The One Thing You Need to Know About Investing

Steve Meves, Senior Vice President/Chief Investment Officer, Wealth Managementmevess_bus009xqc

Investing is about using the money you’ve saved to purchase an asset that will hopefully appreciate over time. The key word in that last sentence is “time.” Giving your investments sufficient time to grow, regardless of what you are investing in, is the hard part. It’s also a key ingredient to building wealth.

Market Movements Are Noise

The financial markets go up and down, sometimes within the same day. But throughout history, they’ve kept climbing. The indexes we use to measure investment results—the Dow Jones Industrial Index and the S&P 500 Index—reflect this jagged climb. It’s this historical proof of resilience through wars, political mayhem and underperformance that allows professional wealth managers to remain calm in the face of sell-offs. They’ve seen the charts and looked at the data on market closes. And, they know that sell-offs end with recoveries. These recoveries may take time, but eventually they occur and have led to a resumption in the historical upward trend.

Go Long

The mistake many investors make is in assuming they need to do something when markets sell off. That’s only natural. It hurts to see your account balances decline, even if it’s a short-term occurrence. Our brains are hard wired to feel the pain of a loss—in this case money—more intensely than we feel the joy of a gain. It’s why we are intuitively risk averse. No one likes the way they feel when they lose.

When markets do sell off—whether during a day, over several weeks or even months—we all impulsively want to avoid further pain by selling. Some even want to anticipate the loss by selling before markets ever start selling off.

Taking evasive action may feel good in the short run, but it can destroy investment results in the long run, because you need to be right about the market continuing to go down when you are out of the market. More importantly, you also need to be in the market during its recoveries in order to benefit. It’s hard to know on any given day the kind of day it will be.

When Is the Right Time to Invest?

When you are an investor and take a long-term view, any time can be the right time depending on what you are investing in. Therefore, it’s advisable to have access to wealth managers who actively monitor markets daily to determine when it makes sense to pull back on investing in securities, or types of securities, and when to add more. It’s also our job to keep emotions like loss avoidance from endangering your overall goals so that your portfolio is diversified over different types of assets. That way, it’s better positioned to withstand volatility in any one type of asset.

In the end, the secret to successful investing is to remain focused on why you invest: to build wealth over time.

For more information on how our goal-driven wealth management services keep you on task over the long term, visit us here or call 630-801-2217. We can’t wait to talk to you about what we can do for you today.

 

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Investing Solutions Built for the Individual

Brad Johnson, CFA, CFP®, Vice President, Investment Officer

Brad_JohnsonMany assume the first step to investing means going the do-it-yourself route and selecting among the thousands of mutual fund companies, online brokers and robo-advisors to create your own strategy. But, there is another option to the off-the-shelf solution.

Banks have not only been in the wealth management business from the start, they are well-suited for meeting the needs of each investor, not just the average investor.

What We Have Against Cookie-Cutters
Part of the appeal of a bank solution is that it provides services, not just products. This is important because as you move through your life, we can adjust our services and strategies to remain appropriate to your current needs. From simple savings and basic brokerage services to investment management and trust and estate needs, banks can accommodate your financial life as it changes.

Low Cost Versus High Touch
While self-service tends to be the cheapest route in money management, it’s hard to do by yourself. Change ripples through the global markets, and reactions can be swift. Having a dedicated team watching over your investments helps ensure you’re well-positioned for whatever occurs and able to take advantage when opportunities arise.

OSB-0043_Johnson-Blog-Sidebar_FNLSetting and Forgetting Versus Responsive
Robo-advisors and passive strategies have their uses, but algorithms can’t factor in personal preferences or your changing circumstances over time. Instead, they can generate what is expected to work for the average investor. That may not be the same as what’s right for you.

The Fact Is Investing Isn’t a Math Problem
When it comes to investing, the choice of providers can come down to a one click solution, as with the robo-advisor options, versus a one-stop solution.

Banks like ours offer a one-stop solution with answers that adapt to your situation and the constantly shifting market and economic conditions that affect you.

To learn more about what we can do for you, give us a call.

Women and Wealth: What You Need to Know

Jacqueline Runnberg, CFP®, Vice President/Wealth Advisor

Jacqueline Runnberg“Girl power!” isn’t just an empowered cry from the 1990s girl band rock scene. It speaks to the current reality: the growing influence of women as wealth creators and decision makers.

Today, women are more likely to achieve higher levels of education and participate in the workforce at a similar rate to men. They also head up a growing number of households due to divorce, lifestyle choices and longer lifespans. In fact, it’s estimated that 95 percent of women will be their family’s primary financial decision maker at some point in their lives.[1]

In the U.S., women currently control about $11.2 trillion—39 percent of this country’s investable assets.[2] By 2030, it’s expected that at least two-thirds of the nation’s wealth will be in the hands of women.[3]

Yet for all this financial firepower, women tend to lag men when it comes to planning for their financial futures.

What Makes It Different for Women

When it comes to investing, women are said to be more conservative investors who are generally inclined to take less risk. This isn’t entirely a bad thing—men generally take too much risk. But, being too conservative can leave women unprepared to meet their income and health care needs later in life.

Unlike men, women also tend to put more emphasis on objectives and planning and are better savers. These are also very good tendencies for ensuring that wealth takes care of family members. But often, this planning isn’t being expanded to accommodate their own needs, needs that arise from longer life spans.[4]

Thinking About Tomorrow

Runnberg InfographicAmong the realities we try to make our clients more aware of is that women tend to live longer, which leads to the need for their invested wealth to last longer. Women often outlive their husbands. And if they are single, their longer life span makes them even more vulnerable to the high cost of health care than men and puts them in even greater need for planning.

Addressing these issues can extend beyond money. It can require a Plan B, should it not be feasible to count on other family members to step in if a single or widowed woman becomes incapacitated.

As part of a bank trust company, we can provide more encompassing services than many financial advisors. These include serving as a trustee, settling estates and ensuring bills are paid and medical and household services are received when a client becomes temporarily or permanently incapacitated.

It’s all part of the holistic range of services we can provide our clients to help them feel empowered, confident and secure when it comes to talking about, understanding and then planning and investing for their family’s future needs as well as their own.

[1] Heather R. Ettinger and Eileen M. O’Connor, “Women of Wealth: Why Does the Financial Services Industry Still Not Hear Them,” Family Wealth Advisors Council, 2011.
[2] Sylvia Ann Hewlett and Andrea Turner Moffitt with Melinda Marshall, “Harnessing the Power of the Purse: Female Investors and Global Opportunities for Growth,” Center for Talent Innovation, 2014.
[3] Heather R. Ettinger and Eileen M. O’Connor, “Women of Wealth Study: Why Does the Financial Services Industry Still Not Hear Them,” Family Wealthy Advisors Council, 2011.
[4] Jean Chatzky, “Why women are better investors than men,” fortune.com, posted April 10, 2015, retrieved September 18, 2015.

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.