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SetForL ifeFinancial Services

http://HowToBeSetForL ife.comCopyright Mark Huber 2006. All Rights Reserved.-1-

How To Stop These 10 I nvestor Mistakes FromHappening To You!

Authored By:

Mark Huber, CFP

SetForLife F inancial ServicesRichmond, British Columbia, Canada

Office Phone: Richmond (604) 207-9970Office Fax: Richmond (604) 207-9971Office Phone: Burnaby (604) 439-3341Office Fax: Burnaby (604) 439-1900

E-Mail: [email protected] Site: http://HowToBeSetForLife.com
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Mark Huber, CFP is alsoauthor of -

"The UnCanadian Way To Get Rid Of Your Mortgagehttp://HowToGetRidOfYourMortgage.com/TheUnCanadianWay.html

"The UnCanadian Way To Be House Rich AND Cash Rich"http://HowToBeSetForLife.com/HouseAndCashRich.html

"The UnCanadian Way To Create Wealthhttp://HowToBeSetForLife.com/TheUnCanadianWay.html

"The UnCanadian Way To Get Out Of Debt Fasthttp://HowToBeSetForLife.com/BeDebtFreeFast.html

"The UnCanadian W ay To Deal W ith Your RRSPshttp://HowToBeSetForLife.com/RRSPsTheUnCanadianWay.html

"The UnCanadian Way To Finance Your Kids Educationhttp://HowToBeSetForLife.com/RESPsTheUnCanadianWay.html
http://howtobesetforlife.com/http://howtogetridofyourmortgage.com/TheUnCanadianWay.htmlhttp://howtobesetforlife.com/HouseAndCashRich.htmlhttp://howtobesetforlife.com/TheUnCanadianWay.htmlhttp://howtobesetforlife.com/BeDebtFreeFast.htmlhttp://howtobesetforlife.com/RRSPsTheUnCanadianWay.htmlhttp://howtobesetforlife.com/RESPsTheUnCanadianWay.htmlhttp://howtobesetforlife.com/RESPsTheUnCanadianWay.htmlhttp://www.pdfdesk.com/http://howtobesetforlife.com/RRSPsTheUnCanadianWay.htmlhttp://howtobesetforlife.com/BeDebtFreeFast.htmlhttp://howtobesetforlife.com/TheUnCanadianWay.htmlhttp://howtobesetforlife.com/HouseAndCashRich.htmlhttp://howtogetridofyourmortgage.com/TheUnCanadianWay.htmlhttp://howtobesetforlife.com/


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You Have Full Di st r ibution Rights to Th is Report.

You may FREELY give this report to family, friends, colleagues and anyone elsewho you feel will benefit from reading it.

You may also offer it to your Website visitors, as a Bonus for a relatedproduct, or use it as an Opt-In incentive to build your list.

You may NOT edit, modify or in any way change the contents of thisfile whatsoever. You may also NOT sell this product.

Copyright (c) 2006 Mark HuberAll Rights Reserved

http://HowToBeSetForLife.com

LEGAL NOTI CE: Every effort has been made to accurately represent thisinformation and its potential. Please note that each individuals successdepends on his or her background, experience, commitment, desire andmotivation.

As with any endeavor, there is no guarantee that you will be successful.The author, publishers and distributors of this information assume noresponsibility for the use and/or misuse of this information and contentsherein, or for any injury, damage and/or financial loss sustained to personsand/or property as a result of using this information and/or contents.

While every effort has been made to ensure the reliability of the contentherein, the liability, negligence or otherwise, or from any use, misuse or abuseof the operation of any methods, strategies, instructions or ideas contained inthe material herein is the sole responsibility of the reader.

The reader is strongly suggested and encouraged to seek competentlegal and/or accounting and/or financial planning advice before engaging inany action and/or activity indicated or implied.
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Short Version: You and you alone are responsible for any and all results thatmay or may not be incurred from anything you do as a result of reading thisreport.

Copyright (c) 2006 Mark HuberAll Rights Reserved

http://HowToBeSetForLife.com


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From the Desk of Mark Huber, CFP

Dear Fellow Canadian:

Over the course of my 21 year career as a financial planner I have seen andhear allot!

I want to set the record straight about what works and what doesnt in theinvesting world.

This report is not exhaustive on the subject but it was written as a summary of my opinions and beliefs when it comes to investing.

Enjoy the read!

My sincere desire is that it will help you on your journey towards financialfreedom.

To Your Success!

