Has your portfolio been savaged by this new edition of a 'Bear Market'? Are you feeling there's no end in sight and have no hope of recovering what has been lost? Well, there are solutions and I hope to offer a few here.

Make no mistake, we are in a longer term 'Bear Market' and there is no way of knowing when it will end. Having said that there are a number of strategies you can use to protect yourself, as outlined below.

1) Investor, Know Thyself The very first step in being a successful investor is having a good understanding of who you are. By that I mean you must know how much risk you are able to tolerate, financially, psychologically and emotionally. For example, if you have a $10,000 account are you able to experience a loss, even temporarily, of $1,000, $2,000, or more, less? If your portfolio of $100,000 slides to $90,000 of value, or $80,000, are you able to comfortably sleep at night? These types of temporary declines are very common in the stock market so you must understand in advance what amount of loss, if any, you are able to live with.

Solution: Carefully develop your investment portfolio to meet your personal risk tolerance. As a general rule you may reduce market risk by balancing your portfolio between a mix of stocks, bonds, and money market, and/or their mutual fund and exchange traded fund equivalents.

2) Are You Investing for Income, Future Growth, or Some Combination of Both? It is very difficult and increases risk to use your investment account to receive income while at the same time attempting to protect and even grow your principal. For example, if you are withdrawing 4% annual income from your account and it goes down 10% in market value in one year, your account is worth 14% less than what you started with. Imagine three years in a row of market declines, as happened 2000 - 2002.

Solution: Build two portfolios, one for growth and one for income. The growth account could be filled with stocks and or the equivalent mutual and exchange traded funds. The second account, designed for income, could consist of income annuities, corporate and/or municipal bonds, or their equivalent mutual and exchange traded funds.

3) Invest With Tax Consequences Firmly in Mind Don't let the tax tail wag the dog, but always build and manage your investment portfolio with strategies to minimize taxation. If your total return in one year is 9% and you give up 4% in taxes, you probably have not been as tax efficient as you could have been.

Solution: As much as possible use tax efficient strategies. For example you could place your income generating investments in municipal bonds, income annuities, and/or tax efficient vehicles like index income oriented mutual and exchange traded funds (ETF's).

4) What to Do in an Existing 'Bear Market'? Assess the damage, keep the better performers, and sell those that have generated the greatest losses. Don't wait for them to get back to break even and then sell, a common mistake made by many. They may never come back, or it may take so long that you will have missed many other opportunities in the meantime.

5) Keep Investment Costs Low Avoid buying investments that carry steep costs, many hidden from view. Front end loads, back end loads, markups, markdowns, internal expenses, surrender penalties and more await the unwary buyer.

Solution: If you are an accomplished self directed investor buy your investments through a discount brokerage firm like Schwab, TD Ameritrade, Fidelity etc. Buy only No-Load mutual funds, exchange traded funds, low transaction fee stocks and bonds. If you need guidance then at the risk of sounding self promotional seek out a registered investment advisor who works on a fee for service basis. This type of advisor has a fiduciary responsibility to place the interests of the client first and foremost, ahead of self interest and ahead of any financial services firm with which he or she may be affiliated.

6) Can You Protect Your Assets in a Long Term 'Bear Market'? I believe the answer is yes you can. You do not have to 'ride out' a long term 'Bear Market', watching helplessly as you lose 20%, 30% or more as has happened to so many in the past.

Solution: Buy quality, low to moderate risk investments. If the long term trend is down, as is currently the case, sell those getting hit the hardest, move to money market or even partially to 'inverse' exchange traded funds. 'Inverse' funds are designed to do opposite of the respective index so if the major indexes are trending down you can reposition part of your portfolio into inverse ETF(s) moving in the opposite direction, as they are designed to do.

Note: Nothing in the preceding paragraphs are to be construed as specific investment advice. It is meant only as a general guide to possibilities available to today's investor.

