5 Best Tips for Investors: Wealth Management Solutions

By Bruce Smith | February 21, 2016

Many new clients come to us with questions and confusion about the investing process; some even wonder if there's a "magic bullet" solution to investing, or perhaps a list of investment success secrets.

Bruce Smith is a 401(k) Financial Advisor with Premier Financial Group in Eureka Humboldt CountyWhile every investor's situation is unique -- and while "one-size-fits-all" investment guidance doesn't exist -- we do have a few best practices to share. Here are five of the best tips for investors. 

1. Wealth Planning and Risk: What's Your Comfort Level?

Before jumping into the wild and wooly world of investing, do a bit of self-analysis and determine your comfort level with risk. While all investment reward comes with some risk attached, the real question is how much risk are you willing to accept? Reaching your long-term financial goals means you'll have to accept that risk-reward trade-off.

A number of factors impact your risk tolerance, such as:

  • Your investment time frame

  • Your ability to accept market fluctuations

  • Realism -- For instance, current interest rates are almost non-existent which makes short-term investments in bond and fixed income positions lower in, both, risk and reward

Asking yourself these questions will help you determine your comfort threshold:

  • What's my time frame? 

  • How well do I deal with market volatility?

  • How much could I lose before panic sets in?

  • Have I reduced risk through adequate portfolio diversification?

2. Involve a Tax Professional in Your Strategic Financial Planning Process

The investments you choose -- and any withdrawals you make from your accounts -- often have tax ramifications. Factors such as dividends, distributions and capital gains may increase your tax bracket and impact your tax burden. Consulting with a tax professional will help you navigate these complex -- and ever-changing -- rules and regulations. 

3. Keep Wealth Management Fees to a Minimum

In previous posts, we've discussed the high, and often hidden, costs of active management. Instead, we advocate a passive, long-term investment approach that doesn't waste investor's money on futile attempts to "beat the market." 

Don't waste money on unnecessary costs and fees. Instead, focus on investments with:

  • No loads -- Funds in which all of your money is actually invested into the fund

  • Low fees -- Low-fee management saves investors thousands

  • Low or no commissions -- Commissions associated with any management style can add up quickly

  • No transaction costs or surrender fees

4. Diversification and Allocation: Keys to Wealth Planning

True diversification means that your portfolio is diversified both within and across asset classes, an important qualifier. Efficient diversification across asset classes:

  • Reduces exposure to uncompensated risk

  • Decreases the probability of loss

  • Helps capture market returns

You can achieve adequate diversification through proper asset allocation.

5. A Great Relationship with Your Wealth Advisor

Bruce Smith is a Financial Advisor with Premier Financial Group in Eureka, Humboldt CountyYour partnership with your wealth advisor is a significant key to financial success. Look for an advisor that is:

  • An independent, fee-only, SEC Registered Investment Advisor who will act as a fiduciary to help eliminate potential conflicts of interest

  • A Certified Financial Planner ™ or CFP ®

  • Able to provide a range of services, from estate planning to retirement planning

  • Committed to a long-term, passive investment approach

Choose an advisor that takes the time to develop a personal relationship with you. A pro-active advisor that emphasizes open, timely communication and puts your needs first goes a long way toward providing you with the financial peace of mind you need.



Posted in Financial Planning, Investment Guidance