Where is Your Money Invested?

Sep 11, 2018 | Investor Education

You’ve already decided to invest — for your retirement, your future, to turn your money into more money — and you sit down with a financial advisor.

Together you talk about risk tolerance, goals and projected returns, and you commit to an investment strategy. You leave the meeting feeling like you’re on the right track.

Then you realize, you have no idea what you’re invested in. While you may have had visions of being the next Warren Buffett, playing the stock market like a violin and betting big on the next Apple or Facebook, the reality is you’ve bought into a mutual fund made up of hundreds or even thousands of investments, or structured products promising you easy (but opaque) access to derivatives. And you can’t answer a fundamental question.

Where is your money invested?

You could argue that doesn’t matter that much. As long as your money is making money, who cares, right?

But in our experience, many investors want to know their money is supporting a good business, a good sector, a good idea or a good cause. They want to be active investors, conscious investors, making personalized investments — even if they need a little help.

Why is it so hard to know where your money is?

Put simply, investing can be complicated. Your average mutual fund is comprised of hundreds or even thousands of investments and getting to the bottom of what’s included is far from straightforward.

A search of Yahoo Finance can point you to the top holdings in a given fund. For more detailed information, you can check the portfolio listings on the website of the firm that manages the fund. Sometimes, that too will leave you with limited information. In that case, you’ve got to sift through the weeds of the fund’s dense prospectus to sort out all the details.

Other investment vehicles make that process even more complex. Take structured products, which were designed to offer customized access to hard-to-reach asset classes. Simply defining them requires a page-long explanation on Investopedia, so you can only imagine how hard it is for the average investor to understand where his or her money is going when you’ve bought into one.

Unit investment trusts (or UITs) pose a similar problem: They offer individuals the opportunity to invest in a diversified portfolio of investments with a low initial investment requirement. But that portfolio is difficult to unpack, making it difficult to access the information you need about where your money is going.

Despite all the confusion, you aren’t doomed to be in the dark when it comes to your investments. As a general rule, the worse a product is, the more difficult it is to understand. So steer clear of the complexities, and explore your options.

How do I make sure my money goes where I want it to?

There are funds designed to give you some sense of control over your investments. Tempo™ Funds, for instance, are time-emphasized portfolios, and they give you the ability to personalize your investments to reflect your risk tolerance and beliefs — whether that’s investing in new technology or supporting your ideals. This allows you to personalize your investments as you save for a future event like college, a wedding, retirement or even a new home.

Spector™ Funds — or specific, theme-oriented investments — are another option for those who are looking for a more aggressive investment. These investments are generally not diversified like Tempo™ Funds or other time horizon funds. They try to capitalize on very specific themes, strategies or trends by using individual stocks and low-cost ETFs. You can choose to focus on things like investing locally, social responsibility, cutting-edge tech, women leaders, renewable energy, Buffet methodology or health care, among other causes and sectors. These funds are specifically targeted to investors looking to get more out of their money than simply meeting a savings goal.

There’s more good news for investors: You don’t have to choose a particular fund to gain clarity into your investments. You can hire a financial advisor committed to helping you achieve all your investment goals — from saving for your retirement to contributing to the growth of companies and causes you believe in.

Investing can be complicated, but it doesn’t have to be. A little guidance can make all the difference.

Make the Switch to Dreamwork Financial Group

To learn more about DreamWork Financial Group and our Fee-Only Wealth Management model, visit our website and schedule a meeting with our Chief Financial Strategist, Clint Kirby and be sure to sign up for our free monthly newsletter. Also, be sure to check out our archived newsletters, bold predictions and other articles in our knowledge base.

Warm Regards,

Clint Kirby Chief Financial Strategist at DreamWork Financial

Clint Kirby - Chief Financial Strategist

DreamWork Financial Group

Clint Kirby, DreamWork Financial Group is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

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