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With so many outlets telling us how to invest in today’s investment frenzied marketplace, it’s difficult to decipher through it all to determine what investments and strategy are best for you. After reading the Wall Street Journal; SmartMoney: and Barron’s; then watching CNBC and Bloomberg, you find that you are more confused than ever!

Quality, performance and expense should be three of your top priorities in choosing your investments. This of course should be predicated on your age and risk tolerance.

Quality takes time to build. Make sure your investment choices have a proven track record of quality performance and a reputable name that has been around for a while. There are many great funds and stocks that are introduced each year, but if you are not a professional or very knowledgeable about the market, then let other people discover if those new investments are going to be quality over time.

Nothing speaks as loud as performance. We all want the best performance, but return numbers can be deceiving. For example, We have two investments each producing an 11% return from 1997 to 2007. Although they both have identical returns, they have traveled a completely different road to get there. Let’s say that investment “A” produced a +34% in 1999, but returned a -36% in 2002. Investment “B” on the other hand, gave you a +21% in 1999 and a -7% in 2002. Which of these two investments would you be more comfortable owning? If two investments are equal in performance, always choose the one with the lowest volatility. In this case it would be investment “B”. Volatility can be found in what’s called a fund or stock’s beta. The lower the beta the lower the volatility and vice versa. There are plenty of investments out there with good solid returns and low volatility. Investments with considerable dividends will help lower the beta/volatility.

Expenses are most evident in mutual funds and annuities and can eat away at your returns over time. Most people will notice performance, but very few investors seem to know what their expenses are. All mutual funds have an expense ratio that is shown on their profile. Anyone can go on the internet to Standard & Poor’s or Morningstar’s website and pull up the profile on the funds they own or are thinking about investing in. It’s a good practice to try and keep your expense ratio below 1%. Some global/international funds will be over 1% due to increased operation costs, but it is important not to disregard these if you want a balanced portfolio.

So remember, when everyone from friends, TV, magazines, newspapers and the internet try and tell you where and what to invest in, just smile, then let quality, performance and expense be your guide.
David Chamblee is a financial advisor in Atlanta, Georgia.
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