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A Core Investment Strategy

Investing is a tricky business. The financial services industry spends an enormous amount of money on a marketing message that consumers can accomplish their retirement goals simply by purchasing their investment products.

But investing isn’t like buying tires for your car. You don’t simply shop for the cheapest mutual fund or “best performing” ETF. That doesn’t solve the consumer’s problem because it doesn’t answer their real question.

Consumers who have dipped their toe in the water of investing often find that they’ve grabbed the proverbial “tiger by the tail.” Suddenly their account values are soaring up and crashing down, often for reasons the account owner doesn’t understand. After a time, the consumer is shaken loose feeling a little dizzy.

How To Tame The Tiger

The key to investment success and retirement security is accepting that you can’t simply buy it. Financial security is something that is achieved over time and must be maintained. The first step in the process is accepting you can’t do it yourself. You don’t have the experience, expertise or stomach for it.

Hire someone to guide you, but don’t give up the reigns. No one cares about your money as much as you care about your money. You always have to keep an eye on things.

Why are you investing? What are you trying to accomplish? Consumers forget to ask this fundamental question. Saying “retirement” isn’t good enough. Specify time frames and dollar amounts. How much do you need and when do you need it? If you need help answering these questions, then get help.

Your investment strategy should be a function of two things: what you need and what you can handle. If what you need is a lot of growth, but you can’t handle seeing even the slightest drop in account value, you’ve got a problem.

Most people fall into the camp of being, well, average. They need as much growth as they can handle. This means owning some stocks, since stocks are what provide growth. But there’s a limit to how much stocks they can handle, so that’s where a good financial advisor is critical. What does a good financial advisor do? They can guide you to a compromise. They can also help you keep from reacting emotionally to short-term investment fluctuations.

Many people come to us with questions about “investments.” Which should they buy? How should they allocate their retirement plan? That shouldn’t be the first question they ask and it isn’t the first answer we give. It would be like going to a new doctor and immediately asking which medication to take.

The first step is to understand the client, the current circumstances and their needs. DouglasBradley does this with our Financial Fysical. Once this is done, we can address the question of how to accomplish the client’s goals with a personal financial retirement plan.