Avoid Being the Investor Fish

A "fish" in poker is a losing player, typically inexperienced or unskilled at the game.  In the world of investing, one needs to overcome being a potential fish. 

Here's what I have learned:

• There are numerous investment options:  Stocks, Bonds, Bank products, Insurance products, Private equity/credit.   
• There are numerous advisor costs:  High fee/high touch, no fee/minimum advice, assets under management (AUM) fee, insurance product commissions, hourly only fee
• There are accessibility and flexibility option:  accessible anytime or locked up for months or years.
• There a different levels of risk:  Low, Medium and High

It was important for me to sort out which of these options worked best for me.  To start, I wanted low fee, low risk and high accessibility.    Thus, I used bank products initially, savings account and CDs.   Next, I moved to stocks in self directed accounts with discount brokers, for lower fees, which has now become no fees.   I tried advisor managed accounts, for a 1% AUM fee for part of my investments.   I typically have not done insurance products, such as annuities or whole life policies,  yet due to the higher fees and lower accessibility.  I have been offered private credit opportunities, but have not invested.

I have since moved away from managed accounts, since I have concluded that very few consistently outperform the S&P index.   Thus, I will be mainly investing in the stock index funds in the future and only a few individual stocks.

At this time, I believe my choices are giving us the appropriate balance of returns, safety and income needed.   We still need to evaluate the results when a significant economic downturn occurs.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial nor investment advice. Please consult a professional advisor.

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