This is going to be very simple.  As I said in last week’s post, April 21-28 is Money Smart Week!

Here’s the Top 10 Reasons You Need to Take Advantage of Financial Education:

1)  Learn how to save some M-O-N-E-Y – it’s a lot easier than you think!

2)  Stop you from making Dumb Mistakes with your money – learn how to set priorities for your money!

3)  Give you Great Ideas you never thought of before – including how to talk to your spouse about money!

4)  Get you motivated to become Financially Organized – aka budget!

5)  Figure out Debt Sucks, and how to get rid of it – get out of financial slavery!

6)  Get rid of your Fear of the Future – knowledge is the cure for fear!

7)  Find out how to know if your Investments are Successful – and yes, you can know!

8)  Help you with Questions to Ask your financial advisor – find an advisor you can trust!

9)  Change Your Family Tree – draw a line in the sand, and say I won’t live like this anymore!

10) Can you say Free Financial Education? FREE – seriously, what is free these days?!?

Reminder - see last week’s post for the list of classes I’m teaching this week – I would love to see you there!

Pamela Otten is CEO of Pamela Otten LLC, a Registered Investment Advisor. She loves to work with women business owners and entrepreneurs, and women in transition due to job change, death, or divorce. Pamela will help you set and reach your financial goals, educate you to understand your investments, and teach you how to do more charitable giving. Pamela is a Endorsed Local Provider (ELP) of Investing for Dave Ramsey (www.daveramsey.com/elp), and a Qualified Kingdom Advisor (www.kingdomadvisors.org), trained and committed to integrating biblical principles with her investment advice.

Photo Credit – gtall1

Financial Planning, Investment Advice, and Investment Management provided through Pamela Otten LLC, Registered Investment Advisor.

Warning! What follows may change your financial life forever!  Money Smart Week is starting this Saturday in Wisconsin and many other states across the nation.

Money Smart Week is one of my favorite weeks of the year.  Free financial education on topics ranging from how to save money on your groceries to how to be an intelligent investor.  How cool is that?

Money Smart Week Calendar of Events are available at local financial institutions, the library, and will be sent home with your child from school, as well as inserted in the local paper. You can also look classes up online on the Money Smart Week interactive calendar.

Below is a list of the classes I am teaching during Money Smart Week, starting on Saturday, April 21:

Saturday April 21: Fond du Lac MoneySmart Living for Women Conference, UW Fond du Lac

9:00 am – How to Be an Intelligent Investor

10:00 am – Why Women Need Financial Intimacy

Tuesday, April 24: Plymouth High School, Plymouth

5:00 pm – For Women Only – Why Women Need Financial Intimacy

6:15 pm – Basics of Investing

7:30 pm – How to Be an Intelligent Investor

Thursday, April 26: Horace Mann Middle School, Sheboygan

5:00 pm – For Women Only – Why Women Need Financial Intimacy

6:15 pm – Basics of Investing

7:30 pm – How to Be an Intelligent Investor

Below are descriptions of each class being offered:

Why Women Need Financial Intimacy – Women need to have financial intimacy in their relationships, to protect themselves from financial harm caused by unexpected events, such as death, separation, or divorce.  Learn how to have good financial planning conversations with your partner, and how to protect yourself financially, before you become single, divorced, or widowed.

Basics of Investing – If you don’t know what a stock or bond or mutual fund is, this class is for you.  Basics of Investing will cover different types of investments, what they are used for, and different types of investment accounts to put them in.  This class also will cover important investing concepts, including biggest investor mistakes, risk, time horizon, and investor behavior. 

How to Be an Intelligent Investor – How are you making your investment decisions?  How do you know you are choosing the right investments for you, even in your 401k?  How do you know if your investments are doing well?  All of this and more will be answered in this class, so you can be an intelligent investor.

We all need more financial knowledge.  Do yourself a big favor and take advantage of the free financial classes during Money Smart Week!

Pamela Otten is CEO of Pamela Otten LLC, a Registered Investment Advisor. She loves to work with women business owners and entrepreneurs, and women in transition due to job change, death, or divorce. Pamela will help you set and reach your financial goals, educate you to understand your investments, and teach you how to do more charitable giving. Pamela is a Endorsed Local Provider (ELP) of Investing for Dave Ramsey (www.daveramsey.com/elp), and a Qualified Kingdom Advisor (www.kingdomadvisors.org), trained and committed to integrating biblical principles with her investment advice.

