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How To Stop These 10 Investor Mistakes From Happening To You!

Authored By:

Mark Huber, CFP

SetForLife Financial Services Richmond, British Columbia, Canada Office Office Office Office Phone: Richmond (604) 207-9970 Fax: Richmond (604) 207-9971 Phone: Burnaby (604) 439-3341 Fax: Burnaby (604) 439-1900

E-Mail: mhuber@HowToBeSetForLife.com Web Site: http://HowToBeSetForLife.com

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Mark Huber, CFP is also author of "The UnCanadian Way To Get Rid Of Your Mortgage
http://HowToGetRidOfYourMortgage.com/TheUnCanadianWay.html

"The UnCanadian Way To Be House Rich AND Cash Rich"


http://HowToBeSetForLife.com/HouseAndCashRich.html

http://HowToBeSetForLife.com/TheUnCanadianWay.html

"The UnCanadian Way To Create Wealth

"The UnCanadian Way To Get Out Of Debt Fast


http://HowToBeSetForLife.com/BeDebtFreeFast.html

"The UnCanadian Way To Deal With Your RRSPs


http://HowToBeSetForLife.com/RRSPsTheUnCanadianWay.html

"The UnCanadian Way To Finance Your Kids Education


http://HowToBeSetForLife.com/RESPsTheUnCanadianWay.html

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You Have Full Distribution Rights to This Report. You may FREELY give this report to family, friends, colleagues and anyone else who you feel will benefit from reading it. You may also offer it to your Website visitors, as a Bonus for a related product, 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 this file whatsoever. You may also NOT sell this product. Copyright (c) 2006 Mark Huber All Rights Reserved http://HowToBeSetForLife.com

LEGAL NOTICE: Every effort has been made to accurately represent this information and its potential. Please note that each individuals success depends on his or her background, experience, commitment, desire and motivation. As with any endeavor, there is no guarantee that you will be successful. The author, publishers and distributors of this information assume no responsibility for the use and/or misuse of this information and contents herein, or for any injury, damage and/or financial loss sustained to persons and/or property as a result of using this information and/or contents. While every effort has been made to ensure the reliability of the content herein, the liability, negligence or otherwise, or from any use, misuse or abuse of the operation of any methods, strategies, instructions or ideas contained in the material herein is the sole responsibility of the reader. The reader is strongly suggested and encouraged to seek competent legal and/or accounting and/or financial planning advice before engaging in any action and/or activity indicated or implied.

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Short Version: You and you alone are responsible for any and all results that may or may not be incurred from anything you do as a result of reading this report. Copyright (c) 2006 Mark Huber All 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 and hear allot! I want to set the record straight about what works and what doesnt in the investing 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 financial freedom. To Your Success!

Mark Huber, CFP

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Table Of Contents Introduction: 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 Hints for 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 The Time (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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Introduction: Getting Rich Slowly But Surely Prologue The two basic rules for investors are: Rule #1 DONT LOSE MONEY! Rule #2 DONT FORGET 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 this weeks top-performing fund. While this report wont tell you how to double your money in six months. We will give you a program that will help you deliberately and consistently build your wealth over time to get rich slowly, but surely. We will lay out the basic building blocks of an effective, proven strategy that is so simple, it never occurs to most investors: Dont focus on trying to beat the market or outperform other investors, factors you cant control. Instead, focus on avoiding mistakes the one thing you can control. By avoiding mistakes, you benefit from two powerful forces you have on your side: Time, which lets you build wealth slowly and steadily, without taking unnecessary risks; and the Power of Compound Interest, which gives your portfolio an enormous boost over time especially in the latter stages of your wealth creation program. We will give you a perspective on the correct way to look at the critical issues and help you identify the right questions to ask the professionals. By demystifying the process of hiring and firing money managers, we will help you avoid being hoodwinked by industry jargon and bogged down by information overload. Above all, we will show you how to sidestep the classic pitfalls that trap many investors. Learn how to avoid these big mistakes, and in the long run, you will win at investing.
You can get poor a lot faster than you can get rich.Anon

