Blind Acceptance?
Hey,
Welcome to StopStealingMyDough.com, a blog devoted to educating investors, particularly women investors about financial stuff.
I’ve been managing money since 1985 first as a retail stock broker, then at a big trust department and since 1995, in a firm I co-founded. You might best think of my role as that of portfolio manager. It’s with that perspective that I’ve come to understand that no matter how well educated, intelligent, wealthy or hardworking, investors (women and men alike) tend to make the same kind of mistakes over and over. It’s the craziest juxtaposition of incredible anxiety about money on the one hand with blind acceptance on the other.
Wall Street has taught investors to value what is good for Wall Street without question and those firms depend on you leaving your brain at the door when it comes to investing. The fact is, you can know what’s necessary to make the right choices and I’m here to help- you just have to agree to engage your brain. It’s not rocket science. In fact, I’m guessing that when I point out fundamental concepts, you’ll say to yourself, “duh.”
Women investors have the same issues as men; it’s just that women have now become a sought after Wall Street conquest, heightening the likelihood that you’ll get caught up in a bad financial relationship. Apparently some guys caught on that women have money, are smart, make decisions and – guess what, have been underserved by an industry founded and managed by men.
When
Here are some topics I know we’ll cover in coming months:
How does your money person get paid?
Socially Responsible Investing
Women’s Equity Fund?
Mutual Funds or not?
How to build my own portfolio
Wall Street catering to women investors
It’s the whole portfolio that counts
Individual Stocks and Stock Sectors
International Stocks
Exchange-traded funds
There are a lot of others, but I’ve got to run. Please send me your ideas, comments and questions and we’ll address them one by one.
One Housekeeping Note: Maybe you picked up on this already – I’m not a writer and this blog is not edited. So excuse the grammar and spelling and that kind of stuff.
posted by Charter Financial Group @ 1:12 PM
1 comments
1 Comments:
Connie,
Thanks for your comment. I couldn't agree more that women investors need to be informed on all aspects of investing and I intend to take our discussion wherever it leads - from A-Z on investing.
With regard to your specific question, skip the flat panel although prices have come down substantially. See the article in Wednesday's Wall Street Journal, entitled, Flat Panel TV's You Can Afford.
I agree that it's sometimes difficult for smaller investors to get advice and assistance in managing their portfolios. The majority of advice-givers you might encounter are likely to be paid on commissions, and let's face it, smaller sums of money mean less money for the advice-giver. The whole notion that these people are somehow "advice" givers or financial consultants is a topic for another day, but suffice it to say that the silver lining to your current financial situation is that you'll have to go it alone - and that is not such a bad thing.
Your grad degree tells me that you're probably smart and hardworking and, with a little guidance and continued diligence on your part, you'll reach your financial goals. Speaking of financial goals, what are yours? In order to set your asset allocation, you'll need to answer the following questions:
Liquidity- Do you have any known uses for the money in the next several years?
Time Horizon - How long can you keep this money invested?
Risk Tolerance - Are you going to stay awake at night worrying every time the market goes down? How much of a decline would stress you out?
Tax Situation - What is your effective tax rate?
Your investing time horizon and risk tolerance will dictate whether any investment in stocks is appropriate for you. History has shown that stocks perform better over long periods of time than bonds or cash but the operative phrase here is "long periods of time." The market can be very volatile and short term risk is too great if you don't have enough time to let the money ride. If you believe you can leave the money invested for at least 5 years, then you might consider placing a sizeable portion of your investment balances in stocks. Otherwise stick to bonds, cd's and money markets.
I always recommend clients have some portion of their funds in bonds to moderate the risk somewhat. If you have a high marginal tax rate, then tax-free bonds might be the way to go. Be careful though, because bonds fall in price as interest rates rise and be sure that the bond issuer is creditworthy because you do not want to own a bond that has its credit rating downgraded (ask GM bondholders) or worse yet, declares bankruptcy.
Once you know your desired mix of stocks, bonds and cash, I recommend you use exchange-traded index funds to implement your mix. These funds are not managed - which is a good thing, have very low expense ratios and trade like stocks on the exchange. If you go to www.ishares.com you'll see a huge array of these funds and can do your research of which is best for you. Essentially, you need to make a determination of which broad markets, as opposed to which individual stocks, are poised to do well. Do you think U.S. or particular international markets are poised for gains? How do you decide? Consult financial sources like the WSJ or watch CNBC's Squackbox when you're getting dressed in the morning and at the end of the day - whoopee!
I'm just here to tell you that you have no less information at your fingertips, and every bit as much innate brainpower, than the army of financial salespeople you're too small for - so go for it.
Disclaimer: This advice is intended to be a general guide to the decision-making process. You should employ in investing your own money.
Susan
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