Photo Credit – Money Smart Week

Financial Planning, Investment Advice, and Investment Management provided through Pamela Otten LLC, Registered Investment Advisor.

(Today I am participating in the Roth IRA Movement, put together by an advisor friend of mine, Jeff Rose.  Last I heard, over 140 bloggers are writing today about Roth IRAs, in an effort to spread the word about an excellent investment vehicle.)

The Roth IRA is still one of the best wealth-building vehicles available, for two big reasons:

First, contributions to a Roth IRA are made with after-tax money – meaning you have already paid taxes on your contributions.  Your contributions then grow tax-free, and you should not ever have to pay taxes on your withdrawals, as long as you play by the rules.  However, there is no tax deduction for contributions to a Roth IRA.

Second, there are no requirements to take money out of a Roth IRA, ever.  No RMDs, or Required Minimum Distributions, after age 70 ½.  This means if you never need this money, it could pass directly to your beneficiaries, tax-free.  How great is that?!?

Common Misconceptions

When I am meeting with a new client for the first time, I ask what investments they currently own.  I receive the answer, “I have a Roth IRA,” like the Roth IRA is the investment itself.  When I ask what the Roth IRA is invested in, I get a look of confusion.

Saying a Roth IRA is the investment is like saying your wardrobe is your closet.  Your closet only holds your clothes; it’s not the clothes themselves.  So think of a Roth IRA as the holder of the investment (closet), and the contents are the investment itself (clothes).

The other common misconception that goes along with this – you can only have a certain type of investment in a Roth IRA.  You can have stocks, bonds, mutual funds, or even cash in a Roth IRA.   As a result, a wide range of risk is available to you in the investment, and you can be as conservative or aggressive as you want in your investment choices.

Retirement Tips for Women

It’s no secret that women are particularly vulnerable when it comes to retirement savings.  Many women jump in and out of the workforce, as they juggle raising children with their careers.  This results in lower retirement savings. 

Many women also work in positions that do not offer a company retirement plan.  If your employer does not offer a plan to invest in, it is still your responsibility to save for retirement.  A Roth IRA can be an excellent choice to do this.

Women also need to learn to pay themselves before they pay everyone else.  We are so ingrained as caretakers of our families, that we put everyone and everything else first.  I give you permission: pay your tithe on your income, and then put something away for your retirement, if you already have your emergency fund in place. 

Women often believe they need to save for their children’s college years at the expense of their retirement.  Big mistake.  Take care of yourself first.  I know it sounds selfish, but believe me, your children will thank you when you are not dependent on them in your retirement years. 

Contribution Limits

Contribution limits for a Roth IRA in 2012 are $5000 for under age 50, and $6000 for over age 50.  If you are married, and filing taxes jointly, you will not be able to contribute if your modified adjusted gross income (AGI) is more than $183,000. 

If you are single, and your AGI is more than $125,000, you will not be able to contribute to a Roth IRA.  Other rules apply for married filing separately, and other filing situations.  Please consult your tax advisor for more information on contribution limits, and withdrawals from Roth IRAs.

Start saving early enough in your working years, and you will earn a comfortable retirement the easy way, by benefiting greatly from time and the miracle of compounding.

Pamela Otten is CEO of Pamela Otten LLC, a Registered Investment Advisor. She loves to work with women business owners and entrepreneurs, and women in transition due to job change, death, or divorce. Pamela will help you set and reach your financial goals, educate you to understand your investments, and teach you how to do more charitable giving. Pamela is a Endorsed Local Provider (ELP) of Investing for Dave Ramsey (www.daveramsey.com/elp), and a Qualified Kingdom Advisor (www.kingdomadvisors.org), trained and committed to integrating biblical principles with her investment advice.

Photo Credit – LizMarie_AK

Financial Planning, Investment Advice, and Investment Management provided through Pamela Otten LLC, Registered Investment Advisor.

Do your finances need a wake-up? My church (Bethany Reformed Church) in Sheboygan, Wisconsin, is again sponsoring Dave Ramsey’s Financial Peace University this winter. Financial Peace University was developed by Dave Ramsey, to teach you how to beat down debt, save money, build wealth, and give more than you ever thought you could.

