Chillicothe Financial Advisor Reveals Questions For Investors
Chillicothe Financial Advisor Reveals Basic Stock Market Investing Tips.
Over the years I have found that most people
Dont Know what they Dont Know about investing
in Mutual Funds and the Stock Market
It seems that we tend to get our information from all the wrong
sources and form a belief based on what someone that we trusted told us
This information may have come from our parents, teachers, friends
or family members that meant well, but realistically didnt have a clue either..
We just trusted what they said was correct..
You may have also formed your beliefs from reading books or listening
to the financial media or a stockbroker, financial advisor, etc
Just because they have a license to sell securities or are on TV or
wrote a book,, doesnt make them right..
What if everything you knew about money and investing was..
100% wrong!!!.. When would you want to know??
Some people wouldnt want to know at ALL..
..They would rather hold onto their beliefs and call it a day..
It, at least, appears that it is easier for them that way
They dont have to learn something new..
Well, what if it cost them $100s or $1000s of dollars?? If NOT MILLION$??
With 24 hour news channels and millions of web pages on the
internet linked to money and investing,, how do you know who is right???
Simple answer?? Yes,, there is a simple answer
Turn off the noise and study those that have produced
50+ years of academic evidence concerning Stock Market Investing..
BTW I dont know everything either BUT, thats the clue
you dont have to know everything Just the right things..
So,, today I am going to provide a guide for 9 of the 20 Must-Answer Questions
that every stock market or mutual fund investor should know
These are not the answers OR even clues..
Just a guide to give you a start as to why these answers may be important to know..
#1 Have you discovered your True Purpose for Money,
that which is more important than money itself?
YES or NO
(This is the very heart of your most sacred values. What is it that
you value more than money itself? Most investors get caught up in investing
their money for moneys sake. The more the better, and the end game is to
have the most. Your True Purpose for Money is the compass and foundation
from which all spending and investing decisions are formed. Every investor
has one, but often it takes some focus and development to clarify it into a
laser-focused tool for personal and portfolio growth. This is the first step in
developing true peace of mind about your money.)
#2 Are you invested in the market?
YES or NO
(Do you own stocks, or preferably, stock-based mutual funds?
Most investors can answer yes to this question.)
#3 Do you know how markets work?
YES or NO
(While most investors answer that they do have money in the market,
very few can honestly say that they truly understand the dynamics of how
free markets price securities. They are, in effect, ignorant of the forces that
ultimately determine their investing results. You can easily see how having
wealth in something that you do not understand would be extremely disturbing,
especially when markets take large losses. Never put your money in anything
you do not truly understandthat includes the stock market! It is the job of
a properly trained financial coach to help you focus on the right things so
that you do not have to focus on everything.)
#6 Do you know how to measure diversification in your portfolio?
YES or NO
(Everyone knows it is prudent to diversify, but how do you measure it?
Academic and economic scientists use a very specific measuring tool called
correlation to determine if your portfolio has been properly built. If you do
not know specifically, chances are you are not truly diversified. In the typical
portfolio, assets tend to move in a step-rate fashion so that when one crashes,
they all crash. To diversify the right way, you must be able to measure it.)
#15 Do you fully understand the implications and applications of diversification in your portfolio?
YES or NO
(How do you know if you are diversified? How do you measure it?
What is your portfolio likely to do during various market cycles? What is the
worst case scenario for your portfolio, and what is the best? Historically,
what is your worst and best five-year performance? These all are questions
you should be able to address if you have properly built-in diversification in
your portfolio, and you understand how it really works.)
#16 Do you have a system to measure portfolio volatility?
YES or NO
(Scientists measure variability of outcomes with the statistical measure
of Standard Deviation. How do you measure it? It is actually possible to use
statistics to examine volatility, the key measure of risk, with the same analysis
that won the Nobel Prize for Harry Markowitz. Without this measurement,
you are flying blind. It is the foundation of prudent and sound investing.
If your financial planner or stockbroker did not educate you about standard deviation,
this should be a big red flag that tells you something is missing. An informed
investment advisor can help you fix this problem.)
#17 Are you aware of the incentives brokerage firms and the financial
community have when selling commission-based products?
YES or NO
(The large financial institutions create the illusion that, by using their research,
it is possible consistently and predictably to make superior returns. Are you aware
of how they use the media and advertising to create the illusion that they can do
something that is, in reality, smoke and mirrors? By understanding all of the techniques
they use to persuade investors, you can avoid many of the deadly investor traps?)
#18 Do you know the three warning signs that you are
gambling and speculating with your money versus prudently investing it?
YES or NO
(They are stock picking, market timing, and track record investing
..otherwise known as chasing performance. With the help of a informed investment
advisor, you can discern if you have accidentally fallen into these destructive
investor behaviors and traps.)
#19 Can you identify the cultural messages and personal mind-sets
about money that destroy your peace of mind?
YES or NO
(Money can be a great blessing or a corrosive and divisive burden.
Many of the mind-sets and beliefs that you may have about money can
destroy your ability to use it as an empowering tool in your life.
By understanding these biases, you can effectively choose more powerful
beliefs to alter your relationship with money and how you use it in your life.)
Feel any better??
Probably NOT,, but that is OK, as long as you are willing to learn..
Until next time,,,
William Lee Beavers
by: William Lee Beavers
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