Why Are Mutual
Funds Forbidden to Protect Your Money?
By Rachel Victoria, MSFS, former CFP
October 16, 2008
One of our Passive Income Opportunities Members asked me "why Mutual Funds couldn't achieve the same high returns that the Verified Trading Advisory Services are achieving."
Well, most people aren't aware that there is a Security Law that forbids Mutual Funds to invest a large percentage of their funds in cash. The legislation occurred after the Great Depression. It's called the Investment Company Act of 1940. Basically, it restricts Mutual Funds from borrowing, going short, investing in too much cash, or investing in assets outside of the fund's asset class.
What does this
mean to You? If the market is going down (and that could be in either
the stock or bond markets) the Mutual Fund Managers are legally restricted from
protecting your money by placing it in cash.
In
fact, in some situations, the Fund Manager's may have to keep as much as 98%
fully invested in stocks or bonds while the Fund Values are falling.
This explains why most Mutual Funds all have down markets in
the same years. It may not be because you don't have a good Mutual Fund
Manager. Even when the Managers know the market is going down, their hands are
tied and they are forbidden to put money in cash as they watch their primary
Fund assets decline in value.
On top of that, if an Investment Company sees that many of a Financial Planner or Broker's clients are moving out of Mutual Funds and into Cash, it is guaranteed a Compliance Officer will be contacting that Professional and telling them they need to keep their clients fully invested even in a down market, because that is where the Investment Company makes substantial profits.
What Should You Do?
1. Stop leaving yourself vulnerable to losses every 5-7 years in Mutual Funds - the main problem with "Buy and Hold" stock and real estate markets.
2. Set aside a Cash Reserve for emergencies.
3. Create consistent High Yielding Screened Income for your growth portfolio.
4. Ensure that a Proven Expert is Trading your portfolio, without restriction from protecting your money in Cash assets.
Visit our site, www.passiveincomeopportunities.net, for more information on PreSelected and Screened Verified Advisory Trading Services (under the Product Tab) with a Guarantee. These services are still bringing in Substantial Profits now while the Stock Market is Depressed and Volatile. And many of these Services can Utilize your IRA and 401K Funds.
To learn more (if
not already here), please go to my website:
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