Building Wealth Series - Ep. 2 - Smart (Not Dumb) Investing

Keith DeGreen: As I SEA It

In part 2 of this podcast conversation, I discuss the topic of smart investing. I begin by emphasizing the importance of taking care of financial responsibilities, such as paying off credit card debt and building a cash reserve, before starting to invest. I then explain that investing in equities or stocks is likely to bring growth to a portfolio over time, but diversifying with fixed-rate instruments can help reduce volatility. I highlight the importance of targeting portfolio growth that exceeds the rate of inflation to protect purchasing power in retirement. I advise against becoming a trader and instead encourages listeners to be long-term investors. I share my seven rules for wise investing, including allocating portfolios across different asset classes, diversifying within each asset class, and investing efficiently with low expenses. I also recommend working with a qualified fee-only investment advisor. I review the benefits of investing in exchange-traded funds (ETFs) over mutual funds, such as lower fees, higher tax efficiency, and greater liquidity. Note that ETFs track various indices and allow for geographic diversification. I cautions against investing solely in tech companies and emphasizes the importance of diversifying across sectors and markets. Finally, I discuss the allocation of portfolios between equities and fixed income, highlighting that personal circumstances and goals should drive these decisions. I encourages listeners to have an open and honest conversation with their fee-only advisor to determine the best allocation for their individual situation.

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