How to Be a Responsible Investor During Times of Uncertainty

How to Be a Responsible Investor During Times of Uncertainty

Let’s look at how to be a responsible investor during times of uncertainty. There is no doubt that many Americans are feeling weary of the future of the stock market. After a sweet ride down easy street for the past ten years, many investors opened up statements in January and saw their accounts had negative performance. “I lost money.” It is hard to open up that 401k statement and not feel a sense of fear and regret when the ending number is less than the opening number. Thankfully, the markets have rebounded and most of those negative returns have climbed back to positive numbers. However, it is still raw in investor’s minds and many are wondering “what next?”

As a financial advisor, this opens up a wonderful opportunity to educate investors who up until this year didn’t really care too much about how they were invested. All they knew was that they were making money and everything was “fine”. The problem is that “fine” can turn into “definitely not fine” if no one is watching your accounts and making sure you are invested appropriately. I would like to offer a few suggestions for investors to consider, regardless of market conditions.

Make sure you know how your account is currently invested and why those specific funds/ETF’s are a part of your portfolio. Does your advisor use a tactical approach while constructing your investment line up? Instead of just buying across all asset classes and holding them for the long term (you may know this as diversification) we use a strategy that allows us to strategically invest only in areas of the market that have strong positive momentum and performance. This strategy steers us to areas that are doing well and should continue to do well, and steers us away from areas that are showing poor momentum. As an example, our current tactical models have no exposure to emerging markets or international stocks. Why? Because it’s performance has been weak at best and a drag on overall performance. When it’s momentum shifts to favorable again, we will consider adding it back to our models.

Understand the costs that are charged within your account. I have found so many investors have virtually no idea how much their accounts are actually costing them. They are often surprised after we pull back all the layers and show them how much money has gone to expenses. No investment account is free and certainly you will need to be willing to pay for professional counsel and management. But, if left unchecked, excessive fees can wreak havoc on a portfolio’s overall performance over the long run. Make sure you know what fees you pay and then you can determine the reasonableness of them.

Finally, and probably most importantly, to be a responsible investor you should know who your advisor is working for. Many investors believe that when they hire an advisor, the advisor HAS to work for their clients first and foremost. Spoiler alert, if they are not a fiduciary then they probably work for someone else. Stock brokers and insurance agents work for their employers first. Their recommendations have to be suitable, but not necessarily the best option for you. Many people are surprised to hear this. I often say that placing our client’s best interests above our own sounds like common sense, but it’s not necessarily common practice. Fiduciaries on the other hand, have a legal obligation to put their client’s needs above their own. Would you feel more comfortable working with a team who is legally obligated to act in your best interests first?

We understand that investing in the stock market can be confusing and at times even a little scary. This could be a great time to sit down with a fiduciary who can help you take a deeper look at your current investments and make sure you understand your options when it comes to investing. We would welcome the opportunity to help you become a more responsible investor; especially during times of uncertainty in the market.

Ashley Rosser, President

Prior to her career in the financial services industry, Ashley earned her Bachelor of Science in Nursing from Cedarville University.

Ashley decided to make a career change from her ten years within the healthcare industry as a pediatric emergency room nurse to retirement and 401K investment planning. She joined Victory Wealth Partners in 2008 after obtaining her Series 65 professional financial license and went on to earn her AIF (Accredited Investment Fiduciary) professional designation from the Center for Fiduciary Studies.

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