Don't Hire Managers Solely on Their Performance

Investors who buy into top performing mutual funds often don't make much money from this investment, and may even lose a fair amount. In smart investing, we should not chase after the hottest mutual funds or hottest stocks. Buying a mutual fund because it has great performance record is not smart investing.

Buying investments based on performance is not smart investing because investors usually jump into investing in those stocks or mutual funds AFTER a fund has already made a big upward move and then jump back out when returns slump.

Be sure to remember this smart investing tip when you are looking into hiring your next investment manager.