Are you someone who is worried about where to invest your hard-earned money? Do you need ideas for investing? If you ask me, I would suggest Mutual Funds - for they give better returns than banks and are considerably less risky than stocks. For investing in mutual funds, consider the following points:

1. The first point before investing is to clearly identify what you need. Is it big returns or safety? Is it regular payments or aggressive growth? And so on..first prioritize your need. If it is still not clear, then consider various factors around you.

a. If your age is somewhere between 18 and 35 then you should look to be more aggressive and go for growth and big returns (for you have a long career to earn money..so choose more risky options)
b. If you are over 50 years old, then you must look to secure your regular source of income, so you should look for safer investments that will ensure payments regularly.
c. If you lie between 35 and 50 then you should go for specific needs that depend on various situations (like your children's education, your various other needs like a new vehicle, new house etc.) around you.

2. Once you have identified what your investment should give you, look out for the plans that best suit your objective. For the youngsters, there are various funds like emerging market funds, small cap funds etc., and for people who are over 50 there are options that pay dividends regularly and those that invest in government securities only and for the others there are various schemes like tax savers, education supporters etc.

3. After you are through with the second step, you must decide on a portfolio (or a mutual fund that provides a similar portfolio) to invest your money in. You must be a little careful in this step and choose the best and the safe ones. You must make sure that the portfolio is in line with your objectives and will be able to cater to your needs all the time.

The mutual funds in India were buffeted from the meltdown in the Wall Street and its impact on the Indian stock market. The foreign Asset Management Companies, or AMCs, had to deal with another factor. Many mutual fund investors in India were anxious whether their investments in the foreign AMCs were safe, particularly when Lehman went for bankruptcy and AIG's fate was also not decided. There are worries on more Wall Street firms going under.

India has a sizable presence of global AMCs including Fidelity, HSBC, and Morgan Stanley. There are also foreign partners in AMCs, including Merrill in DSP Merrill Lynch, and Sun Life in Birla Sun Life.

But the investors can be assured of their investments in foreign AMCs. Of course, their investment in mutual funds in India has the market risk per se from the fortunes of the stock market or debt markets.

The structure of the mutual funds safeguards the investors in case an AMC falls. The AMCs just manage the money. The creditors of the AMC do not have any right over the investors' money. The AMC just acts as an investment manager of the mutual fund and gets fee-based income on it. The AMC takes investment decisions according to the scheme objectives.

Another entity, the Custodian, has the role of safekeeping of securities and it has no role in asset management. The Custodian is appointed by the Trustees, who are group of persons that have supervisory authority over fund managers. The Trustees of mutual funds in India also ensure that the fund managers stick to the trust deed and the assets of the funds are held safely. The Trustees also perform other supervisory role.

The mutual fund is set up by a sponsor who works closely associated with the AMC. The regulations of the mutual fund regulator, SEBI, require that the Sponsor has to contribute a minimum percentage to the net worth of the AMC.

The Board of Directors of an AMC are normally elected each year at the annual meeting and act on behalf of the shareholders.

So the different levels of supervision in a mutual fund delink your investment from that of the bankruptcy of the AMC. Still, we wish all the foreign AMCs a good luck as they battle the Wall Street storm.

Of course, the creditors have the AMC have rights over the assets of the AMC like its offices. But not over the investors' money.

Are all your worries over from investment in mutual funds? Not exactly, says French bank BNP Paribas. The global markets, including those in India, have not bottomed out yet, it says. But on the positives it says that it expects the Reserve Bank of India to hold rates for the next six months on concern over growth rates. Hopefully, some respite for realty, banking and other interest-rate sensitive counters. BNP Paribas sees Asian banks untouched from the global credit crisis.

As of now, the bank remains underweight on commodities. But still the French bank is worried over how he rescue plans of US Treasury Secretary Henry Paulson and Fed chief Ben Bernanke's will hold off another crisis.

If you understand how to invest in mutual funds you can easily find a way to improve your finances. Everyone wants easy money. If you have money sitting around and are not using it, it is natural to turn to the stock market as an investment option.

Unfortunately the stock market is fickle and it is far too easy to loose money if you don't know what you are doing. Most people have no idea where to start, let alone how to actually make money.

The amount of research needed to make good investment choices is overwhelming. Fortunately small investors no longer need to do this research. Mutual fund providers do the research for you and present a range of options you can understand.

With managers and brokers who understand the current markets and who understand how to take advantage of it, mutual funds give investors an upper edge in investment. Those who choose the stocks that make up the funds keep up-to-date with all the information and make choices to make their mutual fund the most profitable to all involved.