You are invited to join us starting Monday, January 30, 6:30 pm, at our downtown Remedy location, 806 N. 8th Street, Sheboygan, WI. Cost for the 13 week course is $100/individual or couple. No nursery is provided for young children, so please make arrangements for their care at home.

As a Financial Peace coordinator, I have personally witnessed and experienced the exciting transformations this course can bring to families. Please contact me for further information or to sign up!

Pamela Otten is CEO of Pamela Otten LLC, a Registered Investment Advisor. She loves to work with women business owners and entrepreneurs, and women in transition due to job change, death, or divorce. Pamela will help you set and reach your financial goals, educate you to understand your investments, and teach you how to do more charitable giving. Pamela is a Qualified Kingdom Advisor (www.kingdomadvisors.org), trained and committed to integrating biblical principles with her investment advice.

Photo Credit – DaveRamsey

Financial Planning, Investment Advice, and Investment Management provided through Pamela Otten LLC, Registered Investment Advisor.

Dave Ramsey and Financial Peace University are not associated with Pamela Otten LLC.

(Being a diehard Packer fan, I couldn’t resist using Lambeau Field for a crowd photo!  The content of this article is written by Symmetry Partners LLC.  Our firm utilizes Symmetry Partners LLC for investment management services.)

From breaking ground to completion, it took a mere 410 days to construct one of the seven wonders of the modern world. The Empire State Building stands as perhaps the greatest example of what can be achieved when a group of diverse individuals combine their knowledge to maximize efficiency.

Over 3,000 architects, masons, steelworkers, electricians, skilled laborers, and more all worked in conjunction to construct the mammoth building. Independently, they were incapable of completing such a monumental task, but collectively they forged an amplified wisdom that made a remarkable feat possible.

What Makes Markets Efficient

The functionality of financial markets, like any market, is similarly predicated on a meeting of the minds which creates an environment where judgments are made based upon the perception of value. For centuries, market efficiency has been the fundamental principle at the heart of human tendencies for exchange. It is a concept that has been vindicated, challenged and vindicated again. So what makes markets efficient?

At any given time, it’s possible that a single individual acting independently can display naive judgment. It’s not to say that a group can’t, but we would suggest that the likelihood is reduced, considering the broad collection of knowledge.

Capital markets work much the same way. Millions of participants make judgments through the active buying and selling of companies based upon information that freely flows from sources too numerous to mention. What this signifies is that, at any moment, the current price at which a security is trading is likely a pretty good estimate of what that company is worth.

More is Better

If the best answer to a question is more likely to come from within a crowded room, than theoretically, the bigger the room – the better the answer. When it comes to information, the rule of thumb is usually: more is better. The wisdom of many supersedes the wisdom of a few.  

Consider the scenario of shopping for a new computer – a purchase that would typically require some due diligence. Like most individuals, you would probably begin by collecting information, asking your friends and family for input, and scouring the internet for consumer reports and product ratings.

When a satisfactory level of information had been gathered, a selection would be made. Hundreds, perhaps thousands of varying viewpoints may have been taken into consideration. Ultimately, significant amounts of supporting evidence were required to make the most efficient decision on which computer to purchase. Information is the key ingredient, and these days it moves at a staggering pace.

Tomorrow’s Perceived Value

With respect to the financial markets, they don’t trade in yesterday’s information, or even today’s. They are forever looking toward the future, trading based on what they believe is tomorrow’s perceived value. Collectively, the judgment of the masses is hard to beat. However, let’s say an investor was feeling confident enough to attempt to identify a random mispricing.

First, what are the chances that the investor knows something that millions of other people don’t? Second, if they thought that they did know something, what are the chances that the information isn’t outdated and hasn’t already been incorporated into the current price of the stock?  If reasonable doubt exists, then it is logical to suggest that the information may be insufficient. 

None-the-less, there have likely been occasions when an individual did know something that everyone else didn’t. Generally, what happens on these occasions is the person with the information acts upon it. Word spreads, others act, and the impact of the information becomes less and less relevant.