Mark Huber, CFP
http://howtobesetforlife.com/http://www.pdfdesk.com/http://howtobesetforlife.com/


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Tabl e Of Cont ents

I ntroduction: Getting Rich Slowly But Surely

Mistake #1: Treating Investments Like A Part-Time Job Not A Business

Mistake #2: Not Having An Asset Allocation Strategy (See 10 Helpful Hintsfor Successful Asset Allocation)

Mistake #3: Trying To time The Market

Mistake #4: Letting Emotions Drive Investment Decisions

Mistake #5: Ignoring The Biggest Risk Of All

Mistake #6: Expecting Any Managers Investment Approach To Work All TheTime (See Typical Portfolios and their Characteristics)

Mistake #7: Hiring Managers Solely By Their Numbers (See a Sample Investment Policy Statement (IPS)

Mistake #8: Getting Caught Up In The Relative Performance Game

Mistake #9: Not Knowing When To Fire A Manager

Mistake #10: Not Having A Certified Financial Planner (CFP) As A Consultant


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I ntroduction: Getting Rich Slowly But Surely

Prologue -

The tw o basic rules for invest ors are:

Rule #1 DONT LOSE MONEY!

Rule #2 DONT F ORGET RULE #1

Each year, hundreds of books, magazine articles and newspaper columns offer

personal investment advice nearly all of it is aimed at the do-it-yourself investor looking for hot tips or the small mutual fund buyer seeking thisweeks top-performing fund.

While this report wont tell you how to double your money in six months. Wewill give you a program that will help you deliberately and consistently buildyour wealth over time to get rich slowly, but surely.

We will lay out the basic building blocks of an effective, proven strategy that isso simple, it never occurs to most investors: Dont focus on trying to beat the

market or outperform other investors, factors you cant control. Instead, focuson avoiding mistakes the one thing you can control.

By avoiding mistakes, you benefit from two powerful forces you have on yourside: Time, which lets you build wealth slowly and steadily, without takingunnecessary risks; and the Power of Compound Interest, which gives yourportfolio an enormous boost over time especially in the latter stages of yourwealth creation program.

We will give you a perspective on the correct way to look at the critical issuesand help you identify the right questions to ask the professionals. By demystifying the process of hiring and firing money managers, we will helpyou avoid being hoodwinked by industry jargon and bogged down byinformation overload.

Above all, we will show you how to sidestep the classic pitfalls that trap manyinvestors. Learn how to avoid these big mistakes, and in the long run, you willwin at investing.

You can get poor a lot faster than you can get rich.Anon


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Mis take #1: Treat ing I nvestmen ts L ike A Par t-Time J ob Not ABusiness

You probably have an enviable annual income, a sizeable investment portfolioand a comfortable lifestyle youd like more time to enjoy ...someday. How wellyour investments perform will determine when and how youre able to retire,how big an estate you can build and whether you ever get to do the things onyour personal wish list.

No doubt many investors feel theyre so busy making money they cant devotemuch attention to investing it.

However, the principles of success are the same for investing as for any other

business. As the CEO of your own investment company, you need to makesure your assets are managed in a systematic, disciplined way.

Mistake #2: Not Having An Asset Allocation Strategy

Much of the investment advice in books and magazine articles focuses oninvestment selection how to pick specific stocks, bonds or mutual funds.Individual investors tend to put more emphasis on this aspect of the

investment process than any other.Yet, studies show that over 90% of a portfolios return depends on assetallocation how the portfolio is divided among different investment classes,such as stocks, bonds and cash equivalents. Knowing this, large institutionalinvestors (i.e. pension funds, insurance companies, etc.) devote substantialresources to creating, fine-tuning and adapting their asset allocation policies.

By contrast, many individuals make the mistake of not having an assetallocation policy at all. Instead, they back into asset allocation decisions basedon unspoken assumptions, unexamined feelings or untested information:

Bonds are the safest investment.

This isnt the right time for stocks.

Emerging markets are where the real opportunities are.

Anyone who lets this sort of thinking shape their investment approach isvulnerable to missed opportunities at best, and costly errors at worst.


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For example, investors approaching retirement age often shift automaticallytoward fixed-income investments forgetting many people live 25 or moreyears past their actual retiring date and need to keep growing their assets inorder to maintain their lifestyles.

Like anything that tries to look into the future, an asset allocation strategycant guarantee results. Although history tends to repeat itself, the only thingcertain is that investment cycles will occur. But having a sound, well-thought-out asset allocation strategy is essential if you want to reach your long-termgoals.

Here are 10 helpful hints for you to consider when managing yourportfolio:

Helpful Hint One: High-grade bonds and stocks are fundamentally differentassets. Bad years for bonds are often good years for stocks. Bad years forstocks are sometimes good years for bonds. By combining both asset classes(stocks and bonds) in your portfolio it not only lessens your portfolio risk italso protects the downside as well as being able to participle in the up side allowing for greater portfolio stability, growth and by extension compoundingto work its magic for you. It is important to note, however, that 1987 and

1994 were below-average years for both asset classes, serving as a reminderthat the two can have poor years at the same time.

