Investing should always be considered a long-term strategy. If you decide to invest for its own sake or to get rich quick, then you will end up getting broke quick. There is no standard for realizing returns quickly or on a timescale of your choosing. It can take years for you to realize a return on investment. And that could happen after a period of loss, mitigating the success of your overall gains. For the novice or occasional investor to expect to make outsized gains in a short period of time, or overnight, is wildly delusional at best. Or the manifestation of willful ignorance about financial market realities at worst. The stark reality is that a majority of Americans aren’t significantly invested in the stock market or don’t know what they are doing if they are. Learning about choosing the best investment coach may be their best option for success.
Have you ever heard the old investing adage that you should expect an annual 7% return on investment as an average metric?
You do know that estimate is a bunch of malarky, right?
Choosing the Best Investment Coach (Because Generalizations Don’t Work)
The 7% return on investment fallacy, which is taken as gospel by many novice investors, is a mischaracterization of an old Warren Buffett comment.
Buffett made a comment that investors could expect regular 7% returns on investments in particular circumstances.
For instance, if you have a wide and well-diversified stock portfolio and have been prudently investing for years, the 7% metric might be feasible.
And the emphasis should be stressed on the word, “might,” in the previous sentence.
The 7% ROI rule not a standard nor should be a taken-for-granted expectation in all circumstances.
Market conditions, the wisdom of your investing decisions, and thorough research before
If you have budget-consciously invested in one company, and on a whim without prior research, you have no right expecting a return on investment anytime soon.
Expecting a quick and plentiful return on an individual investment is irrational, unrealistic, and could be financially disastrous.
As with many things in life, you may be better off getting advice from a financial advisor or consultant.
I have tips you need to know when choosing the best investment coach.
But first, here is why you ought to get an investment coach.
The American Newbie Investor
Most people invest in the stock market because they have a misguided notion that they will get rich quick.
Financial independence, also known as being wealthy, requires you to commit to several financial tenets. You should learn this before choosing the best investment coach.
Get out of debt and learn to stay out of it. Save as much money as possible and live below your means. Start a business based on realistic research of local business markets.
And learn to make wise investments over a long-term period. None of those things can be done individually with the expectation of getting rich quick.
Especially when it comes to investment.
Unfortunately, most Americans don’t have enough money to invest in the stock market. Many Americans lack a basic understanding of how the stock market operates.
About half of Americans don’t know how the stock market works. About 75% don’t know how bond investment works.
42% of Americans don’t fully know what investments are in their diversified portfolios or how assets are allocated.
Over 52% of new investors rebalance their portfolios more than once a year, which can have negative tax and fee consequences.
Maybe 55% of Americans are invested in the stock market but half of those investors have less than $40,000 invested.
Over 21% of the non-investors report they don’t trust investment coaches or financial advisors.
Americans are more likely to own a home than stock investments.
If any of those statistics describe you, then you need to learn about choosing the best investment coach.
If you don’t know what you are doing, investment is a long-term financial strategy at best or an ignorant short-term gamble at worst.
Choosing the Best Investment Coach
Here is what to look for when choosing the best investment coach.
An investment coach should have a verifiable track record as a successful investor, employee, or owner of an investment company.
An investment coach tutors, mentors, and advises your decisions concerning personal investments.
If you don’t know how to begin investing or haven’t been successful profit-wise, they can help you to begin making better investing choices.
An investment coach should help you to better understand investment terms. The terminologies inherent in investing can be overwhelming to newcomers.
An investment coach helps you to understand how to buy stocks, ETFs, diversify your portfolio, and how to engage in investing.
There are many ways to invest, and it takes time to learn how to do so effectively. The best way to learn how is with the aid of an investment coach.
An effective investment coach helps you to make realistic investments that are appropriate to your goals.
An investment coach will talk to you about your investment goals, wishes, and various multiple year plans for achieving such goals.
They will teach you how to read and analyze financial market activity so that you can gauge the performance of your investments.
Verify Credentials
Before you hire an investment coach, ask about their credentials. Inquire if they offer consultation visits.
Verify their financial literacy in assessing how investments work and gauge their performance.
A good investment coach will ask you about your investment goals and guide you in investing in opportunities that benefit you.
Be wary of any investment coach who is more interested in getting you to invest in stocks that may benefit their interests.
It’s your money. Make sure the investment coach guiding you knows what they are doing.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.