Sometimes I play a game with Cora that annoys her immensely. I ask her questions, and she has to answer them within 30 seconds. These are not difficult questions, but I repeat them often so she begins to memorize the answers. For instance:

"Why is short-term stock purchase risky?"

"Because they're unpredictable."

"If short term stock purchases are unpredictable, does that mean our long-term buy-and-hold purchases are less risky?"

"Yep. Mom, that question took up twenty seconds!"

"Shh. What investments still outperform all other types of investments in the long run?"

"Stocks." She intones, "Because this statistic has not changed over the course of Wall St. history."

"What is the name of the largest river that runs east-west through the State of Virginia?"

"Uhhhh?.The Tom?"

The last answer is wrong, but she scored high on the correct gender (It's the James River).

Now that she (and we) introduced this information into our lives, let's tackle the often frustrating problem of insecurities about choosing securities. We want to purchase our own stocks, but there's so much to choose from. We want to diversify our portfolios, but we don't have the time to decipher the equations. We want to make our own choices, but we don't trust our own abilities. What do we do? Fake it? Trust our intuition?

Intuition might work at the horse races, but it doesn't apply to careful choices in the market. And, I would advise not faking "it" whatever "it" might be, especially with stock purchases. In my opinion, the best solution to insecurities about securities is a fee-based financial planner. This financial planner is not a broker, so I will describe a broker's services before I tout the convenient combination of fee-based financial planners and our own opportunities to purchase equities without a broker's services.

A broker purchases equities (and other investments) for us with fees that usually surpass the minimal contributions we make when we purchase these equities ourselves. If you want to prove that statement, call a few brokers and ask about their commissions, maintenance fees, and dig deep for other possible hidden costs. Then, compare these figures to portfolio maintenance and stock purchases through BUYandHOLD. You can be thorough, and you will find we save money when we bypass the broker.

However, if savings don't convince you, the next step is to create a list of brokers who have good track records. We can ask our stock market savvy friends for advice, and we can also contact our state securities administrator and the National Association of Securities Dealers to discover if the broker in question has any complaints or disciplinary actions taken against them. Once our list of candidates is compiled, we need to prepare interview questions about how they will meet our investment goals and about their approaches to investing. If we don't have investment goals, we don't need a broker. We really need a financial planner.

Some brokers will offer advice and suggestions for our purchases, but we need to remember that most brokers make money no matter how we fare when following their advice. This is how brokers remain solvent. When they recommend a stock and we purchase it, they make a commission. When we follow their advice to sell a stock, they make another commission. One historic major complaint against stockbrokers is the practice of "churning," or keeping a client's portfolio in constant motion with a total disregard to the client's investment objectives to continuously generate commissions. Cora knows short term transactions are unpredictable, therefore they are very risky. Brokers know this fact, also, but some don't care how risky our lives become as long as they make money.

However, most fee-based financial planners charge by the hour rather than by commission. This form of payment makes their suggestions virtually unbiased. The minimum expectation is our ability to pay their fees once we establish a relationship with them. And, with a moderate income, there may be no need to visit our financial planner more than two to four times per year.

To choose a financial planner, make a list, check it twice, and try to find out if they're trustworthy and skilled (you thought I was going to say "naughty or nice," right?). Sometimes the first hourly session is free, but we might waste our time if the planner is unaware of online portfolios and broker-free advantages. Before the first session, inform them you plan to purchase stocks without a broker, and direct them to BUYandHOLD. If the planner is not familiar with BUYandHOLD, I would call the next planner on the list. BUYandHOLD has been recommended by Wall Street Journal, Kiplinger, and Forbes, among other top investment media for their first-to-market advantage, assistance, and variety of investment tools. If the financial planner is aware of BUYandHOLD, they will understand the equities, closed-end bond funds, and money market funds available to us. If we want to purchase our own stocks, these professionals can help limit us to the best possible choices for our situation.

If we want to diversity our portfolios, they can help us manage this balancing act. If we want to make our own choices but we don't trust our own abilities, the financial planner's advice will give us a blueprint to begin building our skills. In addition, if our children don't remember the name of the river that runs east-west through Virginia, they may also never learn that financial planners can be the best tools available for an insecure investor. It's up to us as parents to teach our children these little-known facts.

Until Next Week,
Linda Goin