Know Yourself When You Invest

Current market performance might prompt you to invest in stocks again, or for the first time. Here's how to find the investment help you'll need.

by Wells Fargo Advisors - October 02, 2017

A 2016 Gallup poll  showed the number of Americans who own stock matched the all-time low previously set in 2013. After peaking at 65% in 2007, the percentage of those invested in stocks was down to only a little more than half (52%) last year. For those younger than age 35, the figure dropped to less than 40% (down from more than 50%).

There’s likely a number of reasons for this decline, including fear of the markets following the Great Recession. While it’s true that the stock market has experienced volatility, based on stocks historical performance, they offer the best potential for growth compared to other asset classes. Of course, past performance is no guarantee of future results.

If you’re among those who’ve turned your back on stocks, you may be thinking it’s time to get back into the market — or invest for the first time. If so, a good place to begin is by determining what type of investor you are.

Go solo or get help from a pro?

If you’re a do-it-yourself (DIY) investor or have little money to start with, you may want to consider online investing. It makes trading relatively easy and inexpensive.

However, you may not have the time or confidence in your ability to choose the right investments, which are likely to include other investments besides stocks. If that’s the case, you may want to turn to a professional advisor.

The first thing you should expect is for him or her to get to know you and understand your long-term goals, such as enjoying a financially secure retirement or helping your children or grandchildren afford higher education.

Beginning with that information, your advisor should work with you to an investment plan designed to help you achieve those goals. At the heart of that plan will be a recommended asset allocation, which is nothing more than how your portfolio should be divided up among different types of investments, typically stocks, bonds, and cash alternatives.

Determine your style

There’s more than one way to work with an advisor, and you need to decide which one you’re more comfortable with.

If you want to be the ultimate decision-maker, you may choose to work in collaboration with your advisor. In this case, he or she will contact you with recommendations, and it will be up to you to decide whether to follow them. With this type of relationship, you’ll likely pay commissions on your transactions.

On the other hand, you may prefer to take a hands-off approach and simply delegate the management of your investments. If you choose this, you will:

  • Not be consulted prior to transactions being executed in your account.
  • Probably be charged a fee based on a percentage of your account’s value rather than paying commissions.

By putting in the legwork now to determine your needs and style as an investor, you’ll be better in position to reach your long-term financial goals.

Additional Resources

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Stocks offer long-term growth potential, but may fluctuate more and provide less current income than other investments. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations.

Fees for the advisory program include Advisory services, performance measurement, transaction costs, custody services and trading. Fees are based on the assets in the account and are assessed quarterly. There is a minimum fee of $250 per calendar quarter to maintain this type of account. The fees do not cover the fees and expenses of any underlying packaged product used in your portfolio. Advisory accounts may not be suitable for all investors. During periods of lower trading activity, your costs might be lower if our compensation was based on commissions. Please carefully review the Wells Fargo Advisors advisory disclosure document for a full description of our services, including fees and expenses. There are minimum account size requirements for these programs.