Actionable Guide for the DIY Investor
Acting on personal finances is often one of the most difficult things to do. Hamilton Capital Partner’s “Accelerated Freedom Program” provides actionable and transparent advice to help young professionals build wealth.
Below, we have provided several bullet points that can help guide “DIY” Investors:
- Automate your savings and investments. Although it sounds simple, we often find this to be one of the most difficult actionable items for young investors. Whether it be a weekly ACH from your checking account to an investment account or a consistent payroll deduction to your 401(k), the quicker your act, the better.
- Fees. Just because you are not paying an advisory/management fee does not mean you are not paying fees. Knowing your funds “Expense Ratio” can help increase investment returns over the long run. Many ETF’s and mutual funds are tilted heavily towards the same companies, so finding the lowest cost product is very important.
- Keep it simple. 2020 saw many investors trying to “beat the market” by applying sophisticated options/hedging strategies. Many younger investors did not understand the sophistication of leveraging their purchasing power. “Dollar Cost Averaging” is one of the simplest ways to build wealth. As markets pull back, you buy more of a fund, and as markets tear higher, you buy less.
- Diversification. Wall street tries to make investing more complicated than it is. Diversification does not mean own everything that is tradable. For younger investors, diversification can come in the form of an ETF that tracks an entire index, such as the S&P 500.
- Review your 401(k)/workplace retirement plan. This is a very important part of a retirement nest egg. Reviewing your 401(k) mutual fund fees at least annually can help cut costs and increase returns. It is also important to review your 401(k)-beneficiary information annually.
Happy Thanksgiving from the HCP team!!