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Mistake #1: Business

Treating Investments Like A Part-Time Job Not A

You probably have an enviable annual income, a sizeable investment portfolio and a comfortable lifestyle youd like more time to enjoy ...someday. How well your 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 on your personal wish list. No doubt many investors feel theyre so busy making money they cant devote much 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 make sure 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 on investment 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 asset allocation how the portfolio is divided among different investment classes, such as stocks, bonds and cash equivalents. Knowing this, large institutional investors (i.e. pension funds, insurance companies, etc.) devote substantial resources to creating, fine-tuning and adapting their asset allocation policies. By contrast, many individuals make the mistake of not having an asset allocation policy at all. Instead, they back into asset allocation decisions based on 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 is vulnerable to missed opportunities at best, and costly errors at worst. SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -8-

For example, investors approaching retirement age often shift automatically toward fixed-income investments forgetting many people live 25 or more years past their actual retiring date and need to keep growing their assets in order to maintain their lifestyles. Like anything that tries to look into the future, an asset allocation strategy cant guarantee results. Although history tends to repeat itself, the only thing certain is that investment cycles will occur. But having a sound, well-thoughtout asset allocation strategy is essential if you want to reach your long-term goals. Here are 10 helpful hints for you to consider when managing your portfolio: Helpful Hint One: High-grade bonds and stocks are fundamentally different assets. Bad years for bonds are often good years for stocks. Bad years for stocks are sometimes good years for bonds. By combining both asset classes (stocks and bonds) in your portfolio it not only lessens your portfolio risk it also protects the downside as well as being able to participle in the up side allowing for greater portfolio stability, growth and by extension compounding to 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 reminder that the two can have poor years at the same time. Helpful Hint Two: Portfolio risk rises disproportionately slowly as stocks are added to the portfolio. In a study conducted on stocks and bonds for the years 1987 to 2002, the risk (as measured by standard deviation) of a 25 per cent stock 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-bonds portfolio 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 15 per 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 cent versus 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 stocks are added to the portfolio. For the years 1987 to 2002, the 25 per cent stock portfolio earned about 40 per cent of the additional return on the all-stocks SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -9-

portfolio compared to the all-bonds portfolio. The 50 per cent stock portfolio earned about 75 per cent of the additional return. Helpful Hint Five: An often-overlooked risk for the long-term investor is keeping a too-conservative portfolio. By focusing too closely on the volatility of individual assets instead of on the entire portfolio, investors often maintain an undersized 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 returns are unpredictable (i.e., future returns will be like random draws from historical returns) and you have a long investment horizon, then your optimal stocksbonds mix should not depend upon recent years returns. After good times (for example, 1995 to 1999) and bad times (2000 to 2002), your target asset mix should be essentially the same. Unfortunately, this appears to be the opposite of what investors actually accomplish. Most increased their target stock exposures through the 1990s and decreased it through the bear market that followed. The fixed-weight rebalancing strategy prevents investors from a tendency to increase the target stock weight after good times and to decrease it after bad times. It forces a discipline on them that keeps emotions out of the equation. Helpful Hint Seven: A balanced portfolio avoids market timing. You should never keep all of your assets in the worst performing asset class. This is important because losses are more costly than gains in two senses: First, for most of us, the pain from a 10 per cent loss exceeds the euphoria from a 10 per cent gain; second, if an asset class loses 33.3 per cent of its value, it takes 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 will be 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, is guaranteed to have the highest percent of the portfolio in the overvalued asset class at its market peak, and the lowest percent in the undervalued asset class at its market trough. For example, someone who started 1987 with a 50 per cent 50 per cent stock/bond portfolio but never rebalanced, would have had a 73 per cent stock exposure at the peak of the stock market in March 2000. Helpful Hint Nine: Rebalancing provides a discipline that helps investors overcome inertia. Without this discipline, many investors do nothing because SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -10-

they are not sure what action to take. From our experience this control is very important. We can rarely predict that stocks will beat bonds or vice versa. Without this discipline, the uncertainty might prevent the average investor from making any changes at all. Helpful Hint Ten: A fixed-weight strategy takes little time and can save time when doing taxes. A portfolio that not only automatically rebalances the asset classes but also does the rebalancing based on a new money contribution and not a buy/sell discipline will keep you disciplined and not result in undue taxation.