In the 24 hour news cycle that we live in, it’s hard to keep much of anything a secret. Once upon a time, people relied solely on word of mouth commentary and newspapers to gather information. Today we have access to breaking news in the palm of our hand.

Information has never been so abundant and readily available. Collectively, our interpretation of that information empowers us to freely judge the value of the things we invest in, consume and utilize. The beauty that is market efficiency is the reflection of those interpretations.    

Pamela Otten is CEO of Pamela Otten LLC, a Registered Investment Advisor. She loves to work with women business owners and entrepreneurs, and women in transition due to job change, death, or divorce. Pamela will help you set and reach your financial goals, educate you to understand your investments, and teach you how to do more charitable giving. Pamela is a Qualified Kingdom Advisor (www.kingdomadvisors.org), trained and committed to integrating biblical principles with her investment advice.

Photo Credit – Aff1737

Financial Planning, Investment Advice, and Investment Management provided through Pamela Otten LLC, Registered Investment Advisor.

The opinions voiced in this material are for general information only, and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, please consult your financial advisor prior to investing.

*Source: “High Five! None of Us Is as Smart as All of Us” by Ken Blanchard, Shannon Bowles, Sheldon M. Bowles

Content written by Symmetry Partners, LLC. Our firm utilizes Symmetry Partners, LLC for investment management services. Symmetry Partners, LLC, is an investment adviser registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, or excluded or exempted from registration requirements.

All data is from sources believed to be reliable, but cannot be guaranteed or warranted. No current or prospective client should assume that future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this article will be profitable. As with any investment strategy, there is a possibility of profitability as well as loss.

Symmetry follows a passive investment strategy that involves limited ongoing buying and selling actions. Passive investors will purchase investments with the intention of long-term appreciation and limited maintenance. Passively managed portfolios are designed to closely track their respective benchmark index rather than seek out performance.

As a result, the portfolio may hold securities regardless of the current or projected performance of a specific security or particular industry or market sector. Maintaining investments in securities regardless of market conditions or the performance of a specific could cause the portfolio to lose value if the market as a whole falls. Please note that you should not assume that any discussion or information contained in this article serves as the receipt of, or as a substitute for, personalized investment advice from Symmetry Partners or your advisor.

Copyright (C) 2011, Symmetry Partners.  All rights reserved. 

October 8-15 is Wisconsin’s Money Smart Week. Money Smart Week in Wisconsin is sponsored by the Chicago Federal Reserve and the Wisconsin Department of Financial Institutions. This year we have an abbreviated calendar of events, a transition used to introduce the move to a nationwide week of free financial literacy, starting in April of 2012.

Money Smart Week classes in Sheboygan County this year are being held in two locations: Sheboygan LTC (Job Center building), and the new Plymouth Intergenerational Center building, in Plymouth.

Did I mention classes are free? Presenters volunteer their time to teach the classes, and every presenter signs an agreement stating they will not sell anything during their classes. I’ll say it again – no obligation, free financial education!

Study after study shows the majority of women still feel they are not educated enough about their family finances and investments, and as a result are uncomfortable making financial decisions. Here’s a great opportunity to get some free education, and change your financial future.

What follows is a shameless promotion of the classes I am teaching this year for Money Smart Week:

Basics of Investing

You asked for it – here it is!  If you don’t know what a stock or bond or mutual fund is, this class is for you.  Basics of Investing will cover different types of investments and what they are used for, and different types of investment accounts to put them in.  Also covered will be important investing concepts, including risk, time horizon, and investor behavior.

Here’s the schedule for Basics of Investing:

Plymouth Intergenerational Center (1500 Douglas Drive, Plymouth)  Monday October 11, 7:30 – 8:30 pm, Multipurpose Room B

How To Be An Intelligent Investor

How are you making your financial decisions? How do you know you are choosing the right financial decisions for you, even in your 401k? How do you know if your investments are doing well? This class will teach you how to be a more intelligent investor.

Here’s the schedule for How To Be An Intelligent Investor:

Sheboygan LTC Campus (3620 Wilgus Avenue, Sheboygan)  Tuesday October 12, 7:30 – 8:30 pm, Room S109/111

For More Information

For more information on the classes I am teaching, please call or email me.  For a full calendar of events for Money Smart Week classes all over Wisconsin, check out Wisconsin’s Money Smart Week website. If you do not have Money Smart Week in your state, contact your area’s Federal Reserve Bank to request this program in your area.

