Beyond Investment Illusions

Financial advisor Daren Blonski of Edward Jones in Sonoma invited over two-dozen of his clients and associates on March 21, to attend a lecture entitled “Beyond Investment Illusions,” given by Jacque Finn an Advisor Consultant with The Hartford Finances Services Group. Blonski’s intent for coordinating the lecture was not to sell financial products but to help the community.

Finn immediately got those in attendance at the Sonoma Valley Chamber of Commerce that morning to feel at ease talking about a subject which everyone is concerned about. But they often find difficult to discuss, finances. “I want this to be more like school than church,” he said. He welcomed questions and encouraged everyone to participate. He noted that the subject of finances should not be mystifying to the point of being afraid of to learn about it.

With over a decade of experience in the financial advising field, Finn noted that the world of finances, stocks, bonds, annuities, “is always a changing industry.” Yet the uncertainty of the times we live in has always been. World events, war, economic ups and downs have always been.

This is why Finn reassured it is best to set one’s financial goals and be consistent. All investing seeks a return and naturally, volatility should be feared when investing. But remaining consistent will help to overcome the challenge of volatility in the marketplace. “Over time volatility is an illusion, when taking the time to invest with consistency.

Finn demonstrated through graphs and charts and cleaver illustrations of optical illusions that the S&P 500 stock index has remained at a percentage of at least 9 percent over the last 39 years. All sorts of things happen around our financial goals, “stuff happens around our finances,” he said.

It is true the percentages go up and down; this is volatility. But investing continues just as it always has. “Volatility has not changed, only the way people perceive it,” said Finn. “And, with today’s high tech-Internet technology we can view the changes in the market, minute by minute instead of waiting for stock reports to be issued in the morning newspaper.”

He also talked about the difference between the ‘opportunistic’ or aggressive investor over the ‘apprehensive’ one. “It all has to do with a person’s level of tolerance for risk.

In reality, “no investment is risk free,” “(Fixed investments for example) said Finn. What you can’t see can hurt you, but as he pointed out, every investment has some risk. We learned that from Real Estate in the 2008 recession and sub-prime rate loan debacle. “Optical illusions of sorts do occur when investing,” especially for those who are investing in the short term. Yet those who have invested with long-term goals in mind, volatility should be anticipated. There are basically three risks to keep in mind when investing. 1) Inflation Risk – the rate of inflation reduces the buying power of financial assets every year. 2) Taxes reduce investment returns each year. 3) Longevity Risk: combined taxes and inflation working together negatively impacts a person’s investment causing assets to slip away before or during retirement. A well-planned and diversified investment portfolio can address the risks while helping individual reach financial goals.

A sound investment plan with the help of an experienced advisor can help a person figure out what is best for the future as it unfolds. Weather or not a person should invest in bonds, equities, annuities, commodities or stocks all can be discerned with the right advisor who understands a person’s financial goals. “The market always looks ahead regardless of the unemployment rates.” Because as Finn explained, “there will always be the three E’s.” They are: 1) Earnings, 2) Economy, and 3) Employment.”

An economy will dip for a while, but eventually it bounces back. “There is lots of good things in financial news that never makes it in the news,” said Finn. He pointed to his upbringing in Wyoming and how his homesteading grandpa Virgil used to say in pioneer days there was only beans and jackrabbit to eat. “Yet, my grandma recalled that when beans and jackrabbit were few there was lambs quarters or pigweed to eat.” The flux of a bull or a bear market is constant. “Timing the market place is impossible, no one can predict which companies or stocks will do well and which ones will not,” said Finn.

Naturally, avoid the big swings and dips. Yet as Finn emphasized in conclusion, “while many people today like to do things themselves, don’t go it alone when it comes to making plans for your finances.” “Make a plan set a process not just look to a financial product. Take time to set the goals, step by step. Disciplined investors will get results. And, again the key is consistency in that discipline. “Everyone loves to spend money,” said Finn. But discipline and consistency help people make investments not just spend money.

For more information about investing and current financial product details contact Daren Blonski of Edward Jones Investments at (707) 938-8585. Or visit his page on FaceBook.