Mistake #3: Trying To time The Market


A study of economics usually reveals that the best time to buy anything is last year. --Marty Allen

Like the fountain of youth and the pot of gold at the end of the rainbow, a successful market-timing strategy is something that people have always dreamed 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 equivalents when prices fall. No other investment strategy has a more powerful or universal 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 will continue to try, despite all evidence they will never succeed. But on Wall Street and among institutional investors, the consensus is clear: It is time not timing that makes you successful in the market.

Mistake #4: Letting Emotions Drive Investment Decisions


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

Most of us encounter strong emotions when dealing with money issues and understandably so. Not only can money have a lot to do with our feelings of SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -11-

success, security and self worth, it can have a huge, tangible impact on our lives. Money can give us experiences, freedom and the ability to choose the kind of life we want. The trouble comes when emotions are the unseen driver of investment behavior, distorting perceptions and sparking reactive, short-term decisions that end up being counterproductive. For instance, irrational fear is usually the force behind a classic investment mistake: Directing your manager to sell all your stocks after the market takes a plunge. Those with cooler heads and a longer view know this actually may be the 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 their money into bonds. By investing so conservatively, they let inflation eat away at their principal. Others, propelled by ego or an unquenchable desire to get rich quick, search out super-aggressive growth managers, ignoring the fact higher returns almost always mean higher risks. In between are all shades of investors who let 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 and panic dont lead you astray. How do you guard against that? By having a logical, well-thought-out investment game-plan; one you genuinely believe in and to which you are willing to commit, long-term. In short, emotions do have a place in investing so long as they dont occupy the drivers seat!

Mistake #5: Ignoring The Biggest Risk Of All


Ive got all the money Ill ever need if I die by 4 oclock. --Henny Youngman

Ask affluent investors to name their biggest investment risk and most will tell you 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 wont accumulate enough capital and well outlive our money.

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

Canadians tend to: Underestimate how much income well need. Forget how long our money might have to last. Assume well stay healthy. Save much far less than we should. 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 feel protected, but thats strictly an illusion. Within 30 years, these assets will lose one-half their purchasing power, assuming the cost of living rises only 2% a year. With inflation gnawing away at their security, seemingly risk-averse investors have really only traded one risk for another the risk of outliving their money! They are going broke safely!

Mistake #6: Expecting Any Managers Investment Approach To Work All The Time
Wall Street Guru: Someone with a high degree of self-delusion and a strong bull market. --John 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 doesnt favor his particular approach at that point in time. The market isnt a machine that moves in regular, predictable patterns. Its an ever-changing mosaic that can be approached successfully in many different ways. If one approach were clearly superior, everyone would quickly embrace it, and it would inevitably lose its advantage. Experienced managers know it is critical that they adhere to their chosen investment approach and by doing so, they are sure to encounter times that severely test their mettle. SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -13-

While management philosophies differ in many ways, nearly every approach is a variation on one of two fundamental styles growth investing and value investing. Each style has its pluses and minuses. Growth managers focus on companies with superior prospects for earnings and expansion. These are often exciting, innovative companies with leadership positions in their markets companies whose stocks can soar if conditions are right. The problem is recognized growth stocks typically are priced at a premium and can quickly drop in value if they dont meet the markets high expectations. So its not surprising growth managers make big gains when they do well, but also sustain big drops during difficult times. Value managers, in contrast, favor companies that are selling below their intrinsic worth. These may be companies that are in a temporary slump, possess hidden assets or are in mature industries unappreciated by Wall Street. Value investing can offer the advantage of limited downside risk; some value stocks are 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 a seemingly interminable period of time for the market to recognize that value. In comparison to growth managers, value managers dont experience the same 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 or wrong answer. Its really a matter of what gives you the comfort level you want. Your alternative is to diversify between growth and value styles to spread your risk and increase the stability of returns. Institutional investors often take style diversification to an extreme, spreading assets across the gamut of style subcategories and niche approaches. The pension fund of a large Canadian corporation 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 higher expenses, more complicated oversight, fragmenting of returns and loss of focus on your investment objectives. SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -14-

Another danger is that your diversified stable of managers may actually be similar in style. In that case, you get only the illusion of diversification without the benefits.

