Everyone has their own strengths, weaknesses threats and obstacles that naturally either help or hinder their investing abilities. In today’s post, I’d like to examine both learned and developed strengths that can help you become a better investor. Our strengths provide clues as to which areas of wealth management are best outsourced, and those that can be done alone.

Here are some of the strengths that I have seen that help others be more financially savvy. See if any of these strengths resonate with you. Think of other strengths that help you either with your money or in other areas of your life.

• You are naturally mathematical. You just love math and always have.
• You have a higher education in accounting or statistics, or other math areas that will help you with investing since working with numbers will be easier.
• You have a career within an investment related field, such as accounting, or banking.
• You have a career in psychology. Because so much behavior around investing is related to emotions, this will be very helpful as you invest your money.
• You love to research. This will make you more drawn to doing not only the necessary research to make investment decisions, but enjoy going beyond the minimum.
• You are naturally organized. This will help you create and keep order around your money, an imperative as you grow your wealth.
• You are naturally analytical. If you are naturally analytical, you will be drawn to analyzing and comparing investment products and services.
• You are a great reader; this will lead you through investment books and courses that will be helpful as you improve your investing skills.
• You are a good leader. This will help you as you hire your wealth management team, such as CPA’s and money managers.
• You are disciplined; this will help you to do the “Important but Not Urgent” tasks of wealth management, such as bookkeeping, updating spreadsheets, gathering tax data, and office tasks.
• You are an opportunist. You just have a good eye for spotting opportunities; Do you love to chat with others at social gatherings about opportunities.
• You can tolerate risk well. An investor is more likely to get above average returns if she can still sleep well at night with risk in her portfolio.
• You grew up in a home with healthy money habits and mindsets. This will make it so much easier to establish and maintain good money habits as an adult.

It’s all about identifying and focusing on your personal strengths. You may feel very uncomfortable thinking about your own strengths, just like it is easier to give a compliment than to take one. Bask in your strengths for now, because next time we’ll address weaknesses that hold us back from successful investing.

Disclaimer:

The contents of this website and all products of Nestegginvestor.com and Austin Alternative Investments, LLC are for educational purposes only and are not intended as financial advice. You should always consult your financial professional before investing.
Austin Alternative Investments, LLC

Do you consider yourself an investor? Recently, when naming an investing course, I realized that many people don’t consider themselves investors. By calling yourself an investor, it seems like you have to take on an additional job or responsibility. To feel comfortable calling yourself an investor, you probably need to be involved with investing with your money. Even then, it may feel odd, because it may feel like you are saying to the world that you have “extra” money. For some crazy reason, there can be a stigma around that statement, whether spoken or not.

The word investor can seem big and intimidating for a lot of people, like there is almost shame around it. I understand this because it took me a long time to say that I am an investor. Many people say that if you are an investor, it is a hobby, but making or losing real money doesn’t seem like a hobby at all. Now saying that I am an investor feels as comfortable as saying that I am a mother, or a home owner.

Anyone who has money in an account is an investor. If you have a money market account at the bank, then you are officially an investor, even though your money is in a cash equivalent; you have chosen that cash investment, even if it is only by default. If your wife’s uncle manages your money, then you are an investor. If you have an account that your husband invested in international bond mutual funds, you are an investor, even if you were not involved with the decision about where and how to invest. None of these situations mean that you shouldn’t be knowledgeable about where your funds are invested.

What makes you an investor is that your name appears on each of the accounts in each of these situations. It’s your name on the account, not family member who is managing it (unless it is your spouse in a joint account), not the money manager, and not the bank. If the investment value decreases and you sell it, you are the one who has lost money, not the fund manager or the bank. The realization and ownership of this reality is what makes you the investor.

Embrace the role of being an investor. Learn your options and make the best choices based on that knowledge. Be grateful for your money and then make sure you give it the time and attention it deserves. Your money belongs to you, whether you actively manage it or not, and that makes it ultimately your responsibility.