Helpful Hint Two: Portfolio risk rises disproportionately slowly as stocks areadded to the portfolio. In a study conducted on stocks and bonds for the years1987 to 2002, the risk (as measured by standard deviation) of a 25 per centstock portfolio was essentially the same as the risk of an all-bonds portfolio.The additional risk of a 50 per cent stock portfolio compared to an all-bondsportfolio is one-quarter the additional risk of an all-stocks portfolio.

Helpful Hint Three: An all-bonds portfolio is not the lowest-risk portfolio.Even risk-averse investors should own some stocks. From 1987 to 2002, a 15per cent stock and 85 per cent bond portfolio had a lower standard deviation(risk measurement) than a 100 per cent bond portfolio, which is 8.8 per centversus 9.1 per cent. This is due to the fact that when interest rates rise,bond values move down. (When interest rates fall bond values rise).

Helpful Hint Four: Portfolio returns rise disproportionately quickly as stocksare added to the portfolio. For the years 1987 to 2002, the 25 per cent stockportfolio earned about 40 per cent of the additional return on the all-stocks


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portfolio compared to the all-bonds portfolio. The 50 per cent stock portfolioearned about 75 per cent of the additional return.

Helpful Hint Five: An often-overlooked risk for the long-term investor iskeeping a too-conservative portfolio. By focusing too closely on the volatility of individual assets instead of on the entire portfolio, investors often maintain anundersized stock exposure for their long-term horizon. For many investors,the risk-return trade-off favors an even higher exposure to stocks.

Helpful Hint Six: Rebalancing gives a stable risk exposure. The objective of rebalancing is to return the portfolios risk to its original level. If stock returnsare unpredictable (i.e., future returns will be like random draws from historicalreturns) and you have a long investment horizon, then your optimal stocks-

bonds mix should not depend upon recent years returns. After good times (forexample, 1995 to 1999) and bad times (2000 to 2002), your target asset mixshould be essentially the same.

Unfortunately, this appears to be the opposite of what investors actuallyaccomplish. Most increased their target stock exposures through the 1990sand decreased it through the bear market that followed. The fixed-weight rebalancing strategy prevents investors from a tendency to increase thetarget stock weight after good times and to decrease it after bad times. Itforces a discipline on them that keeps emotions out of the equation.

Helpful Hint Seven: A balanced portfolio avoids market timing. You shouldnever keep all of your assets in the worst performing asset class. This isimportant because losses are more costly than gains in two senses: First, formost of us, the pain from a 10 per cent loss exceeds the euphoria from a 10per cent gain; second, if an asset class loses 33.3 per cent of its value, ittakes a 50 per cent gain just to break even!

Helpful Hint Eight: Due to rebalancing, if an asset class becomes overvalued,you will be selling it as it rises; if an asset class becomes undervalued, you willbe buying more of it as it falls. In contrast, someone who invests, for instance,50 per cent in stocks and 50 per cent in bonds, but never rebalances, isguaranteed to have the highest percent of the portfolio in the overvalued assetclass at its market peak, and the lowest percent in the undervalued asset classat its market trough. For example, someone who started 1987 with a 50 percent 50 per cent stock/bond portfolio but never rebalanced, would have hada 73 per cent stock exposure at the peak of the stock market in March 2000.

Helpful Hint Nine: Rebalancing provides a discipline that helps investorsovercome inertia. Without this discipline, many investors do nothing because


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they are not sure what action to take. From our experience this control is veryimportant. We can rarely predict that stocks will beat bonds or vice versa.Without this discipline, the uncertainty might prevent the average investorfrom making any changes at all.

Helpful Hint Ten: A fixed-weight strategy takes little time and can save timewhen doing taxes. A portfolio that not only automatically rebalances the assetclasses but also does the rebalancing based on a new money contribution andnot a buy/sell discipline will keep you disciplined and not result in unduetaxation.

Mistake #3: Trying To time The Market

A study of economics usual ly reveals that the best t ime to buy anything is lastyear. --Marty Allen

Like the fountain of youth and the pot of gold at the end of the rainbow, asuccessful market-timing strategy is something that people have alwaysdreamed of finding. Although most have given up on the first two, plenty of people still search for the secret of buying low and selling high.

And why wouldnt they? In theory, at least, market-timing is a wonderful idea:Be fully invested during rising markets, and move to safe cash equivalentswhen prices fall. No other investment strategy has a more powerful oruniversal appeal.

The problem is its virtually impossible to pull this off consistently.

Its only human nature to want to time the market, and many investors willcontinue to try, despite all evidence they will never succeed. But on WallStreet and among institutional investors, the consensus is clear: I t is time not timing that makes you successful in the market.