Typical portfolio asset allocation design and their characteristics 30% Equity/70% Fixed Income: These investors care most about protecting their savings. These investors can tolerate 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% Portfolio 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 Income: These investors care more about earning a reasonable level of income on their savings. They are willing to tolerate temporary declines in market value for potential additional returns. These investors may make cash draws on the portfolio in the near term and, therefore, need to be assured of a fairly constant income stream. Asset Mix: Canadian Equity: 20% U.S. Equity: 20% Canadian Bonds: 50% Money Market: 10% Portfolio Characteristics* SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -15-

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 Income: These investors want to balance income and growth. Short-term cash flow needs 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% Portfolio 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 Income: These investors care about the growth of their investment. It is unlikely they will need to draw on the investment for funds and their time horizon is longer term. These investors are not concerned about temporary market declines because 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% SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -16-

Portfolio 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 Income: These investors have a long-term investment horizon and care most about the maximum growth of their investments that is possible within a diversified portfolio. Current or mid-term income or capital requirements are nonexistent. These investors are indifferent to market fluctuations during the investment term because their focus is on maximum long-term capital appreciation 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% Portfolio 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. --Ray Devoe

If you want to know how not to hire an investment adviser, take a lesson from the way small investors typically select mutual funds: They pore over the Morningstar ratings, The Financial Post and Canadian Business lists, and choose from the top-performing funds. Then, with the nations hottest funds in their portfolios, they go on to earn impressive returns, right? Wrong! The fact is investors who buy into top-performing mutual funds often dont make much money, and may even lose. How is this possible? Because small investors typically jump onto the bandwagon after a fund has already made a big upward move and then jump back 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 get stellar 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. Investment Policy Statement (IPS) 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% Canadian Growth) DEF Fund - Income Trust (Fixed Income Style with Equity like volatility) QRS Fund Specialty (Oil & Gas) (100% Canadian Small 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 Fund Index Client Signed: _____________________________ Advisor Signed: _____________________________

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


Its better to be approximately right than precisely wrong. --Anon

Its always gratifying to learn your portfolio has outpaced the TSX 300, or that your bond fund was up 8% when the Bond Index showed 7% returns. But while this stimulates good feelings and cocktail-party chatter, it is really quite irrelevant to an investor. Much more important to know is how well your investment program is doing in relation 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 term results. Poring over performance comparisons also breeds anxiety because theres always someone youre not keeping up with. And if you try to fix things by firing an underperforming manager and hiring one with better numbers, youll probably end up making a classic mistake: buying managers high and selling them low. The real problem is that individuals who get into the relative performance game want to play it only part of the time. They want to beat the indexes when the markets going up, but they dont want to lose any money when the market tumbles. Unfortunately, you cant have it both ways. As an investor, its critical that you stay on top of your investment performance. But make sure you do it the right way: Measure performance of your total portfolio against your targeted goals Always look at after-tax returns. Dont forget to take inflation and expenses into account. Compare segments of your portfolio against the appropriate style benchmarks. Recognize the level of risk associated with your returns. By measuring performance against your personal objectives and not just against the market, youll know where youre going and how quickly youre getting there. Both pieces of information are vital if you want to reach your goal 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 Knowing When To Fire A Manager When it comes to termination, investors frequently err in two ways: By firing managers they should keep and by keeping managers they should really let go. Instead of automatically terminating a manager with poor performance, first find out whats behind the disappointing results. For instance, a manager may be getting mediocre returns because his investment style is temporarily out of favor. Fire him now and youll miss the rebound in performance when the style cycle shifts. Or you might have a defensive manager sitting on large cash reserves 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 good performance. If you see warning signs of organizational turmoil, a slackening of investment disciplines or other kinds of trouble ahead, you should be prepared to take action before your portfolio suffers. There may even be times when you decide to fire a manager who has done a good job, such as when your investment goals have changed. For example, as time goes by your investment focus may shift from long-term growth toward maximum current income, requiring you to move assets from one manager to another. Generally, its not a good idea to change managers too frequently or too quickly. It takes time to become comfortable with a manager and it can also take time for managers to prove their worth. You should hire a manager only after careful research and thoughtful deliberation. The decision to fire a manager 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 Jong

