Would you like to know how investment managers are selected for your portfolio? It certainly is not a case of “we like this guy,” or “who has the best return.” There is a very clear and defined due diligence process. But because our team of advisors recognize that this many not be visible for you, it seemed valuable to share more about it.
Are more choices better? The makers of toothpaste certainly think so. But so many choices can lead to indecision and, worse, inaction. Thankfully, people find a way to cut through the noise, buy their toothpaste and, most importantly, actually brush their teeth frequently. Investors could learn from this. Read more about my quirky analogy.
In the United States, the average federal tax refund is about $3,000. Simply put, this means that the average American tax filer pays the U.S. government about $250 per month too much and then gets their own money back in one chunk in the spring.
That brings up three questions:
1. Should they be giving the government an interest free loan?
2. What should they do with this money?
3. Seriously… $300,000… How do I get that?
Imagine a situation where you were at the playground on the seesaw with your older brother. It works well at first. Then winter comes. The next spring you hop on the seesaw again, but it doesn’t work anymore. Your brother grew faster, and now the seesaw is out of balance. He gets on, you fly up on your side, and you’re stuck with your legs dangling in the air, suspended until he lets you down. Your seesaw is out of balance. You need to rebalance to make it work the right way again.
Many investors view the stock market as risky, because they may lose money. In our eyes, it is worthwhile to have some awareness of the various types of investment risk. In our video, we share several sources of investment risk that you may not have fully considered. Below, we talk in more detail about those risks.
If I were to ask you to take your life savings, drive to the casino, walk to the roulette wheel and put all of your money on black 17… would you do it? Probably not. But why? Because it’s risky. You’ve put all of your hope in that one thing. If it works, are you a genius? Umm…no. You were very lucky. Take your money and walk away. It’ll probably never happen again.
Would you worry if the stock market closed for five months? It did just that at the outbreak of World War I. I’ll admit, that is over 100 years ago. But what if the market was only open a few days a month? I would guess that after a time, most people would actually worry less than they do now. To see why that is so, let’s talk about what a market is, and what it does for us.