Michael Callahan, CFP®, CIM® - Advice and Planning Strategist
It seems there’s an endless supply of experts these days, eager and willing to offer advice on every aspect of our lives. They tell us what foods to eat, how we’re supposed to vote, what types of wines to buy, how to raise our children, and of course, what stocks we should have in our portfolio. There’s no shortage of experts telling us how to invest — countless websites, social media platforms, TV shows, magazines and newspapers are dedicated to economic forecasts and stock market prediction.
The insatiable appetite for experts
Why do we have such an insatiable appetite for experts? We all want someone to tell us the truth, to level with us, or give us the inside scoop – someone who knows more than we do. Perhaps it’s because there’s simply too much information available for us to digest. Rather than try to figure it out for ourselves, we often allow our own opinions to be dictated to us by experts because, well, they’re experts. They must know better than we do. Right?
In many aspects of life, yes, of course we can benefit from following the advice of experts. This is true in personal finance too. However, although many financial analysts and economists featured in the media may indeed be experts in their respective field, they’re not experts on you. In fact, they don’t even know you.
Many financial media outlets focus on investment selection and timing, oriented to what the markets and the economy are expected to do over the next several months. Which stocks are expected to outperform or underperform? Are interest rates going up or down? Which market sectors will advance, and which ones will decline? Financial media is full of experts commenting on such matters. But what does it mean for you?
One of the biggest obstacles to reaching our goals isn’t the market, it’s our own actions. One of the most effective ways to help achieve your long-term financial goals is to plan carefully and make appropriate decisions based on your goals and risk tolerance, not just selecting the right investments at the right time. Whether now is a “good time” to buy gold, or tech, or oil has very little to do with achieving your long-term financial goals. So how can you tune out all that noise and focus on what’s important?
Focus on what matters
First, focus on larger, more important financial goals, rather than day-to-day market activity. Some questions to ask yourself, or your advisor, include:
- Investment contribution – If you are contributing to your investment portfolio, are you contributing the right amount to help you reach your goal? And are you contributing to the accounts appropriate for you – Registered Retirement Savings Plan, Registered Education Savings Plan, Tax-Free Savings Account, Non- Registered, etc.?
- Investment withdrawal – If you are withdrawing from your portfolio, are you withdrawing an appropriate amount to maintain your desired lifestyle, but not depleting your accounts too fast? Have you adjusted your withdrawals as economic factors like inflation have changed over time?
- Asset allocation – What percentage of your portfolio is allocated to specific asset classes such as: cash, bonds, equities, real estate, etc.? Note that here we are referring to strategic asset allocation rather than tactical asset allocation (i.e., market timing).
- Diversification – Is your investment portfolio appropriately diversified? Proper diversification can help guard your portfolio against over-concentration in any particular company, sector or region.
- Rebalancing – Is your portfolio regularly rebalanced? Over time, your portfolio can become skewed due to relative performance of some investments compared to others. Regular rebalancing helps ensure you don’t stray too far from your desired investment allocation. Rebalancing does not ensure a profit or protect against loss.
- Tax management – Are you properly managing your taxes? Considering tax-efficient investment strategies can help ensure you’re taking advantage of all tax credits, deductions and strategies in line with your tax goal.
- Credit and debt – Do you have balances on credit cards, a line of credit, a mortgage or other loans? A personalized debt management solution strategy can allow you to optimize your cash flow and achieve your goals more efficiently. For strategies to manage debt, go to edwardjones.ca/debt-rising-strategies.
- Insurance and risk management – Are you and your family properly protected against unexpected events that could derail your strategy? Specific risk management strategies can help protect you and your loved ones against the unknown and help ensure your future isn’t derailed by an unexpected or unforeseen event.
- Will and power of attorney - Have you worked with a lawyer to develop a plan that reflects your wishes? Have you shared these (or where to find them) with a family member or advisor?
Who’s the expert on what matters to you?
In times like these, when financial matters regularly dominate headlines, it’s more important than ever to work with someone who is not only focused on long-term investing but – more importantly – is an expert on you.
Your Edward Jones advisor makes it their priority to understand what’s important to you – especially as your life and economic factors change – to build a personalized strategy to help you establish your personal financial goals and help keep you on track toward achieving them.
And they’re not alone. Your advisor works with our experienced team of analysts and strategists who assess shifting conditions and conduct rigorous analysis to help your advisor recommend optimal solutions for you. Working with this expertise, your advisor can help you think through your unique circumstances and coach you to better understand your choices.
Tuning out the noise
When it comes to achieving your financial goals, unless the expert giving advice knows your whole financial situation, their generic advice could hurt you more than help you. Investment advice that’s great for one person may be completely inappropriate for another. On the other hand, one thing that virtually all investors can benefit from is a well-constructed investment portfolio — one that is properly aligned with your unique goals and circumstances. Your Edward Jones advisor, who takes the time to become an expert on you, can work with you to develop a financial and investment strategy that’s suited to you and your specific needs.
Talk to your Edward Jones advisor today about ways you can tune out the noise and stay focused on what's most important – you and your goals.