Financial Newsletters

Written by Jeremy Horelick
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Financial newsletters may have any number of emphases, from saving and investing to retirement- and estate-planning. Most newcomers to personal wealth management simply need the basics, such as plans for paying down credit card debt and saving on high-interest charges, both of which are of paramount importance. A lot of first-timers are so eager to jump right in and begin swimming that they never stop to size up their situations first.

Even the most modest of financial newsletters will point out the fallacy in leaping before looking. Say a mutual fund predicts an annual return of 12 percent for the coming year. As your eyes light up over this hot tip, consider that you're now paying 19-percent APR on your MasterCard. Rather than put 2,000 dollars into the fund, which certainly isn't guaranteed to return at the rate it projects, pay off your 2,000-dollar balance, then look to stocks and funds. This is really just common sense.

Other Tips in Financial Newsletters

Another meme that's continually repeated in financial newsletters is that of the index fund. Amateur investors foolishly believe that they are among the five to 10 percent of the folks out there who will beat the market on their own. For the most part, these investors think too much of their own abilities and not enough of historical fact. The truth is that index funds, which mirror the market by investing in the same companies reflected in the major indices, come out ahead of the maverick investor roughly 95 percent of the time.

Financial newsletters tend to emphasize the importance as well of diversification, which is a hedge against risk. By investing in funds as well as individual stocks, adding in bonds, annuities, and one or two higher-risk vehicles, you cover your bases. Of course, you must also factor in your own tolerance for risk and the goals of your plan before embarking on any plan at all.


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