Mistake #4: Letting Emotions Drive I nvestment Decisions

There are only tw o emotions on Wall Street: FEAR AND GREED. -- Anon

Most of us encounter strong emotions when dealing with money issues andunderstandably so. Not only can money have a lot to do with our feelings of


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success, security and self worth, it can have a huge, tangible impact on ourlives. Money can give us experiences, freedom and the ability to choose thekind of life we want.The trouble comes when emotions are the unseen driver of investmentbehavior, distorting perceptions and sparking reactive, short-term decisionsthat end up being counterproductive.

For instance, irrational fear is usually the force behind a classic investmentmistake: Directing your manager to sell all your stocks after the market takesa plunge. Those with cooler heads and a longer view know this actually may bethe time to commit more money to equities.

Emotions also may keep investors boxed into unrealistic investment

frameworks. Some, hindered by a Depression-era mentality, put all theirmoney into bonds. By investing so conservatively, they let inflation eat awayat their principal.

Others, propelled by ego or an unquenchable desire to get rich quick, searchout super-aggressive growth managers, ignoring the fact higher returnsalmost always mean higher risks. In between are all shades of investors wholet their feelings guide their actions, often without even realizing it.

If you truly want to take control of your financial destiny, you must make sure

emotional reactions such as anger, impatience, denial, procrastination andpanic dont lead you astray. How do you guard against that? By having alogical, well-thought-out investment game-plan; one you genuinely believe inand to which you are willing to commit, long-term.

In short, emotions do have a place in investing so long as they dont occupythe drivers seat!

Mistake #5: I gnoring The Biggest Risk Of A ll

I ve got all the money I ll ever need if I die by 4 oclock. -- Henny Y oungman

Ask affluent investors to name their biggest investment risk and most will tellyou its the chance of losing principal. But for all except the very wealthiest of us, loss of principal isnt the biggest risk. Much scarier is the risk we wontaccumulate enough capital and well outlive our money.


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Survey after survey shows that when it comes to retirement planning, mostCanadians are in serious need of a reality check.

Canadians tend to:

Underestimate how much income well need. Forget how long our moneymight have to last. Assume well stay healthy. Save much far less than weshould.

Ironically, many investors try to gain security by putting their assets into safe investments such as GICs, term deposits or Canada Savings Bonds

(CSBs). Those with such a conservative asset allocation mix may feelprotected, but thats strictly an illusion. Within 30 years, these assets will loseone-half their purchasing power, assuming the cost of living rises only 2% ayear. With inflation gnawing away at their security, seemingly risk-averseinvestors have really only traded one risk for another the risk of outlivingtheir money! They are going broke safely!

Mistake #6: Expecting Any Manager s I nvestment Approach To Work

All The TimeWall Street Guru: Someone with a high degree of self-delusion and a s trong bull

market. --J ohn Kenneth Galbraith

Even renowned money managers, with their documented records of exceptional performance, endure periods when their approaches dont work.When that happens to one of these managers, its not because hes suddenly lost his touch or turned dumb overnight. Its because the market doesntfavor his particular approach at that point in time.

The market isnt a machine that moves in regular, predictable patterns. Its anever-changing mosaic that can be approached successfully in many differentways. If one approach were clearly superior, everyone would quickly embraceit, and it would inevitably lose its advantage.

Experienced managers know it is critical that they adhere to their choseninvestment approach and by doing so, they are sure to encounter times thatseverely test their mettle.


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While management philosophies differ in many ways, nearly every approach isa variation on one of two fundamental styles growth investing and valueinvesting. Each style has its pluses and minuses.

Growth managers focus on companies with superior prospects for earnings andexpansion.

These are often exciting, innovative companies with leadership positions intheir markets companies whose stocks can soar if conditions are right. Theproblem is recognized growth stocks typically are priced at a premium and canquickly drop in value if they dont meet the markets high expectations. So itsnot surprising growth managers make big gains when they do well, but alsosustain big drops during difficult times.

Value managers, in contrast, favor companies that are selling below theirintrinsic worth.

These may be companies that are in a temporary slump, possess hiddenassets or are in mature industries unappreciated by Wall Street. Valueinvesting can offer the advantage of limited downside risk; some value stocksare priced low enough that they are unlikely to sustain a sharp decline, even if the overall market drops. The disadvantage is the investor may have to wait aseemingly interminable period of time for the market to recognize that value.

In comparison to growth managers, value managers dont experience thesame highs, but typically do much better during down markets.

So what is an investor to do? The dilemma is the style question has no right orwrong answer. Its really a matter of what gives you the comfort level youwant.

Your alternative is to diversify between growth and value styles to spread yourrisk and increase the stability of returns. Institutional investors often take stylediversification to an extreme, spreading assets across the gamut of stylesubcategories and niche approaches. The pension fund of a large Canadiancorporation may have as many as 20 distinct investment styles in its portfolio.

