Is It Always Less Risky To Invest In Stock Mutual Funds Than Directly In Stocks?

Mutual funds, are often claimed to have two major advantages over direct stock purchases:

1. They provide the benefits of diversification for small and medium investors, who would otherwise be unable to afford it.

2. They provide small and medium investors with professional management, they would otherwise be unable to afford.

Let’s look at diversification first:

Mutual funds and stock investors face two kinds of risk. The first is nonmarket risk; risk their portfolio will underperform the market. The second is market risk; risk the market, as a whole, will perform poorly.

Diversification can reduce nonmarket risk, but it has no effect on market risk. Each unit of the fund, purchased by an investor, represents a diverse portfolio of stocks held by the fund. That’s how diversification is achieved through mutual funds.

However, studies show nonmarket risk, through diversification, can be substantially reduced through owning as few as five stocks of companies in substantially different industries. When we invest an equal dollar amount in five stocks, nonmarket risk is only 14% above the minimum that can be achieved through diversification. In the case of ten stocks, nonmarket risk drops to just 7% above the minimum. This means an individual investor does not need to purchase a great many stocks to benefit from diversification. It is quite possible for small and medium investors to cut nonmarket risk without mutual funds.

Professional Management

The results of professional management are mediocre for most funds. As many as 75% of stock funds consistently underperform stock market averages. For this dubious performance, fund holders often pay sales and/or redemption fees and almost always pay management fees. It is very important for investors to watch management fees, in particular, and make sure they’re justified. Here is why.

Studies show that over 25 years, a tax sheltered mutual fund with a 7% annual return and 2.l% annual management fees, will leave only 61% of the accumulated capital for the investor. The remaining 39% goes to the funds company! When you buy stocks directly, there are no management fees.

Former Magellan manager, Peter Lynch, one of the most successful fund managers ever, freely admitted that it is not unusual for individual investors to beat the returns of mutual funds.

What About Network Marketing?

Network Marketing or Multi-Level Marketing (MLM) has been since 1945 with the California Vitamin Company. Many agree, Nutrilite, as it’s known today, was the very first company to use the network marketing strategy to sell it’s product. Typically network marketing and direct selling refer to the strategies of selling the product by sales people directly to the consumer.

The Multi-level marketing tag usually refers to the compensation process. Network marketing can provide a real, passive stream of income, by this I mean a stream of income that doesn’t require your personal input 100% of the time.

In the typical job structure, the company owner and high executives are typically paid on the work and effort of the people that they employ. I recently watched an episode of ABC’s Shark Tank. On this particular episode Mark Cuban, a shark, tells a young entrepreneur that he’s very busy, but he’d be willing to offer him x amount of money and his personal coaching and input for y% of the company.

Do you know how a man who is an entrepreneur himself, owns a basketball team, produces films, and a guest stars on TV shows, can offer his time to a newbie? Because he’s learned to leverage his time. Mark has people that work for him. So while he’s guest starring on USA’s Necessary Roughness, people working for him are making him money.

Network marketing opens up the door for ordinary people like you to earn extraordinary wealth, because, it allows you to do exactly what Mark has done to excel his own business, add leverage. If you only get paid for what you do, then you are trading time for money; but if you leverage your time by having other people work for you then you get paid even when you are not working. Simple right?

That’s what makes network marketing so powerful. It’s the opportunity to get into a business, then recruit other entrepreneurs, like yourself, and have them work their business; but the benefit is you can earn commissions on the sales they make.

The controversy, in my opinion, with network marketing is this. Many companies that claim to be network marketing companies are so close to pyramid schemes it’s hard to tell the different. A pyramid scheme, in my understanding, is a business structure where the main focus of the company is to sign up people into the business with little to no exchanging of products or services.

If you are presented with an opportunity where the main focus of the company is the commissions you get from signing up other distributors. Then it’s a pretty good chance the company is closer to a pyramid scheme than a direct selling company. The company should be more concerned with selling its products or services rather than selling the business opportunity.

A lot of companies do compensate you for referring new distributors and some even pay you commissions on the sales that they make, but the company should be focused on selling its products. If the products offered are worth their value, then more products will be sold. If more products are sold then that will attract more distributors.

Think of it this way. If a fast food restaurant wants to add a line of soft drinks, chances are it will reach out to Pepsi. Why? Because it is a big names and their products sell! Pepsi does not need to offer huge referral fees because their products sell. But that doesn’t mean they don’t hire people to push their products! It just means that a good company has a healthy balance.