At this point, you may be wondering how you or any other busy person is supposed to develop an investment plan, create an asset allocation strategy, select managers, monitor and evaluate results and accomplish all the other SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -21-

things this business of investing entails. It has become a dauntingly complex endeavor and is getting more so all the time. The solution is to seek the help and expertise of an experienced and knowledgeable Certified Financial Planner (CFP) as a consultant. If youre in the market for a consultant, its important at the outset to understand a consultants role and to recognize exactly what a consultant can and cannot do for you. For starters, a Certified Financial Planner (CFP) consultant doesnt manage your assets. Rather, he or she helps you create the strategic framework that is essential 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 traditional stockbrokers, A Certified Financial Planner (CFP) isnt just in the business of recommending investment products. They are in the business of providing independent, objective advice to help your investment program succeed. Exactly what kind of help does that entail? A good consultant will guide you and 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 Planner (CFP) can help you: Analyze the past performance of your investment portfolio not just how well individual managers and funds have done, but how well you have 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 big losses, people tend to believe theyre more risk tolerant than they really are. Strike a realistic balance between risk and reward so that your expectations are within the realm of probability, based on historical investment returns. Resolve family issues from spending habits to inheritance. SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -22-

Test varying asset allocation mixes against your goals and arrive at a strategic level of diversification among asset classes and investment styles. Simulate the likely best- and worst-case scenarios of any given asset and style allocation mix, so youre better prepared for the unexpected. Gain control over scattered assets, consolidating investments and eliminating unsuitable vehicles. Hire suitable managers based on a set of selection criteria tailored to your personal needs, temperament and biases. Look critically at manager fees or trustee arrangements. Measure individual managers results as well as total portfolio returns against the right yardsticks. Decide when to fire a manager who isnt giving you the results or the service you want. (Dont hold your breath waiting for a manager to tell you, 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 potential trouble spots. Make tactical shifts in your investment plan when warranted by changing economic conditions. Make major strategic revisions to your plan if your needs, goals or circumstances change. Keep your emotions in check during turbulent times. Finding someone with the experience, the objectivity and the critical judgment it takes to handle all these tasks isnt easy. Like money managers, Certified Financial Planners (CFP) are found in different varieties and different places. They may work in a small, independent firms or a large, diversified accounting firm.

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But hiring a good Certified Financial Planner (CFP) isnt a matter of going to the right firm, or even the right kind of firm. Its a matter of finding the right person for you. It may be tempting to take the path of least resistance and look to an old school friend or golfing buddy who is in the business. Alternatively, some investors rely on a traditional broker, a family attorney or their tax adviser for investment counsel. If you have good people functioning in these roles, you certainly want them on your team. But if you have substantial assets, your investment program should be quarterbacked by a senior Certified Financial Planner (CFP) someone whose training and experience focuses on one major role helping you do a better job of managing your managers and your finances. A Certified Financial Planner (CFP) is someone who: Has a strong investment background as distinct from a successful sales background with enough experience to have been through several 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 to play the variety of roles the job requires mentor, confidant, educator, sounding board, referee and advocate, as well as be a source of wise and thoughtful counsel. Dont expect this individual to guarantee that youll always beat the market, or that you wont encounter some reversals along the way. But a Certified Financial Planner (CFP) can help you avoid the big mistakes that investors all too frequently make on their own. Even if a Certified Financial Planner (CFP) did nothing else, that benefit alone is invaluable. A planner can also help you make better choices, achieving incremental returns that, with compounding, will mount into substantial dollar gains over time. SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -24-

