Rookie: About to get rooked?

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I am a rookie investor who doesn’t know much about stocks, etc. I want to invest a small amount, maybe 3000 USD (100,000 NT) or so. I am willing to take medium risk, but don’t have much time to research or deal with this investment everyday. I just want to put it somewhere for like half a year or a year, forget about it, and come back and hopefully it’ll make some money for me.
So now the questions are:
1) Are mutual funds the best choice in this scenario? If not, what do you suggest?
2) What are the chances of losing money with a fund?
3) I realize that there are many types of funds. Which type is suitable for me? I don’t want to be super conservative, I am willing to take some risk. But of course I don’t want to lose money. Is there a fund that generates over 30% in one year, that’s got acceptable risk levels? I understand you can never know…but what about your past experiences? What’s the most you’ve made or lost in a 1 year period with funds?

I wrote

Truthfully, Tycoon’s advice is pretty good. 

Don’t waste your time in MFs… The expense ratios will KILL your investment over the short-term. The medium term isn’t much better due to a tendency to average performance. So, only in the longer term, there’s a chance that your MF will be okay. But remember about 80% of MF underperform the market…! Hah!

Upfront charges will likely eat into your funds, leaving you underwater almost immediately. Anyway, many MFs have minimum amounts to invest, typically $2500-5000.

#1 Why not just simply open a broker account with $7 to $10 trades, choose a few ‘safe’ ETFs (maximum three, to keep your costs under control), your expense ratio would be about 1% for purchase, and hopefully less than 1% for sale.

#2 Then do some basic research here http://finance.yahoo.com/etf

#3 Then purchase a couple of broader market funds, like DIA or QQQQ or Spiders, then one with the exposure you want.

Do NOT trade this account. Only add money regularly to make sure that the balance is appropriate. Ignore it otherwise.

#4 Then start reading. It is really boring, there are no guarantees, but it will limit your cost structure.

Lastly, beware the risk of currency exchange, you may not want to exchange all your money at one time, but trickle feed it into the fund, so that any improvement in the exchange rate will be reflected in your exchange at least partly!

Good luck, don’t forget the reading!

Kenneth

The Four Sins of Running Our Business

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I’ve been reading the 10 stupid mistakes made by newly self-employed. It’s a good list that all business people should look at! I think our business has made several of them at least recently.

There are four that are worth looking at in my context. Click on them to read about them in context at Steve’s website.

1. Selling to the wrong people.
2. Spending too much money.
5. Assuming a signed contract will be honored.
9. Failing to focus on value creation.

We’ve had over the years some very troublesome customers, yes, even customers who we treated very generously, with free samples, free materials (a considerable expense to a language school), easy payment terms, and generous price reductions. However, these self-same customers have on occasion thrown them straight back in our face. We found out that we had been selling to the wrong people, and we had spent considerable time and money selling to them.

We’ve also spent quite a bit of money on the wrong things. Our first mistake was to hire too many people to work for us. Our increased use of staff led to bigger budget requirements, in staff and in taxes, for us. This would have been alright. We thought that the staff hiring would help us, but in some respects, it has actually hurt us much more because it impacted the nature of our marketing. People had heard we were good, so they came to us for their schooling. However, they often came looking for a particular teacher partner. Perhaps the staff didn’t have quite the same attention to their kids as they had expected, so they left disappointed in some ways.

Unfortunately, when we hired staff, we also found problems in number five. Our staff failed to understand that they were continually expected to be responsible for themselves, show up for work promptly, work hard, whatever. Staff however are human, and they display some of the quirks for laziness, gossiping, tardiness, etc. We failed our staff and ourselves by not recognizing the problems earlier and dealing with them. Moreover, I think we failed to manage some members of our staff due to language barriers.

We have been trying to create value on our product, language teaching, but I think our biggest failing has been not getting the message out there that our teaching works, that our students do get results, and that it is good value for money. All of these are challenges in themselves.

Kenneth

Running Our Business

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We’ve been running a business (a language school) for over 6 years, and it’s grown from a very small base into a much larger concern than originally it was. Naturally, in business life, there are the ups and downs of the operation and the cycle of business. We’ve become aware of this.

Yesterday, though we noticed that the number of our enrolments had dropped in September, so we are still trying to analyze the situation. But anyway our moods at school have been dropping this past few weeks because of the antics of one of our staff members. So this just added icing to that cake. We are currently not profitable as the business goes right now, which feels like a real slap in our face.

I recently took back more or less complete financial control, but the hard part of our business is predicting future income (as I guess any) so to discover enrolments are down was quite a shock to me. This will naturally make the next few months more difficult than they would otherwise be.

We were planning to do so many things, but now we need to focus on our core essentials, and we need to develop our marketing skills. So I have decided to dedicate this website to my search for business and financial success. I’m hoping that its successes and failures will encourage other readers to try.
Kenneth