If it’s too good to be true, it usually is!
After more than a decade serving clients in the financial planning industry, I have heard a lot of heartbreaking stories. As advisors, we keenly understand how the lack of financial freedom affects families. The stories that are hardest to hear are the “it’s too good to be true” ones. Many of those stories have a genesis in market volatility moments…just like now. No investor revels in market volatility, nor do advisors. Over the fourth quarter, we want to share real case studies with this Fiscal Harmony™ community. Our goal is to make you wiser investors, even if you never choose to work with us.
Not Market Correlated
When market volatility rears its ugly head, product offerings abound and product sales people are heavily recruited. The Oracle of Omaha, Warren Buffet, famously said, “Don’t invest in something you don’t understand.” This is one piece of advice that we as investors all too often discount in value and chalk up to our lack of knowledge. Adhering to this rule is however a powerful protector of our financial independence.
“Bankrupt in Just Two Weeks” appeared in the Wall Street Journal on June 1, 2020, outlining how exchange traded notes or ETNs (which are different than ETFs) were marketed to investors to “make up for lost time” during 2008-2009. I had a client who was self-managing some of these kinds of securities in a separate account. You may recall that on April 20, 2020, oil went to negative $37/barrel as markets disconnected. Many investors were wiped out as the values of these securities went to zero just as the article implies. At the time, those holdings were a higher percentage of my client’s total net worth than I had recommended. The client did not really understand how the ETN worked, but was unwilling to sell the ETN because it made money…until it didn’t. Perhaps a better strategy would have been to invest in energy and utilities companies through indexes. This is one of the many reasons we evaluate a client’s SCORE and review a family’s complete financial picture.
In her 2016 book, Signals, Dr. Pippa Malmgren referred to this easy money trap as “confusing luck with skill.”
Chalk it up to the wisdom of the Oracle…
Join us on LinkedIn in November to share what makes you most grateful! We are hosting 30 days of Thankful!
Want to know your SCORE? Let’s talk.
2022 Five Star Wealth Manager
Once again, I am honored to be named a Five Star Wealth Manager by Texas Monthly. Over 4,000 Dallas-Fort Worth wealth managers were considered for the award; eight percent of these candidates were named 2022 Five Star Wealth Managers. Being recognized is always nice, but the real blessing is serving families and helping them on the path to fiscal harmony in their lives.
There are risks involved with investing which may include market fluctuation and possible loss of principal value. Particular investments may not be suitable for certain situations. Carefully consider the risks and possible consequences involved prior to making an investment decision. Our firm does not provide legal or tax advice. Be sure to consult with your own legal and tax advisors before taking any action that may have tax implications.
Investing in real estate involves special risk, including possible declines in real estate values, adverse economic conditions, and changes in interest rates and may not suitable for all investors.
Securities offered through Berthel Fisher & Company Financial Services, Inc. (BFCFS). Member FINRA/SIPC. Please note electronic mail is not secure: BFCFS does not accept or take responsibility for acting on time-sensitive instructions sent by email. If you are not the intended recipient, you are hereby notified that any dissemination, distribution or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.
Orchestrating Fiscal Harmony™,
Kelly Kunst CFP®
Founder
2021 Five Star Wealth Manager
Once again, I am honored to be named a Five Star Wealth Manager by Texas Monthly. Nearly 4,000 Dallas-Fort Worth wealth managers were considered for the award; ten percent of these candidates were named 2021 Five Star Wealth Managers. Being recognized is always nice, but the real blessing is serving families and helping them on the path to fiscal harmony in their lives.
There are risks involved with investing which may include market fluctuation and possible loss of principal value. Particular investments may not be suitable for certain situations. Carefully consider the risks and possible consequences involved prior to making an investment decision. Our firm does not provide legal or tax advice. Be sure to consult with your own legal and tax advisors before taking any action that may have tax implications.
Securities offered through Berthel Fisher & Company Financial Services, Inc. (BFCFS). Member FINRA/SIPC. Please note electronic mail is not secure: BFCFS does not accept or take responsibility for acting on time-sensitive instructions sent by email. If you are not the intended recipient, you are hereby notified that any dissemination, distribution or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.