Ignorance is your worst enemy

My friend’s friend used a financial planner. The financial planner bought an annuity and a front-load fund for her. Obviously, it is for the planner’s advantage. The annuity commission could be as high as 10%. How many times I told my friends not to buy annuities except for rare conditions? The annuity is written by the company who issues it and obviously for their advantages not yours!

The front-loaded fee could be 1 or 2%. The ‘planner’ could sell it next month to get another 1 or 2% commission until your investment goes to zero. If you have to use a financial planner, use the one for fees, not letting them selling their products to you. There are many cases of “pennies smart and pound foolish”. Sigh!

Alternatively, just buy an ETF such as SPY that simulates the market and time the market as described in this book. From 2000 to 2010, you only switched to cash 3 times, two correctly and one false alarm (more frequently after 2010). False alarms usually do not cost you much as it would tell you to reenter the market shortly.