That level of diversification simply isnt practical for most individuals. Indeed,over diversifying can create a whole new set of problems, including higherexpenses, more complicated oversight, fragmenting of returns and loss of focus on your investment objectives.


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Another danger is that your diversified stable of managers may actually besimilar in style. In that case, you get only the illusion of diversification withoutthe benefits.

Typical po r tfolio as se t al location design and thei r characterist ics

30% Equity/ 70% Fixed I ncome:These investors care most about protecting their savings. These investors cantolerate small, short-term, temporary losses in the value of the portfolio but

need to preserve capital value even if it means foregoing additional returns.

Asset Mix:Canadian Equity: 15%U.S. Equity: 15%Canadian Bonds: 60%Money Market: 10%

Po rtfolio Characteristics*Average Annual Return: 8.9%

Best Year Return: 27.5%Probability of Annual Gain: 90.6%Probability of Annual Loss: 9.4%Worst Year Decline: -8.0%

40% Equity/ 60% Fixed I ncome:These investors care more about earning a reasonable level of income on theirsavings. They are willing to tolerate temporary declines in market value forpotential additional returns. These investors may make cash draws on theportfolio in the near term and, therefore, need to be assured of a fairlyconstant income stream.

Asset Mix:Canadian Equity: 20%U.S. Equity: 20%Canadian Bonds: 50%Money Market: 10%

Po rtfolio Characteristics*


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Average Annual Return: 9.4%Best Year Return: 25.5%Probability of Annual Gain: 84.9%Probability of Annual Loss: 15.1%Worst Year Decline: -10.5%

50% Equity/ 50% Fixed I ncome:These investors want to balance income and growth. Short-term cash flowneeds are not likely and the investment horizon is over the medium term.These investors are willing to tolerate temporary declines in the market value

as long as the medium-term returns are acceptable.

Asset Mix:Canadian Equity: 20%U.S. Equity: 20%International Equity: 10%Canadian Bonds: 40%High Yield U.S. Bonds: 10%

Po rtfolio Characteristics*

Average Annual Return: 10.2%Best Year Return: 31.2%Probability of Annual Gain: 79.2%Probability of Annual Loss: 20.8%Worst Year Decline: -13.6%

60% Equity/ 40% Fixed I ncome:These investors care about the growth of their investment. It is unlikely theywill need to draw on the investment for funds and their time horizon is longerterm. These investors are not concerned about temporary market declinesbecause they expect to be compensated by a higher longer-term return.

Asset Mix:Canadian Equity: 20%U.S. Equity: 20%International Equity: 20%Canadian Bonds: 30%High Yield U.S. Bonds: 10%


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Po rtfolio Characteristics*Average Annual Return: 10.9%Best Year Return: 35.6%Probability of Annual Gain: 79.2%Probability of Annual Loss: 20.8%Worst Year Decline: -15.8%

70% Equity/ 30% Fixed I ncome:These investors have a long-term investment horizon and care most about themaximum growth of their investments that is possible within a diversified

portfolio. Current or mid-term income or capital requirements are non-existent. These investors are indifferent to market fluctuations during theinvestment term because their focus is on maximum long-term capitalappreciation through a diversified portfolio.

Asset Mix:Canadian Equity: 20%U.S. Equity: 30%International Equity: 20%Canadian Bonds: 20% High

Yield U.S. Bonds: 10%Po rtfolio Characteristics*Average Annual Return: 11.5%Best Year Return: 37.4%Probability of Annual Gain: 77.4%Probability of Annual Loss: 22.6%Worst Year Decline: -18.4%

* Based on historical market analysis (1950-2002)


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Mistake #7: Hiring Managers Solely By Their Numbers

More money has been lost searching for yield than at the point of a gun. --RayDevoe

If you want to know how not to hire an investment adviser, take a lesson fromthe way small investors typically select mutual funds: They pore over theMorningstar ratings, The Financial Post and Canadian Business lists, andchoose from the top-performing funds. Then, with the nations hottest funds intheir portfolios, they go on to earn impressive returns, right?

Wrong! The fact is investors who buy into top-performing mutual funds oftendont make much money, and may even lose.

How is this possible? Because small investors typically jump onto thebandwagon after a fund has already made a big upward move and then jumpback out when returns slump. Not only do they miss most of the funds gains,they take the brunt of its losses.

All things being equal, this years top-performing fund is less likely to getstellar results next year than a fund that did poorly.

It all goes back to the laws of probability and the cyclical nature of the market.


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Here is what a simple, investment Policy Statement (IPS) may look like.

