Wall Street

With the stock market stubbornly refusing to settle down and smooth out, Wall Street has been scrambling to come up with "product" they can sell to gun shy investors. One such new concept is the Lifestyle fund; an extremely diversified package designed to be the single fund in an investor's portfolio.

Online Stock Market Trading There are two general types of these funds, in which assets are spread out across a wide range of stocks and bonds. In one, securities are held directly, in the other, assets are held through other funds.

fund manager and longtime Wall Street commentator Jim Cramer explains how to invest wisely in chaotic times, - or should be, when it's done right.

Stock Investing Course Fidelity's Freedom 2030 is an example of the first type. It targets a specific retirement date, and the cash and bond stakes rise as that date approaches. This type of fund has created a perception among investors that its value will not drop and that it is safe. But, in fact, these are no safer than a standard mutual fund.

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Stock Market Game Since we sold all of our investment positions on October 13, 2000 and preserved our capital, Fidelity Freedom 2030 has lost 39% (through 2/21/03). Do you think that's an isolated incident? I'm not picking on Fidelity, but here are some of their other Lifestyle funds with returns over the same period:

It seems like every week Wall Street comes up with some new, exotic investment idea that puts your money at risk. Thankfully, traded funds (ETFs) are less volatile than individual stocks, cheaper than most mutual funds, and subject to minimal taxation. But how do you use this wonderful product to diversify your investments in today’ changing market

Stock Investing Game Fidelity Freedom 2020: -34%

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Journal Prime Rate Street Wall Fidelity Freedom 2010: -22%

Stock Market News So much for perceived safety.

Stock Investing Basics The other Wall Street bright idea is the fund of funds (FOF). It sounds good, but it actually creates a double layer of costs; the cost of purchasing the fund itself, and then the expenses of the mutual funds the FOF purchases.

Stock Investing Software Take for example, the Enterprise Group of Funds. It shows an expense ratio of almost 2% plus a sales charge of 4.75% according to Morningstar. Tack on the underlying expenses and you're paying out more than 3% a year in investment expenses.

Stock Market Trading If you're a new investor (with less than $10k), and have your account at a discount broker, you can add a minimum of 1% per year in fees just for the privilege of having an account. That brings the total up to 4% in annual expenses. Talk about adding insult to injury.

Stock Investing For Dummy FOFs are sometimes being touted as the only fund you need no matter what the investment climate. So, let's compare to see how the Enterprise fund of funds performed during the same period as mentioned above for the Freedom funds:

Stock Market Crash Enterprise Group of Funds: -35%.

Stock Investing Tip The bottom line is that no matter what type of mutual fund you choose, or what anybody claims it will do for you, you must be vigilant and see if it does what you were told it would. In investing, there is simply no such thing as a sure thing. Sure you need to know how to recognize a good investment. But just as important-maybe even more important-you must know when to recognize that a good investment idea didn't work out, cut your loss, and sell.

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Online Stock Investing Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped countless people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: www.successful-investment.com.

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