Regards,
Bill Ranshaw

If your making money and are in position to have a financial planner, you need to be using this same approach in that area as well.

Don’t work with someone that can get the job done, work with the best at it. Find the broker, planner, mentor that has skin in the game and use him. Don’t just pick a someone based on their title and assume they know what they are talking about.

Only difference between a financial planner and you is that they have a certification and you don’t.

homepwnerer

Please keep an eye out for my next article that I hope to have out next week.

Following you metaphor: When the “average” investor goes thru those programs (IRAs, 401k, etc) basically they are paying in full the house, so it doesnt require insurance. But What if it required before invest (like the finance’s example)? But its not, why because its not their money its your money at risk, Protect yourself!

I admit some companies doesnt help or disclose information to the “average” guy to prevent major losses, but do you own home work, adjust your risks levels based on your tolerance, protect yourself even with “diversification”, But the ignorance will drive you to South Park in like any businesses.

Alice,
PS: Its sad people lost a lot of money, but before blaming other people/system start blaming yourself.

Excellent point…I figured that would come up.

The moral is: just because it exists doesn’t mean people use it! If everyone had an insurance policy on their 401Ks, IRAs or mutual funds there would’ve been no massive loss of wealth over the last 8 months; employees of Enron would not have been devastated when the tree their nest was sitting in got struck by lightning.

If you are using financing to purchase a house, you’re lender will not even give you the money until an insurance policy large enough to cover their interest is in place. It’s kind of like a built in idiot button!

Here’s the point. Your AVERAGE “investor” (these ‘investments’ are really savings programs disguised as investments) simply hands his/her money to an “expert” and may or may not even read their quarterly earnings/losses report. They are completely hands off because they simply don’t know what else to do or they prefer to blame someone else when things get bad (it’s true!). Their only “insurance” is diversification.

Remember what Warren Buffet said about diversification in “The Tou of Warren Buffett”: ‘Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing’.

http://books.google.com/books?id=msOBPzhVqGgC&printsec=frontcover&dq=tao of warren buffet&ei=HBRBSrqJHaHCM5KH8cMO

I blame our education system for not teaching financial literacy, but that’s a whole ‘nother story!

Hope that clears up my thoughts…

FYI:
You can have insurance in your portfolio, like any insurance policy, you have in any asset (car, house, life, property), and they work similar like any insurance; time premiun, deductible, etc.

The morale is; because you dont know them doesnt mean they doesnt exists! and this principle is applicable to any businesses

Thanks, Alice
PS: google these terms “stock insurance options”