I nvestment Policy Statement ( I P S) for ( Client)

Investment Amount that this IPS will apply for - $100,000

Desired Investment Returns 7-9% Annually

Investment Objectives Balanced Growth

Investor Risk Tolerance Profile Balanced (7 on 0-10 Risk

Level)

Investment Time Horizon 10-12 Years

Investment Allocation Approximately 34% Canadian Equity, 11%Foreign Equity, 39% Income Trusts, 11% Fixed Income,

Investments Chosen ABC Fund Balanced (60% Value Equity/40%Fixed Income) XYZ Fund - Canadian Dividend (100% CanadianGrowth) DEF Fund - Income Trust (Fixed Income Style with Equity

like volatility) QRS Fund Specialty (Oil & Gas) (100% CanadianSmall Cap Junior Resource)

Investment Strategy Annually Re Balance back to these ratios of:

40% ABC Fund Balanced 20% XYZ Fund - Canadian Dividend 20%DEF Fund - Income Trust 20% QRS Fund - Specialty

Relevant Benchmark: Morningstar Average Canadian Balanced FundIndex

Client Signed: _____________________________

Advisor Signed: _____________________________


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Mistake #8: Getting Caught Up I n The Relative Performance Game

I ts better to be approximately right than precisely w rong. --A non

Its always gratifying to learn your portfolio has outpaced the TSX 300, or thatyour bond fund was up 8% when the Bond Index showed 7% returns. Butwhile this stimulates good feelings and cocktail-party chatter, it is really quiteirrelevant to an investor.

Much more important to know is how well your investment program is doing inrelation to your personal goals.

When you get caught up in tracking how well your investments are doing

relative to everyone elses, you can easily become fixated on short termresults. Poring over performance comparisons also breeds anxiety becausetheres always someone youre not keeping up with. And if you try to fix things by firing an underperforming manager and hiring one with betternumbers, youll probably end up making a classic mistake: buying managershigh and selling them low.

The real problem is that individuals who get into the relative performancegame want to play it only part of the time. They want to beat the indexeswhen the markets going up, but they dont want to lose any money when themarket tumbles.

Unfortunately, you cant have it both ways.

As an investor, its critical that you stay on top of your investmentperformance. But make sure you do it the right way:

Measure performance of your total portfolio against your targeted goalsAlways look at after-tax returns. Dont forget to take inflation and expensesinto account. Compare segments of your portfolio against the appropriate stylebenchmarks. Recognize the level of risk associated with your returns.

By measuring performance against your personal objectives and not justagainst the market, youll know where youre going and how quickly youregetting there. Both pieces of information are vital if you want to reach yourgoal in time to enjoy it.

A fool and his money are invited elsewhere a sign outside Warren Buffets office.


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Mistake #9: Not Know ing When To Fire A Manager

When it comes to termination, investors frequently err in two ways: By firingmanagers they should keep and by keeping managers they should really letgo.

Instead of automatically terminating a manager with poor performance, firstfind out whats behind the disappointing results. For instance, a manager maybe getting mediocre returns because his investment style is temporarily out of favor. Fire him now and youll miss the rebound in performance when the stylecycle shifts. Or you might have a defensive manager sitting on large cashreserves because of a speculative market environment. His near-term

performance may suffer, but if you drop him for a more aggressive manager,youre inviting trouble when the market inevitably cools.

Conversely, sometimes a manager should be fired in spite of goodperformance. If you see warning signs of organizational turmoil, a slackeningof investment disciplines or other kinds of trouble ahead, you should beprepared to take action before your portfolio suffers.

There may even be times when you decide to fire a manager who has done agood job, such as when your investment goals have changed.

For example, as time goes by your investment focus may shift from long-termgrowth toward maximum current income, requiring you to move assets fromone manager to another.

Generally, its not a good idea to change managers too frequently or tooquickly. It takes time to become comfortable with a manager and it can alsotake time for managers to prove their worth. You should hire a manager onlyafter careful research and thoughtful deliberation. The decision to fire amanager should be made in exactly the same way.

Mistake #10: Not Having A Certified Financial Planner As A Consultant

Advice is what we ask for when we already know the answer but wish we didnt. --Erica J ong

At this point, you may be wondering how you or any other busy person issupposed to develop an investment plan, create an asset allocation strategy,select managers, monitor and evaluate results and accomplish all the other


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things this business of investing entails. It has become a dauntingly complexendeavor and is getting more so all the time.The solution is to seek the help and expertise of an experienced andknowledgeable Certified Financial Planner (CFP) as a consultant. If youre inthe market for a consultant, its important at the outset to understand aconsultants role and to recognize exactly what a consultant can and cannot do for you.

For starters, a Certified Financial Planner (CFP) consultant doesnt manageyour assets. Rather, he or she helps you create the strategic framework that isessential for the successful management of your assets.

Additionally, a Certified Financial Planner (CFP) offers a wide perspective on a

range of money issues, such as cash flow analysis, insurance matters,retirement planning, college planning and estate planning.

