What You Need To Know Before You Invest In Anything
What You Need To Know Before You Invest In Anything
Thomas Kopelman / June 1, 2021
As a financial advisor, I get asked almost daily what I am investing in.
It mostly sounds like this “are you invested in Bitcoin? Ethereum, Apple, Tesla, AMC, etc.” The list could go on forever. I always have a hard time answering this question because what I invest in doesn’t really matter. Just because I invest in certain things does not mean you should and vise versa. The real question is “why do I invest in those things?” The why is so much more important than the what.
And for me, I have a deep why for my investing strategy.
I believe in low cost, diversified investing for most of my portfolio. About 80% of my current portfolio is in low cost index funds that have the exposure I want (the same as our RLS Wealth clients). Some to large cap, some to mid cap, some to small cap, some to international, some to value, and some to growth.
My main focus here is to get what the market offers. To hold on long term and to not touch this money till I need it in the distant future — and to keep the fees as low as possible, but also to keep the gains sheltered inside as much as possible by using ETFs.
Then, with the last 20% I take more risk. I invest in some cryptocurrencies I really believe in as well as some individual stocks. The key here is that I truly believe in them. I did my research. I found what I think will make an impact in the future — and with these investments, I still have a long term view. This belief system is so crucial when you invest, because without it, how do you continue to stick with it when times get tough?
These last few weeks, so many people I know sold their positions in Bitcoin, Ethereum, and other cryptocurrencies, and if that is you, it’s probably because you never believed in the investment in the first place. You probably just invested because others were doing it and you were hoping to make lots of money off of it. I am here to tell you that investing that way rarely works.
Every time things get tough, you are going to sit there and fight yourself on whether you should sell or not simply because you have no true belief around it. This is why it is so important to invest in what you truly believe in because that long term belief enables you to hold on through short term downturns. Sure, it still won’t be easy, but it will be possible when you truly believe in the investment.
I also want to note that chasing investment returns as a millennial is not where your energy is best spent. Your energy is best spent continually investing, increasing your income, increasing your investment percentage, investing in the right accounts based on taxes, etc.
Here are some pieces of investment advice to help you out:
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