OT: Buying Stock

[Gary Layng]

On Wednesday 20 February 2008 11:07, Asaf Maruf wrote:
> I think i did not make my point clear. I maintain that for a person to
> venture into buying and selling stocks, one has to be very well prepared.
> There is too much risk involved.
>
>
> Alternately, one can go with the less risky instruments like GIC's, mutual
> funds and other government securities. Not much preparation is required
> except for knowing your fund manager and details of the instrument.
>
> They can give a decent return of 10-15% on average.
>
>
> Asaf
>
Um, no.

First, with mutual funds YOU ARE BUYING STOCK.  It's just you're counting on a 
more knowledgeable person making the choices for you.  The risks are still 
there - plenty of funds end up going into the toilet - for example the 
ethical funds, which with only a couple of exceptions have tended to tank.  
Plus, you have the fund management fees scalping you.

GIC's and government securities do NOT offer 10-15% returns.  The relatively 
low level of risk doesn't justify it.  In the case of GIC's, you are 
guaranteed a certain rate of return over a set period of time.  Your return 
is less than the interest rate the bank or whatever issuing body gets on the 
loans and mortgages they give out.  (They have to make a profit after all - 
they're not a charity!)  As for government securities, because the level of 
risk is least for this, they will be able to get away with minimal rates of 
return, just barely above inflation.

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