Of course, no Certified Financial Planner (CFP), no matter how dedicated, can or should take over your role as the ultimate decision-maker. That responsibility 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 your goals. My Closing Comments: You know, I have always been fascinated by what causes certain people to obtain 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 Investor Mistakes for the information. Right? Well, in actual fact its the implementation of that information that makes for success. How does it make a big difference? Just as we eat food for it's nutritional value, we also gather information for it's educational value. Eating fast-food or junk food with relatively low nutritional value in great quantities is just as bad as overloading yourself with information that's has little value or is 'theoretical' in nature. The type of information I look for is information from a person who has actually done the things they have written about. For example if I want to learn sky diving wouldn't it make sense to buy information from someone who has actually sky-dived? In addition, it would be even better to buy information from someone who actually sky-dived AND has taught other people how to sky-dive as an instructor? But there are some things you just cannot learn in a book, no matter how good the value of the information. SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -25-

Yes, the quality is important, but that is only the first step in obtaining the goal you want. The goal is whatever you're trying to achieve: More money; success in a particular field; happiness in a relationship; acquisition of a particular object like 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, take action and push yourself into taking appropriate steps toward your goal, nothing happens. All that fine knowledge you've accumulated sits dormant in your brain's storage 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 you will 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, but we'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 school education who made their money by DOING, not reading. There are even more millionaires who made their money by obtaining valuable information and TAKING ACTION. I'll assume you're the type of person who likes to read, otherwise you wouldn't be reading this. However, the one thing you're missing at this moment - is taking action. SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -26-

Most people try to do too much, get overwhelmed and end up frustrated and do nothing. Do ONE THING and do it now. Don't try to do too many things at once... focus and 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 is one quality that one must possess to win, and that is definiteness of purpose, the knowledge of what one wants, and a burning desire to possess it." - Napoleon Hill

A lot of the tasks that are needed to get ahead financially are really quite simple. Things like spending less than you earn, paying off bad debt, saving regularly, investing in RRSPs, and either educating yourself in financial matters or hiring someone who is. Most investors think that investment success comes with conviction or intuition when really the thing that matters most is discipline. I wonder if you agree or disagree with that statement and if in fact you are practicing it? For me, there are five key disciplines to financial success: 1. 2. 3. 4. 5. A A A A A Disciplined Savings plan Disciplined Spending Plan Disciplined Investment Allocation Plan Discipline to Rebalance Disciplined & Comprehensive Financial Plan with Annual Reviews

So there you have it, the five disciplines to financial success. Stay true to your disciplines and success will follow. As most of us spend upwards of 2,000 hours per year working to make money. We hope that you will agree that it only makes sense to devote a couple of hours each year to review the various elements in your financial plan. SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -27-

It is a fact that success is increased with continuous top performance coupled with a disciplined, ongoing, deliberate process of direction and review. If you'd like to explore these and other ways to increase the likelihood of your financial success, contact me, Mark Huber at (604) 207-9970 or you just want to let me know what's on your mind - let me know here: mailto:mhuber@HowToBeSetForLife.com?subject=QuestionForMarkFrom10Inv estorMistakesReport I sincerely hope that How to Stop These 10 Investment Mistakes From Happening 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 have questions on. I look forward to hearing from you. To Your Success,

Mark Huber, CFP ______________________________________________________________ "You tell me what success is to you and I'll draw the plans to build the life of your dreams." _____________________________________________________________ Contact Information: Mark Huber, CFP SetForLife Financial Services Richmond, British Columbia, Canada mhuber@HowToBeSetForLife.com Web Site: http://HowToBeSetForLife.com SetForLife Financial Services http://HowToBeSetForLife.com Copyright Mark Huber 2006. All Rights Reserved. -28-

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Neither Mark Huber, SetForLife Financial Services assume any liability whatsoever for the use of or inability to use any or all of the information contained 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 in the financial services industry. Use this information at your own risk. Be responsible! Always do your own due diligence.

-The End-

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