Instinctively investors know they should diversify their portfolio and most do this. Having looked at hundreds, if not thousands, of portfolios, I can tell you that diversification amounts to more than just owning multiple funds. A common mistake that investors make when trying to diversify their IRA or 401k is that they, inadvertently, create a portfolio that has the illusion of diversification...
In 2019, I wrote the article you see below. At the time, I was extremely excited about the prospect of ETFs beginning to trade at zero cost, and frankly, I still am. Free trading of ETFs (and stocks in many cases) is a huge advancement for investors and gives us, as your financial advisor, additional tools to manage your portfolio. Below is a quick refresher on the history of ETFs, which explains what happened in 2019 and why I was excited about it. I have added additional commentary to the original article in italics.
In this article, we talk about the portfolio change we recently made. We also give our views on the news of the Silicon Valley Bank bank failure and, subsequently, the failure of Signature Bank.
We are facing a bump in the road right now, and I can feel anxiety and panic coming from some clients. I’m writing this today to hopefully relieve some of those emotions and explain what has happened in markets, why it has happened, and what FSG is doing. In addition, this past Monday, the 9th, Mark Carter and I recorded a video talking about many of the same things.
Don’t put all your eggs in one basket. I have no idea where that idiom originated from but it is perhaps the best and simplest way to describe diversification. Instinctively investors know they should diversify their portfolio and most do this. Having looked at hundreds, if not thousands, of portfolios, I can tell you that diversification amounts to more than just owning multiple funds. A common mistake that investors make when trying to diversify their IRA or 401k is that they, inadvertently, create a portfolio that has the illusion of diversification. Let me explain.
"It was not even three weeks ago that I wrote and sent our last communication about the “Coronavirus Chaos” correction. That piece was easy to write. This one was not. Not because I am at a loss for words, but because there is too much information that I want to convey. With that being said, I had to narrow this down to a handful of key topics: What you are feeling right now is normal, Bear markets are not especially rare. Why you should not “bail out”, Timelines of previous Bear/Bull Markets."
The recent news from Charles Schwab, TD Ameritrade, and E-Trade that they will be reducing commissions on Exchange Traded Funds (ETFs) and Stocks to $0 is huge news. The road to $0 commissions (transaction fees) has been a long time coming. From the birth and proliferation of the discount broker in the 90s, transaction costs have been shrinking.