A 2016 Gallup poll showed the number of Americans who owned stock matching the all-time low previously hit in 2013.
After peaking at 65 percent in 2007, the percentage of us who said we were invested in stocks was down to only a little more than half (52 percent) last year. For those younger than 35, the figure dropped to less than 40 percent (down from more than 50 percent).
There are probably a number of reasons for this decline, including fear of the markets following the Great Recession. While it’s true that the stock market has experienced volatility, it’s also been a helpful tool for building wealth over the long term. Of course, past performance is no guarantee of future results.
If you’re among those who’ve turned your back on stocks, you may be thinking it’s time to get back into the market – or invest for the first time. If so, a good place to begin is by determining what type of investor you are.
Go solo or get help?
If you’re a do-it-yourself (DIY) investor or have little money to start with, you may want to consider online investing. It makes trading relatively easy and inexpensive.
However, you may not have the time or confidence in your ability to choose the right investments, which are likely to include other investments besides stocks. If that’s the case, you may want to turn to a professional advisor.
The first thing you should expect is for him or her to get to know you and understand your long-term goals, such as enjoying a financially secure retirement or helping your children or grandchildren afford higher education.
Beginning with that information, your advisor should work with you create an investment plan designed to help you achieve those goals. At the heart of that plan will be a recommended asset allocation, which is nothing more than how your portfolio should be divided up among different types of investments, typically stocks, bonds, and cash alternatives.
Determine your style
There’s more than one way to work with an advisor, and you need to decide which one you’re more comfortable with.
If you want to be the ultimate decision-maker, you may choose to collaborate with your advisor. In this case, he or she will contact you with recommendations, and it will be up to you to decide whether to follow them. With this type of relationship, you’ll likely pay commissions on your transactions.
On the other hand, you may prefer to take a hands-off approach and simply delegate the management of your investments. If you choose this, you will:
• Not be consulted prior to transactions being executed in your account;
• Probably be charged a fee based on a percentage of your account’s value rather than paying commissions;
Choose your advisor wisely
Finding the right advisor is an important decision. You may want to start by talking with friends and relatives whose opinions you respect. If they are working with someone they like, do your own research on them. After all, just because someone is a good fit for your mom or Uncle Charlie doesn’t necessarily mean they’re right for you.
After you have names of three or four prospective advisors, see what you can find out about them online. That may help narrow your choices. Then talk with them on the phone and schedule appointments to meet with the two who seem most promising. In the end, you may have to “go with your gut” to decide which one to go with.
This may seem like quite a bit of work, but when your ability to reach your financial goals is at stake, it’s likely to be worth it.
This article was written by/for Wells Fargo Advisors and provided courtesy of Whitney McDaniel in Beaufort, at 843-524-1114. Any third-party posts, reviews or comments associated with this listing are not endorsed by Wells Fargo Advisors and do not necessarily represent the views of Whitney McDaniel or Wells Fargo Advisors and have not been reviewed by the Firm for completeness or accuracy.
Investments in securities and insurance products are not FDIC-insured/not bank-guaranteed/may lose value.
