3 Mistakes Most Investors Make

Gather, don’t scatter.

Over the years investors have been convinced that proper investing meant taking their money and spreading it out amongst several investment professionals. Over time, many investors accumulate, on average, four advisors and several accounts. From his 401(k), Roth IRA, Traditional IRA, brokerage and mutual fund accounts, to her 401(k), Traditional IRA, trust and saving accounts, a family can accumulate several accounts with several financial institutions.

This scattering of assets leads to a false sense of “diversification” by “not putting all of your eggs in one basket.” Trouble is, this strategy really hurts most investors.

Many investors have unknowingly scattered their assets, resulting in no one person managing or fully understanding their entire situation, goals or dreams. Without comprehensive planning, there actually is no plan at all.

1. Improper Asset Allocation

Most investors have their assets dispersed with several advisors and several financial firms. No single advisor knows what the other is doing resulting in an uncoordinated portfolio. One advisor in firm A might be selling the very asset that an advisor in firm B is buying. Unless there is one coach reviewing the entire portfolio, then your money is not coordinated.

Your asset allocation should always reflect your current position in life, your current goals, future, feelings and family characteristics. When your hard earned money is scattered to other advisors and institutions, you alone are left to properly manage your portfolio. Many individuals are not trained to monitor this correctly and consistently. Unfortunately, the overall plan suffers.

2. Improper Correlation Within Investments, Managers and Funds

Without saying, each investment needs to be excellent on its own. The investment, manager, or mutual fund needs to have a strong track record (I like a ten-year record). You might be able to select quality investments. That’s not the problem. Where the breakdown occurs is knowing how these investments interrelate. This is nearly impossible to track when one advisor is doing one thing, and a different advisor is doing just the opposite.

Let’s think about a recipe analogy. You might have the best ingredients to make your favorite dish. You might even have quality chefs at your beck and call, ready to make this dish for you. If you put all of these chefs in the same kitchen, but don’t let them know what the other is doing, a culinary disaster awaits. You can see that the likelihood of your dish coming out correctly is very low, no matter how good the ingredients were. Same is true with your investment portfolio.

3. Failure to Monitor the Consolidated Portfolio

You know life is not static. Life is constantly changing. Whether it’s your job, children, the economy, world events, new laws, unplanned expenses (and the list goes on and on), your world constantly moves. Your entire portfolio needs to be dynamic as well. When market forces move, the properly managed portfolio needs to move with it. I am not talking about day-trading, but rebalancing when and where appropriate. Additionally, your goals, future, feelings and family characteristics are changing as well. Every day is either a day closer to your goals, or not.

Having your assets scattered makes it nearly impossible to properly monitor your portfolio based on your changing life. With the technology and tools available, along with the new “open architecture” available at full service financial institutions, you are better off hiring one advisor to help you monitor your portfolio. This trusted advisor will coordinate all of your “eggs” and not put them in the same “basket.” He/she can manage your diversified portfolio to meet your goals, future, feelings and family characteristics and make sure your entire portfolio works in unison to make your dreams come true.

In conclusion, years ago, many firms were limited to the solutions they could individually bring to the client. Many had their own proprietary funds or investments, which may or may not have been in your best interest. Today, full service firms have an “open architecture” and are able to go out into the market place and bring any solution to you that is appropriate. For your strong consideration, only hire an advisor who can go anywhere in the marketplace without limitation!

One Dollar

What does one dollar buy today?

For everyone, less than what it could buy twelve months ago. We live in an economy with inflation, cost of living rises, and unemployment. Add to that, job insecurity, downsizing, and offshore job relocation.

So it is no wonder we are preoccupied with survival. Getting by from pay check to pay check. And for many, trying to struggle with, more month than money.

No doubt you’ve heard, “if I could just come up with one good idea.” And many have. Even you have been thinking of an idea. And six months later there it is on the shelf of a supermarket, in a newspaper or a social media news feed.

“That’s my Idea!”… and somebody else has put it in front of you, to your bewilderment. You see, it’s been estimated. That some twenty-six people in the world are thinking of the same idea at the same time. But one person acted on that idea.

It’s the same for three frogs sitting on a log. One decides to jump. How many frogs are now sitting on the log?

Three. One of the frogs decided to jump. But until the frog actually, jumps, there are still three frogs on the log.

Getting back to that one idea. Yes, and, if only you had the time. That little one dollar idea that could make all the difference to your life and your world.

Just the same as the one person of the twenty-six, you need to act. Not on stage. Take action.

All those ideas that pop into your head. Don’t just make a mental note, thinking you will save it for later. And at the same time giving yourself some self-indulging importance of how clever you are. You need to take action. And write them down, as they pop into your head. Otherwise, they drift on to someone else and are gone forever.

I don’t know how true it is, that everyone has a million dollar idea in them. Maybe they do. Only you know for you. And if you were to continually ask yourself, what million dollar idea can I come up with. You might surprise yourself.

With the busy-ness of living and making ends meet. Give yourself some time every week. Quiet time, on your own and just let your mind wonder. Of course, with pen and paper. You never know where this may lead. And it gives you time to cultivate an idea you’ve been thinking off. And you have that pen and paper handy.

Those are basically all the tools you need.

Your free and open mind, pen and paper.

Don’t Squander Your Income

Today’s world is brutal for anyone trying to get ahead. The expense of everything makes it hard to save and the cost of living is rising daily. Jobs are also hard to get and people falling through the cracks are now living on the streets in many cities. From the time one leaves school the pressure is on to succeed and that can take many twists and turns. The first and most vital thing to do is to get a good job.

From the first pay packet one must have a strategy for long-term survival. Set it out on paper and begin a bank account in which a certain percentage of the money is lodged each payday. This is essential for future benefits.

It makes me shudder to see images of people pouring money into poker machines or other gambling devices. These are money cows for the clubs, pubs, and societies that use them to boost their income. What it does to one financially is often so tragic that they end us losing everything. Families can be broken home, homes repossessed or tenants tossed out.

Living on the streets is a dead-end. There is hardly any way up unless you do it by sheer will power and clever tactics. The best thing is not to get into that situation.

While the going is tough it’s really time to get going and do yourself a favour. Don’t squander your income and make doubly sure that you bank as much as possible each week. If you do that then when these times have passed you will be overjoyed because of your sacrifice