Investing 101

Learn the basics of investing the Merriman way

Whether you’re brand new to investing or looking to add some stability to an existing portfolio, this is the course for you! The lessons here cover the core principles our Wealth Advisors follow when building customized portfolios that help our clients achieve their goals.

How we pick investments

Over the long term, the market doesn’t reward investors who concentrate their risk in a single stock. Instead, broad diversification, holding a great number of various types of stocks, is critical in reducing risk and smoothing out the ups and downs of the market.

Stocks vs Bonds

 Stocks, bonds, or both? One of the most important decisions you’ll make in your portfolio is how much to allocate to stocks and how much to bonds. The choice between them represents a basic tradeoff: growth vs. stability. Investing in stocks is more likely to produce higher returns than investing in bonds, but with more volatility.

For most investors, it makes sense to hold both, but the finding the right split involves looking at a number of factors.

The role of stocks

When you invest in stocks, you invest in the growth of companies and the economy. But it’s not without risk – owning an individual company’s stock ties your financial well-being to that company, and you run the risk of losing lots of money. Here’s how to invest wisely:

1. Buy mutual funds and ETFs to invest in hundreds or thousands of stocks at once.
2. Invest in stocks across multiple asset classes – small and large, value and growth, US and international.

All of these things will provide more stability to your portfolio.

The role of bonds

The main benefit of bonds is to provide a counterweight to stocks when there is a downturn in the market. They mitigate risk and provide stability in the portfolio to help make sure you meet your long-term goals.

Specialized & REITs

Does your portfolio consist of just stocks and bonds? You may be missing out on specialized investments such as alternative lending and real estate.

The emotions of investing

You now have a diversified portfolio with the right mix of investments. But what happens during the next big downturn? Emotional decision-making in volatile markets leads to what’s known as the “behavior gap,” the gap between the market’s return and the investor’s personal return. The key to investment success is to find an investment approach you can stick with for the long term and eliminate the behavior gap altogether. AND, hire a wealth advisor to keep you on track when things feel scary.

Spend more time living fully

If you want to spend more time doing the things you love, and less time worrying about the nuances of your portfolio, we can help!

Just a 15-minute call is all it takes to get answers to any initial questions you might have and get you set up with a free consultation with a Merriman Wealth Advisor.