bluecollardollar: on risk in mutual funds

on the radio with Paul Petillo

books by Paul Petillo

I just published my fifth book - this time with Smashwords! ReBuilding Wealth in a Paycheck-to-Paycheck World by Paul Petillo, copyright 2011 This ebook is available across all platforms including iPad and iPhone, Amazon and Sony.

on personal finance

In the world of personal finance, asking what's the worst that could happen is not the same as asking: "will I be able to afford this?" or "have I saved enough for retirement?"
More personal finance

on retirement

If things are good, for some they won't be good enough. If it turns out that things are not so good, someone will ultimately benefit for this off-chance negativity.
More on retirement planning

on mortgages

American dream or not, the games you may have once played with financing your home are not available for the vast majority of homeowners.
More on mortgages and homes

on insurance

Is the insurance industry the next victim of the financial crisis?
Health Channel

on investing

The mutual fund investor has a great many more options available to them in the post-Great Recession marketplace. The question is: are they right for you as you make a retirement plan using 401(k)s or IRAs?
More on investing

WWW BlueCollarDollar.com

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on foreign risk

In our continuing look at the risks facing mutual fund investors, we now look to investments your mutual fund manager may be making outside of the US and, if you have a mutual fund that is focused on a global approach to investing (I suggest that these types of funds might a good place to put some of your portfolio in 2009 - I also suggest it in the book as well) you will face what is known as foreign investment risk.

This is a worthy risk
We wanted a global economy and we got one. For better or worse, and we all know how worse it can be, the world doesn't hinge on the US economy, it swings with us. No longer does the world catch a cold when the US sneezes, it is part of the whole illness. Keep in mind that most of the money that fueled the economy over the last several years was funneled into our wallets courtesy of over seas investors.

Foreign investment risk can catch some of us by surprise and as much as I hate to keep saying it, the book really does a much better job of explaining all of the possible problems that can arise from a foreign investment. It could come from any number of different angels, from a crisis in a currencies to mismanaged governments to poor banking to environmental considerations to tax issues.

And because of that, the cost of the fund might be higher. The volatility of the fund will be greater. And the chance that something unforeseen in some other part of the globe might have devastating effects on the fund's holding are not be taken lightly.

Nor should they be avoided. Foreign investment risk, in other words is a worthy risk, albeit in small portions, say 10% or less of a retirement portfolio. If you are younger, the bet is an extremely good one. There is little chance that a long-term investment in a fund with foreign exposure will not pay-off handsomely. The global audience will not be slowed by the recent recession. There are just too many people around the planet who want the kind of lifestyle that we have to allow for this to last too long.

Previously: Active Trading Risks

Counter Party Risk

Derivative Risks

Foreign Investment Risk

Growth Investment Risks

Issuer and Leverage Risks

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