Even if you've hired a reputable financial advisor to help you navigate the investment world, experts still recommend individuals do their own research to better understand where you're putting their money.
"You have the greatest interest in your own success," says Greg Feirman, founder and CEO of Top Gun Financial Planning. "Take responsibility and educate yourself within the limits of your time, interest and ability."
Greg recently checked in with us to offer tips to new investors on getting started and advice on hiring a financial planner that will look out for your best interest. Here's what he had to say:
Tell us about Top Gun Financial Planning...when and why did you start your business?
I started the business in 2006 because I saw the housing bubble about to implode and wanted to profit from it.
What sets your financial planning services apart from others?
I operate much more like a hedge fund than a traditional RIA. I do all my own research and build portfolios with individual stocks instead of mutual funds. I will also short stocks on occasion.
Describe your ideal client...
My ideal client has money to invest for growth over the long term. Somediv with risk tolerance and a long time horizon.
If we want to jump into investing, where's the best place to start?
I think you have to learn by doing. Of course you should read books and articles to educate yourself. But ultimately you will only learn through the trial and error of experience.
In your years of experience, what have you observed are the biggest mistakes individuals make when investing?
I find that is very hard for most investors to be contrarian. They are bullish when stocks are going up and bearish when they are going down. Sometimes you need to have an independent perspective and buck the trend.
What are the smartest things individuals should do when it comes to investing?
Educate yourself and keep on learning. There is no substitute for experience.
What's your advice on hiring a savvy financial advisor who will look out for their client's interest rather than just their own bottom line?
Find out how an advisor gets paid. Is he pushing certain products because he gets a higher commission? Ask. The trend nowadays is towards fee-only advisors, and that is a good thing. Make sure your advisor's interests are aligned with yours.
Why should everyone be leery of stockbrokers? What about mutual funds?
Like I said, be careful of brokers because they get paid to pitch certain products with fat commissions for them that may not be the best investment for you. Mutual funds are a fine choice for investors who want to outsource individual stock picking to a professional. But you still have to do your due diligence on the funds.
How are you feeling about the economy these days? What do you think we should be keeping a close eye on? What do you think will be making the headlines in the coming months?
There is the economy and the stock market. While there are many problems with the economy, the big corporations that make up the stock market are doing quite well. I foresee that continuing for the near term. However, this bull market is now more than five years old, which is long historically. The good times won't last forever. Another bear market is surely on the horizon, and investors should balance that risk with the rewards of this hated - and misunderstood - bull market.