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Robert Hunter Registered Investment Advisor is now
Marin Wealth Advisors .
Please visit us at our new financial services web site.

Investor Information Articles

How to Prevent Being Screwed (again) by Wall Street:

fresh ideas

 

Reduce Volatility in Your Stocks and Stock Mutual Funds

Volatile markets and volatile stocks and mutual funds sometimes compel us to make untimely investment decisions. Calm yourself and your account with dividends. Dividend paying stocks and funds, aside from sending cash to your account every month or quarter, statistically are less volatile than non-dividend paying stocks/funds. It’s also a lot easier to wait for a position to reach its potential if you’re being paid to wait. If our economy and markets are going to struggle for some years; that extra 2-6% in dividend yield really can help overall investment account performance. Look for solid dividends in utilities, energy stocks and select pharmaceuticals. Be sure to look for companies that have consistently raised their dividends.

Avoid Holding a Declining Investment

Even though most of us have redefined long term, it’s important to avoid holding onto an investment with declining fundamentals, or one that is obviously in a price decline. Staying in an investment that is down trending prevents you from deploying that money in an investment that can work in current economic and market conditions. The tech stock collapse of 2000 to 2002 and the market crash of 2008-2009 taught us that, and many other lessons, including:

  • Valuation matters. Good stock investments require a thorough and disciplined analysis of valuation.
  • If you don’t understand the business model, you probably don’t need the company in your portfolio.
  • The financial press doesn’t have your best interest at heart. They support their advertisers. They don’t help you with investment performance or the safest ways to invest your money. A reputable subscription newsletter or a non commission advisor can help even the playing field greatly.

Keep Investment Costs (commissions and fees) Down

Commissions and management fees really eat into investment performance and, statistically, investment accounts with lower investment costs perform better on average than high fee accounts. Here are some effective ways to keep investment costs down:

  • Use Exchange Traded Funds (ETFs). Annual management fees are a fraction of the fees charged by traditional mutual funds, and capital gains passed through at the end of the year will probably be much lower than a comparable traditional fund.
  • Avoid commissions. A commission based advisor charges per transaction, making it difficult to contain or project expenses. A fee based manager helps manage your assets for a fixed percentage rate each year, fully quantifying your cost.
  • Don’t invest in investment products you don’t understand.
  • It’s almost never necessary to wrap a retirement account in an insurance product (annuity,) unless you want to pay more fees.
  • In a taxable investment account it’s very important to plan capital gains as much as possible. Simply knowing when an investment goes long term will help greatly.

 

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