The Investment Diaries

How To Protect What You've Got

By Julia Scirrotto

I don't come from money. My parents didn't have a "money guy." At best, they paid the bills and hoped for a fat return at tax time. So when a lump of cash landed in my lap at age 16 - a $300,000 wrongful-death settlement after my mother was bested by cancer - I had no investment experience, just a conviction that this money was a force to be corralled in order to make my life better going forward. But how?

Trial and Error
I entered the market in bullish 1999, when securities appeared to be a license to print money. Lucky me, I had two big-shot brokers (family acquaintances I suspect wanted to help the girl whose mom died, although I had chump change compared to what they usually handled). They said I could be a millionaire by 30 with a simple formula: diversify across sectors, mix small and large capital stocks, buy low and sell high. I signed off on their picks. They were the experts.

Then the market turned, and in no time, I was down a nauseating $80,000. I panicked, sold my losers, and fired one of the managers: a classic newbie knee-jerk reaction, but I felt like my choices were sell low or lose even more.

Taking Responsibility
I know now that I didn't really understand risk, that the potential to earn big money comes with volatility. I also didn't believe a rebound would come. It did, of course, and by 2006 I'd bounced back enough to put a down payment on a condo and keep a sizable chunk invested.

Which brings me to this year. Around tax time, it became apparent that my broker really was treating my money like chump change (a $4000 IRA contribution languished, uninvested, for a year while the Dow rose more than 15 percent) while charging a premium.

I wouldn't tolerate such inattention from a boyfriend, and I couldn't accept it from a business adviser. So I dumped my last "expert" and decided to manage my portfolio through a firm with a self-service option (popular ones include e*trade, Fidelity, and Vanguard). They helped me identify my risk tolerance and an appropriate group of funds, and sent me home to do the trades on my own computer. Which felt about as simple as tuning up my own car.