Investing is all about thinking ahead, about planning things for a good financial situation in your future. With all the emphasis on investment firms for their many years of operation and their long-tenured personnel, it would seem that your money is best placed in the dustiest old instruments available.
What’s hidden in that misperception is the economic engines that drive the growth. Yes, stocks and bonds are largely very similar to what they’ve been all along, but there has been an evolution in the products and services that create those instruments.
Think of how technology has changed since the venerable Dow Jones was established. Many people don’t even realize that today’s listings on the DJIA are very different from those just a few years ago. That’s because the market is drastically different, and the index has been updated to reflect that.
So it’s within this framework that you should have a conversation with your investment advisor. Be sure to address some of these key areas.
What Investments Are Coming?
Five years ago, almost no one had heard of Bitcoin. Yet now the cryptocurrency is a growing economic tool, with companies like Genesis Mining providing the opportunity for cottage industries run by almost anyone with a computer.
Find out what your advisor thinks is ahead. He or she won’t steer you toward the next dot-com disaster, but instead toward the real growth markets of the future. Cryptocurrency is certainly worth discussing. So are emerging social media platforms; how would you have felt about buying a few shares of Facebook at its IPO in 2012? Work with a financial advisor who can withstand your most rigorous examination and create high expectations.
What Investments Are Going?
We already mentioned the evolution of the DJIA. It was originally populated with staples like rubber and cotton, but today is far heavier on tech and manufacturing. The departure of many long-standing firms from that key list of 30 was never a surprise, even to the general public.
The financial community knew it was coming long before the average investor, though, and that’s what you should expect of your advisor. Ask whether the current doldrums experienced by one of your investments are just an aberration or an indicator of real trouble. Discuss his or her assessments of the competitive, regulatory, and marketing challenges facing your stocks, and get a frank opinion of which of your holdings are most tenuous.
What Economies Are Changing?
The performance of companies isn’t entirely an internal thing. It’s often affected by the regulatory and political climate of the nation in which they are located. While American investors typically don’t experience too much variability in their economic climate, other places aren’t so consistent.
The EU is a good example. Prior to its advent, there were a couple dozen independent economies. Then they merged into mostly a single economy, and now it is beginning to fracture. Your advisor needs to have a good understanding of how to anticipate such changes and how to insulate your money from them.
Investments are complicated things. They are nearly endless in variety, with constant changes taking place. The investors themselves have a wide array of goals, motivations, and tolerances for risk, and all these players operate on an increasingly complex and unpredictable world stage. Navigating this maze effectively is not for the faint of heart, and it takes the input of an experienced financial advisor to be successful.
But more than that, it takes seeking that input and following the advisor’s recommendations. When investors follow that simple plan, it’s much easier to reach your financial goals.