By Chris Matthai “It’s time to dump… sell… add… buy… move into… change strategy…”
If you’ve worked with a broker or investment advisor, I’m sure this language sounds familiar.
It’s how brokers make a living. They alter tactics regularly with the goal of keeping your account actively trading.
In golf parlance, it’s the equivalent of your caddie advising you to change your grip and stance every few holes. Or perhaps more accurately, it’s as if he’s constantly giving you the wrong yardage.
On top of that, he negotiated his fee and tip before the round started.
It’s an inconvenient truth in the brokerage industry… Your interests and your broker’s interests often aren’t aligned.
Unfortunately, the emphasis for many brokers is on earning commission. Thoughts on whether a trade is appropriate are often secondary.
This quote from famed investor Taylor Larimore sums it up well…
I helped put two children through Harvard – my broker’s children.
Over the years, I’ve heard plenty of horror stories – folks placed in inappropriate investments… overly expensive products… and downright bad advice.
Unfortunately, things don’t seem to be changing…
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Last year’s Wells Fargo scandal is just the latest in a long line of deceitful behavior from big banks and Wall Street firms.
I encourage folks to keep stories like these in mind when deciding whether they want to handle their own investments or turn them over to big bank reps.
It’s why we advocate a “do it yourself” mentality here at The Oxford Club. After all, no one is more interested in growing your portfolio and preserving your wealth than you are.
If you’re still reading, I assume that lightbulb has lit up for you, and you are now controlling your own financial destiny (or at least considering it). It’s a big task – and a commendable one.
The trouble is that there’s no foolproof “one size fits all” system for successful investing and long-term wealth building. You’ll have to find your own path.
Asset allocation plays a major role.
You start by asking yourself four questions:
What are my goals?
What is my time frame?
What is my risk tolerance?
How much do I have to invest?
From there, you should be able to craft an investment strategy that works for you.
But it’s just the first part of the equation. Things get trickier once the pressure is on.
When markets dip – and they will – you must not panic.
It’s easier said than done. In fact, it’s the hardest thing for us to teach new Members of The Oxford Club…
Pouring in and out of investments on a whim is a surefire way to get your return eaten up by taxes and trading fees.
Put another way, don’t go changing your clubs or adjusting your stance unless you’ve got a darn good reason.
If you can change your mindset, then you’ll be trading like a smart investor. Don’t leave it up to your broker – or some overzealous caddie – to call all the shots.
Good investing,
Chris
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Source:: Investment You
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