081 – Are You Hands-On or Hands-Off when it comes to investing?

The first step to investing is figuring out your investor personality.  Tune in today and read the article below to determine if you are a hands-on or hands-off investor. Are You a Hands-On or Hands-Off Investor? How to Determine the Best Approach to Investing for Retirement article by Scott Spann Choosing your investment options in a 401(k) or IRA can be a challenge. This is because we do not all possess the investing knowledge and confidence to make an informed decision and the investing process itself can be emotional and test our own resolve during good and bad times. Contributing to retirement accounts is an important step but isn’t the only step of the retirement planning process. Saving for retirement may not be enough if you aren’t investing in the right types of investments based on your goals and time horizon. An appropriate level of desired growth and income is needed and every single investor needs a basic investment plan. If you don’t have an investment plan in place you may be hurting your chances of reaching important life goals such as retirement. Begin By Reviewing Your Investor Personality Successful investment planning starts with a basic understanding of yourself. This self-awareness includes knowing how you like to make decisions, whether you like advice or you like to do-it-yourself, and what you will most likely do when the going gets rough and your investments face obstacles such as a market downturn. An important first step when investing for retirement is to understand your risk tolerance, which is essentially an assessment of how comfortable you are with an aggressive, moderate, or conservative approach to investing. To put your desired asset allocation plan into action, you must ask yourself a simple question — how involved you want to be in the day to day management of your investment portfolio? Do you prefer more of a “hands-on” or a “hands off” approach to investing? Hands-On Investing Hands-on investors usually prefer being more actively involved in the process of designing an investment portfolio for retirement. Other preferences usually include setting target allocation weights for different asset classes (stocks, bonds, cash, real assets, etc.). Other common activities that hands-on investors should be focusing on include regular monitoring and re-balancing of their investment portfolio. For example, hands-on investors may have a preference toward investing in individual stocks or actively managed mutual funds or setting up their own asset allocation (mix of investment types) of passive investments such as index mutual funds. Hands-On Investor Checklist Regularly monitor and review account performance Complete a routine fee-analysis Have confidence in your own ability to make important investment decisions Prefer customizing investment allocations Regularly research the details of individuals stocks, mutual funds, ETFs, or other investments. Desire creating a portfolio that is tax-efficient Rebalancing investments on a routine basis There are many options for do-it-yourself investors, including self-directed retirement accounts, discount brokerage firms, and low-fee financial services firms where you can invest on your own with or without an advisor. Hands-Off Investors Hands-off investors are typically looking for a simple investment solution. Think about it as a preference for one-stop-shopping. As a result, hands-off investors are more likely to seek out pre-mixed asset allocation portfolios. Popular examples of investments that fit this category include target date retirement funds, asset allocation funds, professionally managed porfolios, or use of an online investment platform or so-called “robo-advisor”. These more hands-off investment alternatives rely on professional guidance to set the...