There are numerous investment philosophies, but at the end of the day, almost all investors have a common goal – to have their money work for them and increase their assets.
As financial professionals, our goal is to partner with each of our clients on their unique journeys and create a game plan for optimizing their wealth. While we keep a watchful eye on their investments and provide recommendations, we strive to help our clients develop and understand a plan to pursue their financial goals. Our approach incorporates the philosophy that we believe our best client is an educated client.
Do you have an investment philosophy? Are you aware of the common denominators that knowledgeable investors have? Here are five key strategies that can help you become a more proficient investor and improve your investing experience.
The Sooner the Better
“The best time to plant a tree was 20 years ago. The second-best time is now.” Of course, it’s better late than never, but those who begin their investing journey early have an advantage. For example, the further away you start investing from your retirement age goal, the more opportunity you have to build your “nest egg” and see more solid returns on your money.
The more time you allow your investments to grow, the more you can utilize the benefit of compounding. Compounding your returns is one of the biggest assets investors have. Reinvesting your profits or distributions, instead of spending them, can generate larger sums of money, creating a healthier portfolio over time.
Using time as an advantage, more and more parents and grandparents are setting their children up for financial success. Custodial Roth IRAs, 529 Education Savings Plans, and teen brokerage accounts are potential avenues to help youth start saving early and help them become financially literate.
If you’d like to explore options for your children or grandchildren, please contact us and we’d be happy to help you.
Consistency is Crucial
For your money to grow, it is helpful to have a systematic approach of adding to your investments on a consistent basis. Whether it is each paycheck, once a month, once a quarter, or annually, creating a plan for recurring additions into your portfolio will support you in pursuing your financial goals. Also, allocating all or a percentage of “bonus” dollars, such as tax refunds, holiday or birthday cash gifts, or work bonuses, can boost your investment portfolio.
Also, identifying strong investments and adding to them when appropriate is a healthy habit for investors. Being consistent requires discipline, but this strategy can prove to be very fruitful over time.
As a financial professional we enjoy helping clients maintain a consistent investment approach.
Strong Returns vs the Highest Potential Return
One of Warren Buffet’s well-known sayings is, “if you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.” Instead of looking for the latest and greatest, or what could possibly give you the highest return in the shortest amount of time, savvy investors commonly employ a lower risk, longer time duration versus a higher risk, shorter time duration.
While risk is an inevitable part of the investment process, each investor needs to determine how much risk they are comfortable with. Your risk appetite can be relational to your knowledge, proficiency, and financial literacy. Temperament also plays an essential role in risk determination. Understanding your emotional tendencies when the markets waver will help you determine what risk assessment level is most ideal for you.
As a financial professional, one of our primary goals is to help our clients create a plan that considers risk tolerance. If you are not sure what your risk tolerance is, call us and we can help assess and determine this for you.
Taking a Long-term Viewpoint on Investing
We have all heard the sayings, “Patience is a virtue,” or, “Good things come to those who wait.” There is considerable merit to these adages when discussing investment viewpoints.
Historically, equities have rewarded long term investors. In the current volatile economic environment, having a long-term mindset can help manage the anxiety and mental strain an erratic market can bring to even seasoned investors. We understand that adopting a long-term mindset can be difficult, especially when you see your portfolio decline, so here are four key elements to help you harness this long-term mindset:
Understand that market turbulence is normal. Markets go up, and markets go down and while these fluctuations are uncomfortable, they are not uncommon.
Avoid or limit media exposure. Fear sells, and the media will go to many measures to keep you in their audience. Focus on your personal goals and objectives and don’t let media outlets reduce your confidence or commitment to your well-devised plan.
Patience has a proven track record. Historically, investors who stayed in the market through volatile times came out significantly ahead of where they would have been should they have pulled their money out.
Remember you are “investing” which is considered a long-term activity. You are not “trading” which is a higher-risk, intense activity with many unpredictable variables.
Even the best of the best in every field often need assistance or advice. Your financial goal is different from anyone else’s, with unique paraments and nuances. It needs special attention!
Having the expertise of a knowledgeable financial professional can help you understand and navigate the maze of potential tax ramifications. Professional guidance can assist you with your investment considerations like time horizons and risk tolerance. There is no “one size fits all” approach to investing and it’s often prudent to explore the various options and strategies available to you.
It is our goal to assess and understand each of our clients’ needs and objectives. As skilled financial professionals, we can help you create a well-devised, diversified financial plan. We want you to succeed in your financial endeavors!
We are available and accessible to you. We believe in keeping an open line of communication with our clients. Should you have any questions or concerns, please contact us.
We value our clients and are honored to be a part of their journey. We strive to understand the objectives of each individual so we can create an optimal plan.
As a reminder, please keep us aware of any changes (such as health issues, changes in your retirement goals, or the sale of a home). The more knowledge we have about your unique situation the better equipped we will be to best advise you.
If you’d like to have an assessment of your investment portfolio and overall financial picture, we can discuss this at your next review meeting, or you can call us to set up an appointment.
We pride ourselves in offering:
Consistent and strong communication,
A schedule of regular client meetings, and
Continuing education for every member of our team on the issues that affect our clients.
Advisory Services offered through Materetsky Financial Group Inc., a Registered Investment Advisor. Securities offered by Registered Representatives through Private Client Services, Member FINRA/SIPC. Private Client Services and Materetsky Financial Group Inc. are unaffiliated entities. All insurance products are offered through unaffiliated insurance companies. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Materetsky Financial Group, Inc. [“Materetsky]), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Materetsky. Materetsky is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of the Materetsky’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.materetsky.com. Please Remember: If you are a Materetsky client, please contact Materetsky, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian. Note: The views stated in this letter are not necessarily the opinion of broker/dealer, and should not be construed, directly or indirectly, as an offer to buy or sell any securities mentioned herein. Investors should be aware that there are risks inherent in all investments, such as fluctuations in investment principal. With any investment vehicle, past performance is not a guarantee of future results. Material discussed herewith is meant for general illustration and/or informational purposes only, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice. This material contains forward looking statements and projections. There are no guarantees that these results will be achieved. All indices referenced are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. The S&P 500 is an unmanaged index of 500 widely held stocks that is general considered representative of the U.S. Stock market. The modern design of the S&P 500 stock index was first launched in 1957. Performance prior to 1957 incorporates the performance of the predecessor index, the S&P 90. Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. Past performance is no guarantee of future results. CDs are FDIC Insured and offer a fixed rate of return if held to maturity. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed.There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. There is no guarantee that a diversified portfolio will enhance overall returns out outperform a non-diversified portfolio. Diversification does not protect against market risk. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. There is no guarantee that a diversified portfolio will enhance overall returns out outperform a non-diversified portfolio. Diversification does not protect against market risk.