Keep in mind when creating a financial plan, a successful investor has been right three times. To profit from any investment, is not good enough to merely select right investment, it is also necessary that the ASP be purchased and sold at the right time and also in the right manner. A good enrolled agent will tell you that selection, timing entitling are all keys to success, when it comes to maintaining a proper investment portfolio. Also, the minded investor should never put all his eggs in one basket, diversification of a client or investors assets is critical.
Diversification, is one of the more important principles of financial planning. It is the driving force behind the success of mutual fund. Although it is conceivable that a person could diversify his assets himself, it is highly unlikely that he could diversify his assets as well as a mutual fund could. While investing in a particular sector or individual mutual fund, can still lead to losses, generally those losses will be less than if the client failed to diversify. In general, even if your client chooses to invest in a technology or energy mutual fund and there is a significant driving force in the market, which causes the mutual fund to do less than forecast, your clients funds will be relatively safe.