Fall is here, pumpkins and gourds are overflowing your neighbor’s porch and pumpkin-spiced everything is on the menu. This means Halloween is right around the corner! It’s time for Patina Wealth’s Spookiest Top 10 list!

#1 – Being invested in a “load” mutual fund

Did you know that if you are invested in a mutual fund that has a “load” attached to it (its last two ticker symbols are usually AX or BX), the broker who sold that to you most likely received a sales commission? There are several different kinds of “loads”, but, the most common are front-end or back-end loads where the sales commission either happens when the client first invests or when shares are redeemed. Patina Wealth believes this is a clear conflict of interest.

#2 - Not knowing your portfolio allocation details

A diversified portfolio means having exposure to multiple asset classes. A portfolio that is invested in different segments of the market can help buffer volatility during market drawdowns. And, it can help create rebalancing opportunities. We think it helps to have holdings in your portfolio that target specific areas of the market. If your portfolio holds a fund that markets itself as being “balanced”, or, having both stocks and bonds together you likely have found it nearly impossible to know what areas of the market the fund is invested in. Very spooky!

#3 – Not working with a fiduciary

Yikes! Not working with a financial advisor who is obligated to make investment recommendations that are in your best interest can be very scary! Unfortunately, conflicts of interest are far too common in the investment industry. Working with a fiduciary can help make sure you are working with somebody who is putting your interests ahead of their own.

#4 – Investing in an expensive mutual fund

There is a lot of research showing how most actively managed mutual funds fail to beat their benchmark. One of the reasons? High fees. Yikes.

#5 -Taking too much or too little risk

It’s not uncommon for an investor to not know what their appropriate ratio of stocks to bonds should be. A person who is nearing retirement may feel like they should drastically reduce their stock exposure, even though they may need their investments to continue to work for them for another 20-30 years. Or, they may have too much stock exposure, leaving them vulnerable to big portfolio drawdowns. There are a lot of factors that should be taken into account including their own risk appetite, time horizon, or how much they are currently withdrawing to help with living expenses. Working with a fiduciary, actively monitoring your risk exposure throughout the year and having a financial plan in place can help answer these questions.

#6 – Making emotional investment decisions

Seeing your portfolio dip during market pullbacks can be very scary. It is easy to want to sell your holdings out of fear of them dropping more. But, making short-term emotional investment decisions can be even scarier because they can have significant long-term repercussions.

#7 – Not knowing how your financial advisor is paid

A fee-only fiduciary financial advisor should clearly show how he or she is paid. This isn’t always the case when working with advisors or brokers who aren’t fiduciaries. Some are compensated by the funds they invest their clients into, receiving “kickbacks”. This scenario makes it hard to know exactly how much they are getting paid. Very scary!

#8 – Not knowing what you’re invested in

Have you ever invested in something not knowing exactly what you are buying? That can be very spooky. Before investing your hard-earned money, you should know exactly how it fits into your overall portfolio.

#9 – Inadvertently realizing capital gains or incurring withdrawal penalties from retirement accounts

When you sell an investment can make a big difference when tax time comes around. Paying short-term capital gains versus long-term capital gains can be frightening. And, mistakenly withdrawing from your 401(k) or IRA before you are allowed to can bring an unwelcome tax bill and early withdrawal penalty.

#10 – Not saving in the most appropriate investment vehicle

ROTH IRAs, Traditional IRAs, Traditional 401(k)s, ROTH 401(k)s, 529 savings accounts, taxable brokerage accounts, the list of different investment accounts goes on. They all provide different advantages and some are more appropriate for each person than others. For example, will your income be higher in retirement than it is now? Are you taking advantage of tax breaks in certain investment vehicles? Properly planning right now can make a big difference in the future. Working with a fiduciary can take the fear out of retirement planning!

If any of these sound familiar to you, we can help!