any moves financially while the markets are so volatile?


Absolutely Sue! In this type of market people panic, creating deals for a shrewd investor. As an artist, you should be comfortable moving against the crowd and looking for opportunities that others miss. Translate this ability into financial moves, and you’ll soon be a pro!

Here are a few ideas:

  • People often delay financial transactions when the stock market tumbles, so look for teaser interest rates at banks.
  • The Federal Reserve may lower interest rates. If this happens, auto loans and credit card rates drop (mortgages, unfortunately, are more closely tied to long term Treasury bond rates, so you won’t necessarily find opportunities there). If your car loan is at a high rate or your credit card is taking a pound of flesh for every purchase, search for better terms.
  • Sell loser stocks and upgrade. If you own mutual funds or exchange traded funds, it’s often best to sit on your hands through a downturn. But if you own individual stocks, this is an opportunity. Down markets usually don’t discriminate between bad and good stocks when the sell-off occurs, sending all of them down together. This could be a good chance to sell underperformers in your portfolio and jump into higher quality companies. Sure, you’ll be selling low, but when the market recoups, quality stocks usually outperform poor quality investments, helping you to make back lost money faster. Making money faster always puts a smile on my face!

How Mutual Funds Work

Committing to invest money is like finding a good script and deciding to begin production. Although there’s power in making that first decision to begin, the harder parts are still to come. So today we’re going to roll up our sleeves and get a little technical, but in a fun way!

In my last blog post we discussed mutual funds and why these tools are an excellent choice for neophyte investors. I’ve been asked some important questions since that post — the most-common one being: Which fund should I use?

Mutual funds are like a room full of different colored paints, and each hue becomes more attractive under different light. It’s impossible for me to recommend the best fund to magically help your portfolio, but to support your research, here are some fundamental points — each building on the next:

1) Large company funds are safer than small company funds. Having both in your portfolio together is safer yet. The same goes with international funds and sector investments… the more diversified your portfolio is, the less risky it becomes. As you spread more paint on your investing wall, there’s a better chance one is going to work.


Finding the “Perfect” Investment

At some point during your career, you’ve had to make difficult choices. As artists, we’re constantly asked to choose. Do you want the part that’s more personally satisfying or the gig that pays well? Should you audition for a show that pushes the limits of your skill or the one in your wheelhouse where you’re sure to stand above the rest? These decisions are rarely fun, and yet, we know that avoiding them doesn’t make the pain recede. Rather, such avoidance can actually be career suicide.

It’s the same for investments.

I understand from experience how easy it can be to freeze up and choose not to invest because the right decision seems so difficult. How do you pick from the thousands and thousands of available investments? So many of them look good. What if you make the wrong choice?

Much like an actor chases the perfect performance and always finds room to improve, so it is with investing. You may spend days, months or even years searching for the perfect investment. Sometimes, accidently, you may get close, finding a juicy money-maker that was exactly what you’d dreamt about. But sadly, even near-perfect investments don’t last forever, so when it ends you’ll still have to go out and look again.