Pamela Otten is CEO of Pamela Otten LLC, a Registered Investment Advisor. She loves to work with women business owners and entrepreneurs, and women in transition due to job change, death, or divorce. Pamela will help you set and reach your financial goals, educate you to understand your investments, and teach you how to do more charitable giving. Pamela is a Qualified Kingdom Advisor (www.kingdomadvisors.org), trained and committed to integrating biblical principles with her investment advice.

Photo Credit – moneysmartwi

Financial Planning, Investment Advice, and Investment Management provided through Pamela Otten LLC, Registered Investment Advisor.

The opinions voiced in this material are for general information only, and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, please consult your financial advisor prior to investing.

All of the lessons in Dave Ramsey’s Financial Peace University are full of practical advice, but the Week 5 lesson, Credit Sharks in Suits, comes straight from Dave’s personal experience with debt collectors. 

Dave also debunks the ideas of what most people think the FICO score is.  And even includes some great advice on what to do if you are a victim of identity theft.  It’s a great lesson.

How many credit offers do you receive in a week, or a month?  You know credit is a big business, by all the advertising money spent on mailings to try and entice you into accepting more credit.

FICO Score

A common myth about the FICO credit score is that you need to take out a credit card or car loan to build your credit score.  Banks have become very good at drawing young people in with this false assumption. Having a large FICO score does not make you financially successful – read on to find out why!

Do you know what a FICO score is?  Dave says the FICO score is nothing but a measure of how much you love debt.  Did you know that every component of the FICO score relates to debt – your debt payment history, your debt level, the length of your debt, the type of debt, and how much new debt you have?

It is very important to check your credit report at least once a year, if only to make sure you are not a victim of identity theft.  Each of the three credit bureaus (Transunion, Experian, and Equifax) will give you one free report a year, so you can spread this out and get one every four months if you like.  You can request a free credit report at AnnualCreditReport.com .

Here’s a shocking statement – make it your goal to have no FICO score at all, meaning you have no debt!

Identity Theft

If you find out you are a victim of Identity Theft, it’s very important to do these three things right away:  1) File a Fraud Victim Report with all three credit bureaus; 2) Call the police, file a report, and send it to all three credit bureaus, to make your Fraud Victim Alert permanent on your files; and 3) Contact the fraud victim division of all the creditors involved. 

Be persistent!  If you don’t want to hire a company to clean this all up for you, understand you now have a new hobby.  This will take a lot of your time, and a lot of patience and persistence to fix.   Understand this is theft, you are not liable, and owe nothing!

Debt Collectors

This lesson is not about dodging bills you legitimately owe.  If you have debt, you need a get a plan to pay it off.  Unfortunately, debt collectors are not your friends.  They have one purpose – to get your money!  Dave gives lots of great ideas on how to deal with debt collectors.

Always, always take care of your family necessities first.  These include food, shelter (mortgage, rent, and utilities), and transportation, and clothing.  Never pay for luxuries at the expense of necessities.  It makes no sense to pay credit card payments, and then lose your home as a result. 

If you are deep in debt, and can not make even the minimums on your credit card bills, then use a Pro Rata plan.  Add all your minimum payments due to get a total minimum payments due.  Divide each minimum payment by the total due to get a percentage for each payment. 

Take the percentage for each bill of the total amount you can afford to pay, and pay that amount for the bill.  At least you will be paying something on each bill, which is better than ignoring a bill altogether.  Remember, people who live in denial of their debt are more likely to get sued or garnished for payment.  Do the honorable thing and put together a plan to work it out.  

Imagine how great it would feel to have no FICO score at all.  Now that would be a great indication of financial success – having no debt! 

Dave Ramsey’s Financial Peace University has several versions – for church, business, and home use.  Check it out right here.

Pamela Otten is CEO of Pamela Otten LLC, a Registered Investment Advisor. She loves to work with women business owners and entrepreneurs, and women in transition due to job change, death, or divorce. Pamela will help you set and reach your financial goals, educate you to understand your investments, and teach you how to do more charitable giving. Pamela is a Qualified Kingdom Advisor (www.kingdomadvisors.org), trained and committed to integrating biblical principles with her investment advice.

