Flipping Rich

A big part of the Flippingrich.com mission is to educate our readers the ABC’s of investing from a couple of experienced investors’ point of view. While Derrik’s got the know-how, sharp eye, and keen talent on real estate investing, I get how the equity markets around the world work.

I consult with hundreds of seasoned financial advisors (FAs) on the daily basis regarding their clients’ asset allocation cases. Most of these FAs are decorated with more letters after their name than you care to know their meaning (i.e CFP, CRPC, CMFC, CFA, etc). And they all use fancy words like “diversification”, “asset allocation”, “sharp ratio”, “alpha”, “quantitative vs. fundamental”,etc… and a string of lingo to make your head spin. No, these are not code words to keep things secret from you. But you might wonder, do I really care to know to know what they mean. Or, do I want to know. I do give those FAs credit to get the designations. It does require time and effort to get there. But you should know the basics or enough to challenge what’s being presented to you so you don’t get “sold” into something that might be totally inappropriate for you.

Aside from “Dummies” books, newspaper, and internet, I have no doubt you’ll find plenty of information related to investing this stock or that mutual fund. On top of that, there’s an abundance of tools to help you calculate the rate of savings for retirement, kids’ college funds, or buy the dreamboat. But, is there enough, too much information, or are these just noise? How do you find the best mix to fit into your portfolio? The last time I looked (yesterday), there’s nearly 23k mutual funds you can choose from. Yikes! And that’s just the number of mutual funds in the universe. In recent years, ETFs (exchange-traded funds) such as Ishares, and Spiders have became quite popular because of lower expense ratios compare to actively managed funds. Then, there’s UITs, REITs, 1031 TICs…you get the picture. Outside of mutual funds, there’s a much longer list of choices.

Thinking back almost 15 years ago, I picked up an Investors’ Business Daily while I was waiting for my delayed flight. I thought I needed to start somewhere to understand the investing phenomena. (If you remember, the internet was at its infancy 10 years ago.) Imagine my reaction when I first open the paper, I thought it was printed in Greek! Fast forward to today, needless to say, I’m quite comfortable with all that’s there in the investment world. But with the internet availability, not only the information but also electronic trading capabilities, it creates another level of confusion and language. Here’s a good web page to check the terms, news, and tools to get you started. http://www.investopedia.com/

In the upcoming weeks, I’ll offer a sample portfolio (asset allocation) mix for different levels of risk. But of course, I’ll define what those risk level means for you. Also, I’ll give you my thoughts of various types of investing options.

Sunny