And a Certified Financial Planner (CFP) is quite different from traditionalstockbrokers, A Certified Financial Planner (CFP) isnt just in the business of recommending investment products. They are in the business of providingindependent, objective advice to help your investment program succeed.

Exactly what kind of help does that entail? A good consultant will guide youand work with you in a logical, step-by-step process of developing and

executing a sound investment plan within the context of a financial plan.Specifically, a Certified Financial P lanner ( CFP) can help you:

Analyze the past performance of your investment portfolio not justhow well individual managers and funds have done, but how well youhave done overall.

Thoroughly assess your investment needs, including tax considerations,current income and future capital requirements.

Come to grips with your true tolerance for risk. Until they suffer biglosses, people tend to believe theyre more risk tolerant than they reallyare.

Strike a realistic balance between risk and reward so that yourexpectations are within the realm of probability, based on historicalinvestment returns.

Resolve family issues from spending habits to inheritance.


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Test varying asset allocation mixes against your goals and arrive at astrategic level of diversification among asset classes and investmentstyles.

Simulate the likely best- and worst-case scenarios of any given assetand style allocation mix, so youre better prepared for the unexpected.

Gain control over scattered assets, consolidating investments andeliminating unsuitable vehicles.

Hire suitable managers based on a set of selection criteria tailored toyour personal needs, temperament and biases.

Look critically at manager fees or trustee arrangements.

Measure individual managers results as well as total portfolio returnsagainst the right yardsticks.

Decide when to fire a manager who isnt giving you the results or theservice you want. (Dont hold your breath waiting for a manager to tellyou, Ive done a lousy job; you should fire me).

Monitor the entire investment process including income flows,savings, cash needs and investment returns and identify potentialtrouble spots.

Make tactical shifts in your investment plan when warranted by changingeconomic conditions.

Make major strategic revisions to your plan if your needs, goals orcircumstances change.

Keep your emotions in check during turbulent times.

Finding someone with the experience, the objectivity and the critical judgmentit takes to handle all these tasks isnt easy. Like money managers, CertifiedFinancial Planners (CFP) are found in different varieties and different places.They may work in a small, independent firms or a large, diversified accountingfirm.


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But hiring a good Certified Financial Planner (CFP) isnt a matter of going tothe right firm, or even the right kind of firm. Its a matter of finding the rightperson for you.

It may be tempting to take the path of least resistance and look to an oldschool friend or golfing buddy who is in the business. Alternatively, someinvestors rely on a traditional broker, a family attorney or their tax adviser forinvestment counsel. If you have good people functioning in these roles, youcertainly want them on your team. But if you have substantial assets, yourinvestment program should be quarterbacked by a senior Certified FinancialPlanner (CFP) someone whose training and experience focuses on onemajor role helping you do a better job of managing your managers and yourfinances.

A Certified Financial Planner (CFP) is someone who:

Has a strong investment background as distinct from a successfulsales background with enough experience to have been throughseveral market cycles

Has a high degree of personal integrity.

Is dedicated to giving you sound, objective advice, rather than selling

you something Creates the comfort level you need to be completely open and honest

about your life goals and investment needs

With this combination of qualities, a Certified Financial Planner (CFP) is able toplay the variety of roles the job requires mentor, confidant, educator,sounding board, referee and advocate, as well as be a source of wise andthoughtful counsel.

Dont expect this individual to guarantee that youll always beat the market, orthat you wont encounter some reversals along the way. But a Certif iedFinancial Planner (CFP) can help you avoid the big mistakes thatinvestors all too frequently make on their own.

Even if a Certified Financial Planner (CFP) did nothing else, that benefit aloneis invaluable. A planner can also help you make better choices, achievingincremental returns that, with compounding, will mount into substantial dollargains over time.


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Of course, no Certified Financial Planner (CFP), no matter how dedicated, canor should take over your role as the ultimate decision-maker. Thatresponsibility belongs to you and you alone. But with the right kind of advice,youll be better equipped to make the critical decisions necessary to reach yourgoals.

My Closing Comments:

You know, I have always been fascinated by what causes certain people toobtain success vs. those who only hope for success but achieve nothing.

You know, and I know, that information is the difference between success.

Thats why you downloaded this report How To Stop These 10 I nvestorMistakes for the information.

Right?

Well, in actual fact its the implementation of that information that makes forsuccess.

How does it make a big difference?

Just as we eat food for it's nutritional value, we also gather information for it'seducational value.

Eating fast-food or junk food with relatively low nutritional value in greatquantities is just as bad as overloading yourself with information that's haslittle value or is 'theoretical' in nature.

The type of information I look for is information from a person who hasactually done the things they have written about.

For example if I want to learn sky diving wouldn't it make sense to buyinformation from someone who has actually sky-dived? In addition, it would beeven better to buy information from someone who actually sky-dived AND hastaught other people how to sky-dive as an instructor?

