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An expert offers advice on how to invest for retirement
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By Joshua Pilkington - Reprint from 3/13/2019

“I remember the first time I tried a chicken fried steak. I was 12. It was a run-of-the-mill ‘apostrophe s’ chain restaurant (Friday’s, Chili’s, Applebee’s, take your pick) and the idea of a steak sounded delicious. I failed, however, to read the menu description and therefore was completely unaware of what I was investing in. When the waitress returned with my plate, I thought it was a mistake. ‘Why would someone destroy a perfectly good cut of meat?’ I asked myself rhetorically.”

That sad tale of a less-than-pleasant dinner offering is from Michael Raines, a Registered Investment Adviser (RIA) who operates under the fiduciary standard. His analogy for investment strategy has a logical conclusion.

“Of course, the choice had been mine, so the fact that this less-than-appetizing entrée now sat in front of me was no one’s fault but my own,” he said. “I had failed to do my research and was stuck now between hunger and dissatisfaction.

“The mistake I made in ordering dinner is made daily - and with significantly steeper consequences - by people who simply don’t know what to own and, worse, what is in their portfolio.”

Dude, Where’s My Money?

When it comes to investing, a large portion of the country’s population is not actively involved in saving for retirement through investing. And those that are invested either superficially or vigorously in the market may not even know where they have put their money.

A study by MarketWatch showed that over 40 percent of Americans don’t know what they are invested in. Worse yet, nearly 40 percent of pre-retirees don’t know how to prepare for retirement.

According to Raines, knowing what to own is a good start, but to do so investors have to sift through the investment jargon that can be overwhelming, especially for novices.

“If the alphabet soup of your local office culture drives you crazy, the alphabet soufflé of Wall Street will get you admitted,” Raines said. “Ryan Gosling’s character Jared Vennett from ‘The Big Short’ delivers a wonderful line in regard to investment jargon: ’Wall Street loves to use confusing terms to make you think only they can do what they do.’”

In other words, Raines added, investors want people to be confused by the terminology, so they are left thinking they don’t stand a chance in their investment world.

“That is false,” Raines said.

A professional financial adviser can help clients sift through that jargon and assist them down the path of selecting the right funds for their investment strategy, the amount they should be contributing, and how much they’ll pay in fees.

Lexicon Devil

Alongside that jargon is the lexicon game that funds will play. Labels like domestic, international, global and world funds can be misleading in that the companies in the fund may not fit the criteria of the name of the fund.

Much like the label game, investors can also be mislead by target-date funds (TDFs). Target-date funds have grown steadily since the mid 2000s and are often lauded as a low-risk, safe-bet retirement investment strategy. They can be that, but they can also carry a lot of false promises as noted by David Esch’s in-depth look at TDFs titled “The False Promise Of Target-Date Funds.”

Investing for the future can be an overwhelming task, but it doesn’t have to be. Research is a key element to successful investing.

“You prepare for your future by reading the prospectus and hiring a professional advisor to help wade through the jargon and alphabet soup of trading,” Raines said.

That way novice investors can have their steak and eat it too.





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