When looking for a freelance investment consultant, you must first decide what risks you are willing to take. Once this is known, you should also have some working knowledge of how stocks and mutual funds function and rated. Requesting an investment consultant to give details the volatility measures of the Beta, R-Squared, and standard deviation will help differentiate the frauds from the experienced consultant.
The Beta of a stock is a numerical indicator of how the stock measures up against the index of which it follows. The perfect beta is a 1.0. If a stock’s price moves less than the index, it follows the beta will be below one. If it fluctuates more, it will be above one.
The R squared of a stock compares the movement of the stock to the index it follows and they are explainable. The closer the number is to 100, the more that is understood about the movement. For a number between 85 and 100, the stock fluctuates similar to the index. If the number is below 70, its fluctuations are unexplained and are not the same as the index in which it follows.
The standard deviation of a stock is an indicator of how the short term performance of a stock is, as it is compared to its long term performance.
These three measures are generated from the stocks performance over the past three years usually. Expert freelance investment consultants should know this and how they should be used when deciding on the risks of any stock or mutual fund.
A new type of investment vehicle has entered the market in the last few years. Not too many freelance investment consultants have experience with them yet. These are the ETFs or exchange traded communities. These are similar to mutual funds with many different investments in them but are traded on a daily basis, like stocks are. The investment in these can be stocks, futures, or even leverage funds against key indexes. These are considered to have an increased risk because most are for short term gains than stocks and mutual funds.
The expert freelance investment consultants should be aware of all these mentioned items and more. When deciding on which consultant to choose, look at their education and experience. A major factor should be if they have ever worked as an investment consultant with a firm before. If they have, then their length of service and reason for leaving should be known.
There certainly are some risks involved when you have to put your trust in outsource consultants in investment with your money. Those that get paid on a commission from the performance of their advice will give you a better chance of receiving better investment. The incentive that they will only be paid if their advice is right is a great motivator to do better research before they make any move with your investment dollars.
Finding and trusting a freelance investment consultant is not something that should be left to chance. Ask for evidence of past performance. Just remember, past performance is only an indicator of what could happen, not what will happen. Find the best investment Consultants on Globfreelance.com
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