Some mutual funds wind up costing investors a lot of money. Managers and brokers take fees to pay for their expertise. When investing, it is smart to look for a no penalty mutual fund to minimize extra fees.

No load funds are in fact just as good as mutual funds where you can expect to pay fees. Sometimes they are even better. Having extra fees does not make your investment any more secure or productive.

There is an amazing amount of information available for those who are looking to invest. You can find information in books and articles from magazines and financial journals. Newspapers often discuss investment information in their financial pages. There are many websites and other internet sources with lots of investment information. Many mutual funds also offer pamphlets to read at no cost. By researching you can learn all about your investment possibilities.

It is very important to read up as much as you can before investing. It is your knowledge that will help you find a mutual fund that suits your needs.

Tips on hidden fees and unseen risks will help you understand what goes on behind the scenes in the mutual fund world. You can avoid many pitfalls by researching carefully. There is also a lot of information on the history of individual companies and funds and you can track their performance to see their track record.

It is easy to buy into a mutual fund once you find one that suits your needs. With lots of information available you can be in charge of your investment choices and know how to invest in mutual funds effectively.

Equity funds, if selected in the right manner and in the right proportion, have the ability to play an important role in achieving most long-term objectives of investors in different segments. While the selection process becomes much easier if you get advice from professionals, it is equally important to know certain aspects of equity investing yourself to do justice to your hard earned money.

Knowing them and by using them in the selection process can make a big difference to the end result. Here are some important investment guidelines:

1. Know your risk profile

Before you take a decision to invest in equity funds, it is important to assess your risk tolerance. Risk tolerance depends on certain factors like emotional temperament, attitude and investment experience. Remember, while ascertaining the risk tolerance, it is crucial to consider one's desire to assume risk as the capacity to assume the risk.

It helps to understand different categories of overall risk tolerance, i.e. conservative, moderate or aggressive. While a conservative investor will accept lower returns to minimise price volatility, a moderate investor would be all right with greater price volatility than conservative risk tolerances to pursue higher returns.

An aggressive investor wouldn't mind large swings in the NAVs to seek the highest returns.

Though identifying the desire for risk is a tough job, it can be made easy by defining one's comfort zone.

2. Don't have too many schemes in your portfolio

While it is true that diversification helps in earning better returns with a lower level of fluctuations, it becomes counter productive when one has too many funds in the portfolio.

For example, if you have 15 funds in your portfolio, it does not necessarily mean that your portfolio is adequately diversified. To determine the right level of diversification, one has to consider factors like size of the portfolio, type of funds and allocation to different asset classes. Therefore, it is possible that a portfolio having 5 schemes may be adequately diversified whereas another one with 10 schemes may have very little diversification.

Remember, to have a well-balanced equity portfolio, it is important to have the right level of exposure to different segments of the equity market like large cap, mid-cap and small cap. In addition, for a decent portfolio size, it is all right to have some exposure in the sector and specialty funds.

3. Longer time horizon provides protection from volatility

As an equity fund investor, you need to understand that volatility is an integral part of the stock market. However, if you remain focused on the long-term objectives and follow a disciplined approach to investing, you can not only handle volatility properly but also turn it to your advantage.

4. Understand and analyse 'Good Performance'

'Good performance' is a subjective thing. Ideally, to analyse performance, one should consider returns as well as the risk taken to achieve those returns. Besides, consistency in terms of performance as well as portfolio selection is another factor that should play an important part while analysing the performance.

Therefore, if an investment in a mutual fund scheme takes you past your risk tolerance while providing you decent returns, it cannot always be termed as good performance. In fact, at times to ensure that your investment remains within the parameters defined in the investment plan, you may to be forced to exit from that scheme.

