My Dream said:
If I were an informed consumer than I would attempt to invest on my own.
No, that's not exactly the case.
You are an investor anytime you have money at risk in an investment, and there are
always choices to be made. You can decide how hands-on you want to be, but most people don't have the time, desire, experience, knowledge, or energy to invest in single issues. Mutual funds are great for people like that, or for those with some more developed knowledge/interest/time they may opt to buy some Exchange Traded Funds. But there are people, like you, for whom that route is too involved and then a financial adviser is an option. Yet even there you are faced with options and decisions. If the FA starts telling you "I'm putting 40% in the ABC growth fund and 40% in XYZ Muni fund and keeping 20% in a Money Market so we have options to make purchases later" you need to understand what the heck the guy is talking about.
You also need to have an idea how much risk you are taking and be able to compare the returns you are getting with similarly risky investments. If everybody else in the average mutual fund was pulling down 8.5% and you were making 1% - there is a problem, because you've been taken advantage of.
When I said you need to be an informed consumer of investment products I specifically said you don't need to have the same degree of knowledge as a financial planner. What I meant was that you need to know the very basics. Like what a mutual fund is, how it works, what you are making, what they charge you for the privilige of owning it and how to know if what you're making and paying is reasonable or a ripoff.
Buying investment products has choices just like any other set of consumer choices you make every day. If you need to clothe yourself you might be the kind of person who buys the materials and pattern and goes home and sews it yourself. That's the equivalent of the investor who picks individual stocks/bonds to create a portfolio of investments. You could go to a department store and pick something from off the rack that fits you and is reasonably priced. That's the equivalent of a mutual fund buyer. Or you might prefer to go to a clothing store and work with a commissioned salesperson who will help you with purchasing a blue, two-piece european-cut suit suitable to wear to the office. You get measured and fitted, chose from a selection of different suits that only need some tailoring to fit you well. I'm sure somewhere in the process of buying a suit you would do some comparisons and make a decision that while you
really like the Italian designer suit, the price is just not worth what you're getting in exchange. That's the kind of investor you need to be and I think you want to be. You are willing to pay a little more for quality advice, convenience and merchandise, but you want value for your money. That would also be an informed consumer.
What you
did was like going to the custom suit store and walking up to the first salesperson you saw and saying "I need a
nice suit by next Tuesday. I don't have time to look at colors and I wouldn't know a designer garment from something made in a Guangxi sweat shop by blind tailors. But I want it to fit, be reasonably priced, look nice and be durable. Oh, and I don't have a lot of time to hang around for fitting so here's my credit card and I'll see you next Tuesday." That store is full of good suits and a few ugly ones, the prices range from great to "money is no object", and the salesmen range from someone who has 40 years experience and impeccable taste, to the owner's nephew who can't keep a job anyplace else and thinks jeans with holes are
da bomb when it comes to fine apparel. What do you wind up with next Tuesday? I don't know, it's all a matter of luck because you were definitely not an informed and careful consumer. You might have a suit that everyone compliments that only costs you $12, or you may wind up paying $6,000 for something that looks suitable for the Pimps and Hooker's Ball with one sleeve six inches longer and a zipper that keeps falling down.
Modified to remove humorous picture - but my sense of humor is warped and I didn't want to offend