Photo Credit – USFWS Pacific

Financial Planning, Investment Advice, and Investment Management provided through Pamela Otten LLC, Registered Investment Advisor.

The opinions voiced in this material are for general information only, and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, please consult your financial advisor prior to investing.

I’m sure all of you have heard the old saying, “Don’t put all your eggs in one basket.”  This applies to many areas in life, including investing.  Today I am continuing the series on The Biggest Mistakes Investors Make (see Part 1 here), because I see investors making these same mistakes over and over again.  

Here’s some more of the Biggest Mistakes Investors Make:

2)  Investing before having an Emergency Fund.  It makes no sense to invest before you have an emergency fund in place.  You will just end up selling your investments, or using credit cards to pay for your emergencies.  Get the emergency fund in place first!

3)  Investing when you have Debt.  Here’s a shocking statement – if you have any debt besides your mortgage, you have no business investing.  Get rid of the debt, and then get very serious about your retirement.

4)   Not Considering your Time Horizon.  One of the most important factors in choosing your investment’s asset mix is your time horizon to hold the investment.  If you are not going to use this money for many years, you can take more risk with it, since you have the time to ride out the volatility of the markets.

5)  Watching and Believing the Media Hype.   Get yourself an investment philosophy you can believe and stick with, and forget what the media is saying.  Don’t forget – the media exists to get readership, viewers, and market share.  The media does not exist to do what is in your best interests.

6)  Thinking the Government is your Retirement Plan.  If you are still thinking the government is going to fund your retirement, plan on living at or below poverty level.  Social Security may not be there in its current form when you retire.  You need to take responsibility for how you will live in retirement.

8)  Putting your Retirement in One Basket.  If you have all of your retirement, or a large percentage of it, invested in your company stock, you are taking way too much risk.  If your company goes bankrupt, you may be left with nothing.  If you think this could not happen to you, talk to past employees of Worldcom, Enron, and Kmart, just to name a few.

Pamela Otten is CEO of Pamela Otten LLC, a Registered Investment Advisor. She loves to work with women business owners and entrepreneurs, and women in transition due to job change, death, or divorce. Pamela will help you set and reach your financial goals, educate you to understand your investments, and teach you how to do more charitable giving. Pamela is a Qualified Kingdom Advisor (www.kingdomadvisors.org), trained and committed to integrating biblical principles with her investment advice.

Photo Credit – woodleywonderworks

Financial Planning, Investment Advice, and Investment Management provided through Pamela Otten LLC, Registered Investment Advisor.

The opinions voiced in this material are for general information only, and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, please consult your financial advisor prior to investing.

I know I’m aging myself here, but I’ll go there and admit I grew up listening to James Taylor, and loving his song “You’ve Got a Friend.”  There is just something about that song that makes you feel so loved. 

I have been very visibly reminded of what’s really important in life in the last month.  A good friend of mine ( in her 40’s) had a massive stroke.  She should have died, but God had another plan.  God showed up, showed off, and is giving her an amazing testimony to His love and faithfulness as she recovers.

From time to time we all have struggles – some more serious than others.  I want to encourage you today if you are struggling, especially with your finances.  Money, especially the lack of it, affects all areas of our life.

We all make mistakes.  I like to tell people I am uniquely qualified to be a financial advisor, since I have made almost every money mistake in the book.  I know how you feel when you do something you regret.

Understand you are not alone.  There is help out there for you!   Give yourself some grace.  Draw a line in the sand, and say I won’t live like this anymore!   

I want you to know I will be there for you when you need me.  I will help you through your financial difficulties, and set you on the road to being successful with money.   

It is possible to feel joy and peace in your financial life.  Let me be your friend, and inspire you to manage your money God’s way. 

I’m sending you grace and joy today.  Receive it, and let me know how you have inspired or encouraged someone else today.  Please comment below – I’d love to hear your stories!

Pamela Otten is CEO of Pamela Otten LLC, a Registered Investment Advisor. She loves to work with women business owners and entrepreneurs, and women in transition due to job change, death, or divorce. Pamela will help you set and reach your financial goals, educate you to understand your investments, and teach you how to do more charitable giving. Pamela is a Qualified Kingdom Advisor (www.kingdomadvisors.org), trained and committed to integrating biblical principles with her investment advice.