In other words, you need to assess as to how much risk did the fund manger subject you to, and did he give you an adequate reward for taking that risk. Besides, you also need to consider whether own risk profile allows you to accept the revised level of risk

5. Sell your fund, if you need to

There is no standard formula to determine the right time to sell an investment in mutual fund or for that matter any investment. However, you can definitely benefit by following certain guidelines while deciding to sell an investment in a mutual fund scheme. Here are some of them:

You may consider selling a fund when your investment plan calls for a sale rather than doing so for emotional reasons.
You need to hold a fund long enough to evaluate its performance over a complete market cycle, i.e. around three years or so. Many of us make the mistake of either holding on to funds for too long or exit in a hurry. It is important to do a thorough analysis before taking a decision to sell. In other words, if you take a wrong decision, there is always a risk of missing out on good rallies in the market or getting out too early thus missing out on potential gains.
You should consider coming out of a fund if its performance has consistently lagged its peers for a period of one year or so.
It doesn't make sense to hold a fund when it no longer meets your needs. If you have made a proper selection, you would generally be required to make changes only if the fund changes its objective or investment style, or if your needs change.
6. Diversified vs. Concentrated Portfolio

The choice between funds that have a diversified and a concentrated portfolio largely depends upon your risk profile. As discussed earlier, a well-diversified portfolio helps in spreading the investments across different sectors and segments of the market. The idea is that if one or more stocks do badly, the portfolio won't be affected as much.

At the same time, if one stock does very well, the portfolio won't reap all the benefits. A diversified fund, therefore, is an ideal choice for someone who is looking for steady returns over the longer term.

A concentrated portfolio works exactly in the opposite manner. While a fund with a concentrated portfolio has a better chance of providing higher returns, it also increases your chances of under performing or losing a large portion of your portfolio in a market downturn. Thus, a concentrated portfolio is ideally suited for those investors who have the capacity to shoulder higher risk in order to improve the chances of getting better returns.

7. Review your portfolio periodically

It is always a good idea to review your portfolio periodically. For example, you may begin reviewing your portfolio on a half-yearly basis. Besides, you may be required to review your portfolio in greater detail when your investments goals or financial circumstances change.

While reviewing the portfolio, you must consider the following:

How is your portfolio performing from the viewpoint of your personal goals? Are you comfortable with the price fluctuations that may have occurred keeping in view your short term, medium term and long-term goals?
How are your investments performing compared with others in the same category? It is important as for example, a 15% growth in your fund may look great, but not if the average returns given by other funds in the same category is 25 per cent. However, too much emphasis shouldn't be put on the short-term performance.

Most salespeople talk too much. The more you tell, the less you sell.

If you want to close a lot more sales, do nothing but ask questions for the first half of your client interview. The payoffs to asking questions are enormous as I explain in this article. Questions increase your sales in 5 ways to:

Direct your clients thoughts
Find out the necessary facts
Determine the “emotional facts”
Increase your stature and credibility in the prospect’s eyes
Maintain control of the conversation
Direct Your Prospect’s Thoughts

How would you like to make your prospects think what you want them to think? You can indeed direct your prospect’s thoughts with your questions. Before we proceed, would you make a mental picture of a large gray elephant for me? With this simple question, I can make you form a mental picture and you can consistently direct your prospects mental activity in the same way. I know one super sales person who asks prospects, “What are your plans when your health fails?” Immediately the client’s thoughts and mental pictures turn to scenes in a hospital bed or wheelchair. Questions are your most powerful tools for closing more sales.

Just the Facts, Ma’am
Additionally, questions allow you to find out the facts (how much money they have, how much taxes they pay, how are their current investments allocated, what insurance do they have) and protect yourself. You must have all of these facts before you can ever ethically and legally discuss any recommendations (know your client rule).

Emotional Questions
More importantly, questions allow you to determine emotional preferences; what do you like/not like, what’s comfortable/uncomfortable, what do you move toward/away from? Do you feel comfortable with the stocks you own, or nervous? If you became disabled tomorrow, what would you feel remorse about not having completed? These feeling questions are critical. They keep you from making recommendations that will never fly with your prospect.

Junior financial advisors often think their job is to do the “best thing” for the client and to have lots of product knowledge. The best thing for a particular prospect might be tax sheltered growth and the advisor therefore recommends a variable annuity. But if the prospect is afraid of market fluctuations, then this recommendation is dead in the water before it is spoken! Therefore, the “best thing” is an appropriate recommendation that your prospect also feels comfortable with. And you can only know what’s comfortable by asking questions.

