As a well-established San Antonio Financial Group, we know that the stock trading fee of $4.95 is not the issue. The real concern is the time and emotional investment in the practice of stock trading.
When I was managing a very tactical group of investments, my 3 a.m. “bathroom breaks” required a visit to CNBC Asian markets. My body was in one place half the day but my mind was elsewhere. Trading investments required full engagement.
I shared this concern with a client recently who was struggling in many areas of his life because of the emotional grab of trading. “To what benefit?” I asked. He was trying to make more money, yet he was losing relationships.
Take our quick risk assessment test to understand your risk tolerance and how it affects your current situation.
Now consider you ignore my caution and commit to trade stocks anyway. What does it take?
A long-term successful trader needs to be fully equipped with the following tools:
- First, he or she needs to be intelligent enough to know if a company is making money or going broke. This is called fundamental analysis and isn’t always easy.
- Then, he or she should know if people are dumping the stock or jumping on the train because this information will carry the price a certain direction. This is known as technical analysis.
- Lastly, and certainly not least, he or she should know if the price is right. This is called valuation.
Of course, the political and economic environment plays a role as well.
All this to say, even if you are fully engaged, don’t try it.
From a personal perspective, you must have considerable time and emotional fortitude – everyone has a number where they lose sleep over the stock market. The time required is important to consider because other, more important tasks will be set aside. Consider the opportunity cost. Also, if you have a track record of making emotional decisions with money, stop now. Trading isn’t for you.
Another thing to think about: I’ve not seen a trader on the list of Fortune’s richest people.
If you are buying investments to hold them for a long period of time, good for you. It may be boring, but don’t give up. It may be in your best interest.
Tactical allocation may involve more frequent buying and selling of assets and will tend to generate higher transaction cost. Investors should consider the tax consequences of moving positions more frequently.
Stock investing involves risk, including loss of principal.
Before you start planning for your future, make sure you talk with a financial planner who will consider your investment risk before recommending an investment plan for your specific situation. Then ask yourself this: Are your investment decisions being made by one advisor? This is common in the industry, but think about the risk.
- What if the market goes down while the advisor is on vacation?
- How clearly is the advisor thinking if he or she is having marital problems?
- What if the advisor gets caught up in the latest Wall Street fad?
In PAX Financial Group’s actively managed programs, all decisions are made in-house by a committee of experienced financial advisors utilizing unbiased third-party software. This unique committee structure protects investors from the possible biases or events that may impact one advisor’s objectivity. Each advisor acts as a check-and-balance system for the others. Investments are selected by an objective process, focused on evidence and not theory. A disciplined monitoring process is used that includes investment audits and focused position evaluations. We also walk with you through both the good and bad times by maintaining awareness of the economic landscape. We don’t attempt to “time” the market. Instead we rely on a long-term disciplined investing strategy founded on research and supported by our leadership. It’s just one more way PAX looks out for our investors’ best interests.
You may also want to read our 5 investing rules to never forget and our 5 tips to avoid investment deceit. Also, take advantage of PAX Financial Group’s Risk Assessment Test. Everyone has a different tolerance for risk, and understanding your risk tolerance is one of the most important elements in your investment decision. It’s not good practice to simply follow someone else’s course.
Contact PAX Financial Group for more information and to learn how we can help you.
This material is provided by PAX Financial Group, LLC, the opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.