Photo Credit – Krystal T

Financial Planning, Investment Advice, and Investment Management provided through Pamela Otten LLC, Registered Investment Advisor.

The opinions voiced in this material are for general information only, and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, please consult your financial advisor prior to investing.

In order to win the Monopoly game, you have to have a strategy.  You need to have a plan, and stick to it, to be successful at Monopoly.  Today I am starting a series on The Biggest Mistakes Investors Make, because I see investors making these mistakes over and over again, which feeds into the fear during volatile markets.

In volatile markets, we are very tempted to make investing mistakes.  We somehow forget everything we have learned, and our desire to “do something” takes over.  Giving in to our short-term temptations can be very damaging to our long-term financial goals.

Here’s a reminder of some of the Biggest Mistakes Investors Make:

1)   Not having a financial plan.  You don’t know what you are invested in, why you invested in it, and what your goal is with this investment.  Or maybe you knew once, and now you are not sure.  If you don’t know the answers to these questions, it’s very easy to question your investment choices, and make poor decisions about changing them.

2)   Waiting too long to invest.  This leads to all kinds of problems.  If you think you have no money to invest now, you will not have money to invest later either.  We need to make our savings a priority, and pay ourselves first, after we give our tithe.  The longer you wait, the more risk you will need to take to get to your financial goals.

3)   Not taking advantage of “free money.”   If your employer offers a match on your company plan investment, and you are not investing at least the amount to get the full match, you are making a big mistake.  Think of it as a bonus for being a good saver.  Tell your children this, so they don’t make this mistake while they are young!

4)   Listening to the media for investment advice.  If you buy in to the media, especially during volatile markets, you will sabotage your long-term goals.  All the doom and gloom of the media is designed to get readers and viewers.  You know this, so ignore it.

5)   Market timing.  Market timing is jumping in and out of the market, to try to decrease your losses, and increase your returns.  Markets are random!  No one knows where the markets are going tomorrow!  Many of us have made the mistake of taking our money out, and putting it into cash in volatile markets.  All this does is lock in your losses, and stop you from participating in any future market gains. 

6)   No diversification.  I see this way too much – in fact, over 90% of the time when I look at portfolios.  Investors are putting all their eggs in one basket.  And it’s usually the Large Cap Growth basket, only one asset class.  This happens because investors are more comfortable investing in company names they know, and want to invest in the United States.  We do live in a global economy however, and you are taking way more risk than you need to by owning only one asset class.

7)   Stock picking.  This is believing some investment money manager guru, or your financial advisor, knows which stocks to pick for best future performance.  No one knows the best stocks to pick for the future.  I don’t care what crazy technical analysis they are using.  No one knows.

8)   Track record investing.  Goes right along with stock picking – choosing investments based on their past performance.  “Past performance is not an indication of future returns,” is stated in the very fine print of every investment prospectus.  This gets countless investors into trouble, because they choose investments based on what was hot in the recent past.

9)   Not understanding the risk/return relationship.  Investors want big returns, but don’t want to take any risk.  It doesn’t work that way.  Define your financial goals, find out what it will take to get there, and understand there will be a certain amount of risk involved in reaching your goals.  Know what your risk number is, so you don’t have to be fearful in volatile markets.  Ask your financial advisor, and if they don’t know what your risk number is, it’s time to get another advisor.

There are many more big mistakes investors make, but these are some of the biggest mistakes I see (and have experienced myself).  Ignore the temptation to “do something” during volatile markets, which may do serious long-term damage to your financial goals.

Pamela Otten is CEO of Pamela Otten LLC, a Registered Investment Advisor. She loves to work with women business owners and entrepreneurs, and women in transition due to job change, death, or divorce. Pamela will help you set and reach your financial goals, educate you to understand your investments, and teach you how to do more charitable giving. Pamela is a Qualified Kingdom Advisor (www.kingdomadvisors.org), trained and committed to integrating biblical principles with her investment advice.

Photo Credit – EvelynGiggles

Financial Planning, Investment Advice, and Investment Management provided through Pamela Otten LLC, Registered Investment Advisor.

The opinions voiced in this material are for general information only, and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, please consult your financial advisor prior to investing.