How to Market a Book, Get Organised and Find More Time to Write and Relax While Marketing Your Book

Market a Book – Get Yourself Organised

When it comes to the point at which we market a book the story is all too familiar in the world of the Indie Author/ Self Publisher. The book is written having been painstakingly toiled over for months, probably years. E-book or paper version it matters not, the direction and the outcome unfortunately is so often a well trodden path to marketing failure. Do not go there. There is another way and the key is organisation. To market a book you need to be organised and disciplined. Of course there are no guarantees of success, but you need to give yourself the best opportunity you possibly can to reach out as far as you can but, and here is the key part for me, at the same time you must maintain a balance between your writing and your marketing. It can be done. Marketing your book does not mean that you cannot continue to write. Just get organised, write a plan, do not scattergun, stick to the plan and ensure that you have a clear vision of the future. Above all else be patient. Most books do not sell in large numbers immediately and the marketing strategy for each book is enhanced as other books are added to your author’s portfolio, perhaps sequels or maybe a whole new novel or subject matter is written. A method which I have come to use, not just in my writing, is to create a structure with a clear centre point, or a hub as I like to call it. This method can be applied to absolutely any situation in life either on a grand scale, if you are perhaps moving house, or on a smaller scale, if you are planning a birthday party for example. For the purposes of this article I will refer only to the use of this method when you market a book. I hope, however, that it will be obvious how it can be applied elsewhere.

First create a stable hub, a static website (in the case of marketing a book), which will host the core of your marketing strategy and will become a place to which you can refer others who either express an interest in your work or who you reach through an advertising campaign. Let this hub have clear and concise links to your:

Points of sale
Social networking sites
Twitter feeds
Other ‘hubs’ for other projects
Online reviews
Online news articles
and so on
Also display some reviews on the hub page.

Make this place, the hub, your own, whether it is a self hosted blog or website or one which you have commissioned. Choose a domain name which is memorable, relevant to your book or to you and one which you think will be easy to refer enquirers to. I hope that you can see by now that in its simplest form, pulling all of the strands of your authoring life together in one point is hugely beneficial in keeping clutter from your mind and showcasing your work, and it is an incredibly simple concept really.

The situation actually gets even better as once this hub is achieved you can let it mature and gain status on the internet in the knowledge that it will still be there tomorrow, next week, next year or in ten years time. As the hub is literally a showcase it does not suffer from the same flaws as social networking pages such as Facebook, or even your blog. What I mean is that no-one expects the content of the ‘hub’ to change so it doesn’t need your constant attention, unlike your Facebook page, Twitter feed or Blog which, if they do not get updated regularly your visitor’s perception is that you have perhaps lost interest and they quickly move on. As browsers and book purchasers we are a very fickle bunch I can assure you.

Of course a hub can be tweaked, but I do find that once it is established it just quietly sits there doing its job and it actually needs a minimal amount of attention from you. Imagine, as has happened to me, bumping into a friend who you have not seen for some time in the supermarket. You want to tell her about your book and you want to direct her to where she can find you online. In an instant you know that there is one simple, and relevant, web address that you can recite which will cover all of your bases. It will lead to sales points on Amazon or Smashwords for example or to your Facebook, Pinterest or Google + page and contain some on site reviews. Simple. You could even sell your book directly from this hub using your PayPal buttons which can easily be set up.

I sincerely hope that this makes sense to you and that it is something which you might consider when you market a book. It works for me and I can assure you that before I did this my marketing strategy was chaotic and I could not find time to write or follow my other interests because of my ‘mind clutter’. Give it a try. It works.

Proven Ways To Help Market Your Business

We live in a day and age that can be very difficult financially. Not only has this impacted us on a personal level, it often impacts our businesses as well. That is why it is very important for you to consider the type of marketing that you are doing for your business. After all, if you’re not advertising your business and seeking new customers, it is unlikely that you’re going to be able to keep your doors open for very long. Fortunately, there are some ways that you can market your business which are very effective and have shown themselves to increase profit in a very short amount of time. Here are some suggestions for you to consider.

First of all, before we start to talk about some of the newer innovations because of the Internet, it’s important for you to understand that you should not completely abandon the older options that are available. For example, if you have a direct marketing mailing list, make sure that you are using it to its full potential. People still get mail on a daily basis and the unique thing about mail is the fact that almost everything gets examined. If you are able to have a compelling message, it can help to pull new people into your business on a regular basis.

If you are trying to use the Postal Service in order to keep track of your existing customers, there may be some ways that you can cut down on your expenses while still doing so effectively. Instead of sending out mailers on their own, why not include them in your necessary mailings? For example, if you bill your customers, why not include an advertisement with the bill that helps to outline the other services that you offer. You may find a considerable amount of success when doing so.

One newer innovation that has been very successful for many businesses is contacting people through text message. If you set up your text messaging marketing properly, you might be surprised with exactly how far it can take your business. You need to be cautious, however, because this is not simply something that can be done without any consideration for the person that is receiving the message. You need to have their permission and this can be obtained by offering them something in return for their cell phone number. Make sure that you are gathering the cell phone numbers at your establishment and then message them on an occasional basis to help pull them back to your store again.

As a final way of contacting your customers in gaining new customers, make sure that you are not overlooking social media marketing. Facebook is the largest of the social media networks and it can really help to make a difference in the success of your business. The reason why that is the case, is because it allows you to form relationships with your customers and to develop new relationships with those who have not yet taken advantage of your services. When social marketing is used properly, it can really help to push your business in the right direction.