Let the experts manage your savings
Country Routes September 1993
Is a mutual fund "stocks"? A lot of people think so. In my last column I explained that mutual funds were simply "professional management of your savings."
True, some mutual funds are called equity funds. However, there are income funds, bond funds, money market funds (mostly invested in T-bills), gold funds, real estate funds, balanced funds, etc.
But even the so-called equity funds are simply professional management of your savings.
Ninety per cent of the time they are in stocks, because the "experts" (professional management) believe that is the best place to achieve safety and above average gains. But, I've seen funds be as much as 50 per cent in cash (earning interest) if they felt the equity market was a poor place to be, or a downward trend might be coming. When they were largely "cash" could we say they were a stock fund? Certainly not.
We turn to experts in almost everything we do in life. We utilize doctors, dentists, mechanics, lawyers when we need their services. Therefore we should use experts to look after our savings, and I believe mutual funds to be those experts.
As I mentioned in my last column, are they all good? We can agree there are some excellent car mechanics, some good ones and some poor ones. But can we say the same about every profession, be they doctors, or mechanics, or people working at the same job you do? There are a few excellents, a lot of good ones, and some poor ones.
It's the same with mutual fund managers. There are a lot of good ones, some excellent ones, and yes, some poor ones.
That is why I believe it is advantageous, when looking to start saving, or investing with a mutual fund, you seek out the advice of an independent representative. Someone who has no loyalty to any one fund but rather you, the investor. Someone who will know and continually seek out the excellent fund managers that invest in Canada, or others that invest worldwide, so that you can share in the economies and growth of many different nations.
We've seen funds that invested primarily in Canada, then shifted for several years to primarily European investments such as Germany, England, and then move to Japanese investments, and lately to U.S. investments.
The investor who placed savings into such a fund and left them there for the past 20 years has shared in the economic growth of all those countries during their boom periods, and he never had to take a move or a decision.
Where else can you find an invextment like that? The Grand-daddy of them all is a typical example. The Templeton Growth Fund, which has invested in all those countries at differing times. $10,000 invested in it when it started November 29, 1954 is worth over $2,000,000 today. Now I call that investing. Not the way I wrote about in one of my previous columns when I invested in a "hot stock" and lost, and it was supposed to be a sure thing.
Remember, let the experts make the critical decisions for you.
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