Myth # 1: My advisor should help me get out of low-performing investments—and get into high-performing investments.
Fact #1: An investment strategy that’s based on predicting which investment will be on a hot streak or a losing streak (and predicting how long the streak will last) isn’t likely to succeed over the long term. The same goes for making investment decisions based on how you feel.
For example, investors who pulled out of the stock market in the 2009 bear market experienced a 7% loss. Those who stayed the course experienced a 59% return.*
When you partner with Ironhorse, you don’t have to face volatility alone. You’ll have an investing coach by your side during market ups and downs—minimizing the risk that you’ll abandon your long-term plan during the next market swing.
* Investors with a 50% stock/50%bond portfolio rebalanced from October 9, 2007, through March 31, 2015, would have a +59% return. Investors who switched to 100% cash on September 15, 2008, through December 31, 2015, would have a -7% return. Stock is represented by S&P 500 and bond is represented by Barclays Capital U.S. Aggregate Bond Index (rebalanced monthly). 100% cash represented by 3-month Treasury bill. Data provided by FactSet and Vanguard calculations. Data as of December 31, 2015.
Myth 2: My advisor only focuses on my account balance—everything else is up to me.
Fact 2: Your financial life is bigger than your portfolio. Our first job is to get to know you. Then we will take a holistic view of your finances, using your investing goals, time frame for investing, and comfort level with risk to build a long-term financial plan. Your interests always come first, and you can be as involved in your finances as much (or as little) as you want to be.
Ironhorse advisors can help you answer questions such as: How do I create a retirement budget? When should I claim Social Security benefits? Is my investment strategy tax-efficient? Not only will your advisor answer your questions, but he or she will also guide you through periods of market volatility – making it more likely for you to stick to your long-term plan.
Myth #3: When the market swings, my advisor should make a change to my portfolio.
Fact #3: Market volatility is expected. On average, equity markets experience a correction, which is a drop of 10% or more, every 18 months.
Even if you’re rattled by this, rest assure that we are not. We simulate various market conditions during the portfolio-building process to forecast how likely your portfolio is to meet your goals in different environments. Then we carefully selects your asset allocation to lessen the impact of market volatility—so you can trust your asset allocation when (not if) markets are on the move. This is also when we revisit your risk tolerance and risk tolerance score to make sure your portfolio is allocated to your comfort level as well as your investment objectives.
Myth #4: If my portfolio doesn’t include the most popular investments, my advisor isn’t doing a good job.
Fact #4: If your investment goal is to get in on the ground floor of the next big thing, chasing trendy investments may be a winning strategy. But if you have real-life investment goals, such as retiring in X number of years or funding X percent of a loved one’s college education, you’ll probably be better off investing for the long term with a diverse portfolio.
An asset allocation that’s designed to meet your goals is the cornerstone of a solid investing strategy. In truth, the asset allocation you choose impacts your portfolio’s performance (a.k.a. investment returns) more than any other investment decision you make, including individual investment selection.
We can help you tune out the noise and stay focused on what really matters. You don’t have to buy into the hype to achieve success—and we’re pretty confident your future self would agree.
Myth #5: I only need an advisor if my portfolio is complex.
Fact #5: You can benefit from working with Ironhorse even if you don’t have a complex portfolio. The qualities—passion, spontaneity, and ambition—that serve you well in life are the same qualities that sabotage your savings.
In addition to building and helping you maintain a goal-based financial plan, we can support you through periods of market volatility, acting as a sounding board for emotionally driven ideas that could potentially ruin your long-term objectives.
You work hard for your money. We can help you manage the complexities of your financial life, from juggling multiple priorities to making your future dreams a reality, with a financial plan that’s tailored just for you.