But there are some things you just cannot learn in a book, no matter howgood the value of the information.


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Yes, the quality is important, but that is only the first step in obtaining thegoal you want.

The goal is whatever you're trying to achieve: More money; success in aparticular field; happiness in a relationship; acquisition of a particular objectlike a big house or car, etc.

But there are certain things you CANNOT learn in a book.

You can only learn them by DOING.

You get direction and valuable info in books but until you implement, takeaction and push yourself into taking appropriate steps toward your goal,

nothing happens.

All that fine knowledge you've accumulated sits dormant in your brain'sstorage facilities waiting to be activated.

There are some things you can ONLY LEARN by doing.

No matter how much you read, or think you know, there are some things youwill never know until you DO it.

Let me make this as clear as I can.There are 2 types of knowledge (actually there are even more than that, butwe're sticking with just 2 for now).

There is knowledge obtained through reading.

And there is knowledge obtained through doing or through experience.

Some people call it 'experiential' knowledge, others call it "Street Smarts".

There are tons of millionaires who have little more than a high schooleducation who made their money by DOING, not reading.

There are even more millionaires who made their money by obtaining valuableinformation and TAKING ACTION. I'll assume you're the type of person wholikes to read, otherwise you wouldn't be reading this.

However, the one thing you're missing at this moment - is taking action.


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Most people try to do too much, get overwhelmed and end up frustrated anddo nothing.

Do ONE THING and do it now. Don't try to do too many things at once... focusand do one, then another until you wake up one day and say,

"Wow, look at how far I've come".

Success by Design. Do You Have What it Takes?

"There i s one qua lity that one must possess to win , and that i s def in iteness of

purpose, the know ledge of w hat one w ants, and a burning desire to possess it ."- Napoleon Hill

A lot of the tasks that are needed to get ahead financially are really quitesimple.

Things like spending less than you earn, paying off bad debt, saving regularly,investing in RRSPs, and either educating yourself in financial matters orhiring someone who is.

Most investors think that investment success comes with conviction or intuitionwhen really the thing that matters most is discipline. I wonder if you agree ordisagree with that statement and if in fact you are practicing it?

For me, there are five key disciplines to financial success:

1. A Disciplined Savings plan2. A Disciplined Spending Plan3. A Disciplined I nvestment Allocation Plan4. A Discipline to R ebalance

5. A Disciplined & Comprehensive Financial Plan with Annual ReviewsSo there you have it, the five disciplines to financial success. Stay true to yourdisciplines and success will follow.

As most of us spend upwards of 2,000 hours per year working to makemoney. We hope that you will agree that it only makes sense to devote acouple of hours each year to review the various elements in your financialplan.


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It is a fact that success is increased with continuous top performance coupledwith a disciplined, ongoing, deliberate process of direction and review.

If you'd like to explore these and other ways to increase the likelihood of yourfinancial success, contact me, Mark Huber at (604) 207-9970 or you just wantto let me know what's on your mind - let me know here:

mailto:[email protected]?subject=QuestionForMarkFrom10InvestorMistakesReport

I sincerely hope that How to Stop These 10 I nvestment Mistakes FromHappening To You has been useful to you.

I wish all the very best to you now and in your future endeavors.

Remember, always feel free to contact me on any financial topic you may havequestions on.

I look forward to hearing from you.

To Your Success,

Mark Huber, CFP

______________________________________________________________

"Y ou tell me w hat success is to you and I ' ll draw the plansto build the life of your dreams." _ _ _ _ _ _ _ _ _ _ ___________________________________________________

Contact I nformation:

Mark Huber, CFPSetForLife Financial ServicesRichmond, British Columbia, [email protected] Site:http://HowToBeSetForLife.com


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Did You Like This Report?

We would enjoy hearing your comments.

If you would like further information on this or anything else just give me acall or click here Mark Huber, CFP Tel: (604) 207-9970mailto:[email protected]?subject=CommentsForMark

Share This W ith A Friend!

Do you think your friends, family or co workers may find this report helpful tothem as well?

You have my permission to pass it along without making any changes ormodifications to the report itself.


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http://HowToBeSetForL ife.comCopyright Mark Huber 2006. All Rights Reserved.30-

Copyright 2006 SetForLife Financial Services. Al l r ights reservedw orld wide.

Neither Mark Huber, SetForLife Financial Services assume any liabilitywhatsoever for the use of or inability to use any or all of the informationcontained in Mark's Web Sites, Blogs, emails, ebooks, Podcasts, audio, reports,

broadcasts and newsletters.

The information expressed and contained in Mark Hubers Web Sites, Blogs,emails, ebooks, reports, broadcasts and newsletters are solely the opinion of the author based on his personal observations and 21 years of experience inthe financial services industry.

Use this information at your own risk. Be responsible! Always do yourown due diligence.

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