I took a one-week night class on investing, and it was completely worth it. My teacher is a wealth advisor but only manages clients with multi-million dollar accounts. He was teaching to a class of not-even-close millionaires, so I didn't feel like it was a sales pitch like how I've felt when other financial advisors would lead seminars. He gave some pretty good advice, so I thought I'd share here. Some of it you probably know this stuff but I thought it was really good in general.
- Don't trust the advice of just one person (per my teacher, not even him). Warren Buffet, The Wall Street Journal, Business Week, well-known economists (well known for the industry, but not to me) have all predicted wrong. The teacher read quotes from business publications that in hindsight were obviously wrong.
- If you put your money in a small, private investment firm, don't feel comfortable that they have a fiduciary responsibility to you. Most ponzi schemes were committed by fiduciaries. This next part I don't really understand, but I have it written in my notes so maybe someone can clarify it....If you're going to use a small investment firm, don't trust the financial statements provided by the firm. Ask the firm to see the statements from the financial institution where the money is actually kept.
- Asset allocation should not be based on age or retirement date, it should be based on risk tolerance and goals. Pressuring someone in their 30s to have an aggressive portfolio when they have a low risk tolerance may cause them to panic sell when the stock market dips. Alternatively, pressuring someone in their 50s to be in a more conservative fund may cause them to feel FOMO and cause them to panic buy. The key is to try to keep emotions out of investing.
- Investment apps on your phone may lead to worse returns. Again, keeping emotions at bay. If you see a huge loss in one day, you might panic sell. The teacher said an actual study showed that people who have investment apps on their phone tend to perform worse, but I couldn't find the study for this. He talked about the Norwegian Investment Fund and how the fund has remained consistent in its asset allocation regardless of how the market was doing. He said they do well because they don't react to panic. He spent almost an whole hour on human psychology and how it can ruin a good investment strategy.
- The teacher doesn't really like target retirement allocation funds because the fees are higher, and you can build your own allocation cheaper if you put in the effort. I'm only writing this since I figure most people in this sub have enough interest to build their own asset allocation.
- He praised index funds for their low cost and market performance.
Anyway, it was a lot of good info that he crammed into 5 days. I thought it was an interesting class so hopefully these pointers help someone out!
Submitted April 17, 2019 at 11:03PM by 401J http://bit.ly/2V8J2nN