Gain Stature
Questions communicate to the prospect that you are a professional and that you are thorough, that you get all the facts before starting into a sales pitch. You position yourself as a true advisor, a knowledgeable expert, rather than salesperson. (Think about a visit to the doctor. Notice how he relentlessly asks questions and hesitates to make any diagnoses until he is 98% sure? If you did the same with your prospects, your closing ratio would soar).

Maintain Control of the Sales Conversation
Questions allow YOU to control the conversation. If the prospect starts firing questions at you, and you start answering them, who is in control of the conversation? You’ve lost it and the probability of a sale is very low. Picture an intersection full of traffic. Do you want to be the cop in the center directing the traffic or one of the drivers being told to make a left turn? Questions allow you to stay in control of the sales conversation.

As you see, the lost art of asking questions can cost you dearly. Where can you learn this skill? The best book I have seen is Neil Rackhams’s Spin Selling and Spin Selling Field Book.

Even when you do start to tell, end each explanation in a question and give your statements real power, as in this example:

This mutual fund has had a five-star ranking, the highest rating, for the last 15 years. And you do want the best, don’t you?

By ending every explanation or paragraph in a question, you have the prospect “buy in” and you also test their temperature. If you ask the above question and they stare into space or start squirming, you know right away something is off, that you are misreading the prospect. You can than ask, “That fact seemed to make you uncomfortable. Did it?”

Employ questions for a powerful increase in your closing ratio. That would be great, wouldn’t it?

The thousands of agents I have observed are mostly sales laborers. They spend their day:

Answering the telephone
Opening mail
Handling inquiries
Resolving Problems
Scheduling appointments
Calling Prospects
Reacting
Take a hard look and see if you are doing the same. Read on and you'll find a way out.

In between the above activities, you have client appointments. The client appointments, the opportunity to make your money, get sandwiched in between the activities that generate no money. In other words, you have two appointments consuming a total of 3 hours a day and the other 7 hours you spend in non-revenue-generating activity.

Although I have often heard doctors criticized for their lack of financial understanding, they know so much more than the average financial planner about running a business. Look again at the above list of laborer activities. Does your doctor do any of these activities? No. He spends his time in client appointments, back to back, all day long. The entire day is one long fee-generating party.

Your doctor is a professional, not a laborer. Are you a sales professional or a sales laborer? If you do not like your answer, here's the way out.

Refuse to do the laborer activities by hiring someone to do them. Your first reaction to my suggestion will be something about not having enough money, or when you make x amount, that's what you'll do, or someday when…..

You've got it backwards. When your doctor first opened his practice, he hired an office manager who acted as receptionist and he hired a nurse. He hired two people before he had one patient! Then, he could spend his time visiting with other established doctors generating referrals, spend some hours a week on the staff of a hospital and generate billable services and pursuing the activities which would build a lucrative business with an abundance of clients. Your doctor pursued a simple financial concept that many agents do not get: invest today and reap the rewards tomorrow. Sure, you tell your clients that, but look at your business to see what you believe.

Too many agents are focused on minimizing today's expenses and they will never create the tomorrow they desire. Most agents do not understand the simple model of a successful professional practice. The model is that you do everything to maximize the most valuable resource for its highest and best use--the agent’s time must be spent in selling activities. The time for those activities must be created BEFORE the activities occur. You must create a CONTEXT before you can create the CONTENT.

So:

Hire a service assistant if you do not already have one. They will do the activities on the list at the top of this article

Hire a sales assistant that does all of the sales grunt work. Activities such as setting up seminars, sending out the direct mail, calling CPAs and setting up appointments to meet them, calling your clients and getting referrals and finding out the groups they belong to that you can speak at, sending out a newsletter to your clients and prospects, etc.

For 120 days you may have negative cash flow. But then you will notice a transformation. You will wake up one morning and notice that you are a Sales Professional! You spend your day meeting with clients, prospects, referrals, referral sources, networking, giving talks, writing articles--all of the activities that only a professional can do, the items you cannot delegate. Business is being referred, you have more appointments, your are getting larger clients and your monthly income is hitting new records.

You're skeptical that this risk will work? Here's a tip. If you want to see how extraordinary you are, you've got to raise the stakes. You've got to take risk beyond your comfort zone to operate at a higher level. And if you need a reminder to stay on track, just call your doctor's office to make an appointment and see how many weeks you have to wait for an opening.