Disclaimer:

The contents of this website and all products of Nestegginvestor.com and Austin Alternative Investments, LLC are for educational purposes only and are not intended as financial advice. You should always consult your financial professional before investing.
Austin Alternative Investments, LLC

2010 had the best September the stock market has had since 1939. September is typically a down month. Once again we see that with investing, like most things in life, there are always exceptions to the rule.
Seasonality experts look at a particular time frame or month and make predictions based on what typically happens during that period. For example, a common seasonal behavior that affects the financial markets is when funds and investors sell their losing positions in December to capitalize on losses for tax purposes. Then, in early January, money flows back into the market as this money is reinvested.
Another common and predictable event is when fund managers sell their losing stocks and buy winning stocks toward the end of the quarter. This makes their holdings look better for the marketing material that comes out at the end of the quarter. This practice is known as window dressing.
While a few experts have capitalized on seasonal trends, for most investors it makes more sense to look at the direction of the overall market than try to get in on smaller seasonal moves. Right now the market is headed up. It will be interesting to see how long the uptrend lasts. While the markets and the economy gives us clues for direction, only time will tell for certain where the financial markets are headed.

Disclaimer:

The contents of this website and all products of Nestegginvestor.com and Austin Alternative Investments, LLC are for educational purposes only and are not intended as financial advice. You should always consult your financial professional before investing.
Austin Alternative Investments, LLC

Charts provide a simple way to look at the history of almost any investment you are considering buying or one you currently own. Don’t be intimidated by charts, as they are just visuals for past prices for an
asset, whether that asset is a mutual fund, a stock, or an index. Enjoy this short audio that gives some very basics on stock charts.

Click here to view the embedded video.

Disclaimer:

The contents of this website and all products of Nestegginvestor.com and Austin Alternative Investments, LLC are for educational purposes only and are not intended as financial advice. You should always consult your financial professional before investing.
Austin Alternative Investments, LLC

Does your financial advisor have a fiduciary responsibility to you? This is one of the best questions to ask anyone that you’re considering managing your money, but many investors just are not aware of this responsibility. Read this Forbes article that explains more about this important concept that every investor should understand before entering any relationship with a financial professional.

Just what is a fiduciary obligation? A client’s best interest must be put first in making investment decisions when a fiduciary responsibility exists; the advisor is legally obligated by this standard. As the article explains, when the CFA (Certified Financial Advisor) designation is prominent in marketing materials provided by brokers and other financial professionals, investors assume that a fiduciary relationship exists. While the CFA Institute promotes putting the client’s best interests first, a fiduciary responsibility is not required for the CFA designation. The article, written by former SEC attorney Edward Siedle, says:

While CFA Institute expects charterholders to subscribe to a fiduciary standard, many in the brokerage industry are in positions in which they and their employers specifically do not accept this high standard of care. Instead, brokers often subscribe to a more lax “suitability” standard–meaning they are free to promote products that benefit the broker, and brokerage, more than the client, as long as those products are not blatantly unsuitable.

The difference between the suitability standard and the fiduciary duty is substantial. This doesn’t mean that a financial professional with the suitability standard won’t do a good job for you. You should, however, understand the difference between the two standards, and know which relationship exists when you are working with any financial professional. Always remember that not all credentials legally obligate a financial advisor to put your best interests first.

Have you ever notice how mutual funds sometimes change their names? Unfortunately, it is not always to the investor’s benefit. Forbes has an excellent article that explains the reasons and consequences of name changes.

The article says that there are three main reasons that mutual funds make name changes. First, they rename due to a change in their investment strategy. Second, the name change is simply the result of the words in the name having a negative connotation. And the third reason is to give the fund a more marketable name.

The author of the article, Shauna Carther, writes that there are usually two main consequences that are a result of a mutual fund name change:

1.Higher fees: If the fund has changed its name in lieu of a reallocation of assets, additional costs could incur from higher trading costs associated with reorganization of the portfolio, legal fees and advertising cost. These funds tend to have large 12B-1 fees, which go toward advertising and brokerage commissions.

