Are You Owning the Investments You Own?

Are You Owning the Investments You Own?

by Ben Simiskey on Oct 21, 2020

Investments, Asset Management, Financial Planning

When people use the word “own” in the context of investments, they are most often referring to possession – the investments that one has purchased and that belong to them. For anyone with an account like a 401(k), IRA, brokerage, etc, you generally own (possess) shares of stocks or mutual funds or ETFs or other investment vehicles. But do you OWN the investments you own? You don’t have to be a licensed and trained investment professional. But do you understand what is in your account and why?

 

A great, free resource available to anyone is an annual publication by the Texas State Securities Board. Their Texas Investor Guide: Strategies for Investing Wisely and Avoiding Financial Fraud is now in its 10th year.

 

The guide starts by acknowledging that “investors have more responsibility than ever for achieving their financial goals….This shift in responsibility requires us to know a lot more about making investments, yet too few of us really feel equipped to make informed decisions about our financial future.”

 

It's a valuable resource for investors of all kinds and all experience levels. As the name states, it’s about both educating people to invest wisely and helping them avoid financial fraud. “And if you decide to seek a financial adviser, the Investor Guide will help you ask the right questions and do the necessary research to increase your chances of finding a financial professional you can trust.”

 

The guide is broken into the following sections:

 

  • Introduction
  • Part 1 – Why Invest?
    • Before Investing, Develop a Plan for Family Money Management
    • The Time Value of Money
    • The Rule of 72
    • Investing for Growth
    • Why People Don’t Invest
  • Part 2 – Making Investments
    • Asset Classes
    • Investing Through Mutual Funds and ETFs
    • Actively Managed vs Index Funds
    • Establishing an Account
  • Part 3 – Principles of Investing
    • Investment Risk
    • Strategies to Manage Risk
    • Allocating Your Portfolio
    • Sample Portfolio Allocations
    • Portfolio Returns
    • Reallocating
    • Rebalancing
    • Target Date Funds
    • How Investment Costs Affect Your Return
    • The Impact of Fees
  • Part 4 – Investing for a Secure Retirement
    • Retirement Accounts
    • Pension Plans
    • Social Security
    • Annuities
    • 401(k) Plans
    • IRAs
    • Employer Plan or IRA
    • Cash-Outs and Rollovers
  • Part 5 – Avoiding Scams and Understanding High-Risk Investments
    • The Warning Signs of Fraud
    • When You Suspect Fraud
    • Top Threats to Investors
    • Spendthrifts
    • Cryptocurrency Offerings Reach Main Street Investors
    • Texas Case Studies of Investment Fraud
  • Part 6 – Finding a Financial Professional You Can Trust
    • Investment Advisers
    • Brokers
    • Robo-Advisers
    • Financial Planners
    • Alphabet Soup of Designations
    • Questions to Ask
  • Texas State Securities Board
  • Reading List
  • Glossary of Terms

 

If you decide to engage a financial professional for help with your investing decisions, make sure you educate yourself about the different types of financial professionals. The questions to ask a potential adviser that are included in this guide (along with the questions they include that you should be prepared to answer from financial advisers) can greatly assist you in your search.

 

Don’t rush that decision. Invest the time to do your due diligence. Whether you decide to work with an adviser or tackle investment decisions alone, make sure you understand what investments you own and why. OWN the investments you own. Invest purposefully and make them work for you.

 

TODAY’S ACTION ITEMS (Time involved: 10 minutes)

  • Download a pdf copy of the Texas Investor Guide here.
  • If you would rather have a hard copy of the guide, email ben@cpadvisers.com with your name and address, and we’ll send you a copy.
  • Read the Introduction and Part 1 – Why Invest? This is approximately 6 pages total. Take notes as you go.
  • Open your calendar and block off 30 minutes per day for the next 5 days. Each day, you’ll read another part until you have completed all 6. The entire 6 parts are just 60 pages total.
  • Feel great about taking a significant step toward owning the investments you own and protecting yourself and your loved ones from financial fraud.