2.An unsuitable investment portfolio: At one time it was not uncommon to see mutual funds change their name to reflect popular investment strategies rather than the mutual fund’s main investment goal. This kind of name change, however, is largely eliminated today by stricter SEC regulation (discussed further below). These purely cosmetic changes create problems for investors who are pursuing an investment strategy suitable for their current asset allocation goals.

Investors must look beyond the marketing material for mutual funds, or any other investment for that matter. See what the actual fund holdings are, know the expenses and see how the fund has performed in the past, especially during different types of markets. Know enough about the fund to understand what investment returns you can reasonably expect based on its past, whatever the name may be.

Are you on track to reach your financial goals for the year? Early July is the perfect time to find out. As your investment statements come in over the next week or two, don’t just file them; Look at them and see if you are on track for the financial goals that you have set in place.

Mid-year is always the perfect time to access your financial plan, and this year it may be more important than usual. According to The Big Picture today’s Investor’s Business Daily, the stock market is definitely back in correction mode. While picking the exact tops and bottoms is impossible, always having a risk management strategy makes sense for investors, especially during times when the stock market is reaching new lows with high volume.

Put some time in your planner to update your investment spreadsheet in early July. Spend an extra few minutes on those financial statements coming in to make sure you really know exactly where your money is invested, and checking out your risk management strategy. This is the first step toward reaching your financial goals.

Investors are wondering why gold is moving up while the stock market is moving down today. Usually gold is a stock market hedge, meaning that it moves in the opposite direction of the stock market. This happens because gold is considered a safe investment and investors flock to gold during times of fear in the financial markets.

During the 2008 correction gold moved down along with the stock market. This was because investors feared that the entire world would have slower economies. And now today gold and the stock market are moving in the same direction again.

Just like with most things in life, it is wise to think in probabilities. More often than not, in the past gold has moved in the opposite direction of the stock market. You can learn from both today’s short term action in the markets and also the 2008-2009 correction that investing trends among different sectors are just not always consistent. It is important to think about the probability of the change in the value of your investments, and always have room for a rule breaker in your portfolio to keep you financially safe when the abnormal happens.

My favorite investing story is that of my father buying municipal bonds that yielded 15 to 20% at a deep discount in the early 1980’s. It is hard to believe that interest rates were ever that high, as we have become accustomed to today’s low rates that have been with us for so long now. Those bonds provided steady tax free income for many years for my parents until they were eventually called.

Dad’s birthday was in June, so I decided to write about him. He was a wise man, and a disciplined and empowered investor. He was able to spot a once in a lifetime opportunity simply by paying attention to what was going on in the economy and the financial markets. He developed a simple yet consistent way to stay informed that required little time: He read Barron’s weekly at the library during his lunch break, scanned the Wall Street Journal, and watched Louis Rukeyser on Wall $treet Week every Friday night.

It is amazing how much easier it is today to stay informed! Now we can listen to both radio and television shows on our phones, view thousands of financial websites, get Barron’s either online or delivered, and still have the more traditional ways to access information. Sometimes it is just too much information. Avoid analysis paralysis; Chose a few sources for reliable investing information and read them consistently.

The huge advantage of tax free accumulation of wealth in an IRA is offset by the disadvantage of not having access to the money.  As you probably already know, you generally cannot withdraw money from your IRA without being penalized, but there are exceptions. An article from Forbes by Eric Fox outlines five such situations where the rules can be bent.

The article states:

The conventional wisdom among most Americans is that money in an Individual Retirement Account (IRA) is locked up until age 59.5, and can’t be withdrawn without paying taxes and a 10% penalty on early distributions. The reality is that there are multiple exceptions to the 10% penalty that allows individuals to take money out for a range of reasons, including buying a first home to medical to education.

Be sure to read the article for the details if you do have an IRA and think you may need access to your money.