How Can My Investor Let Me Lose Money on Investments?

S&P Futures

3,882.75

-7.25(-0.19%)

 

Dow Futures

30,885.00

-37.00(-0.12%)

 

Nasdaq Futures

11,880.75

-52.75(-0.44%)

 

Russell 2000 Futures

1,799.30

-4.10(-0.23%)

 

Crude Oil

85.51

+0.40(+0.47%)

 

Gold

1,677.20

-6.30(-0.37%)

 

Silver

19.48

+0.09(+0.49%)

 

EUR/USD

0.9996

-0.0022(-0.22%)

 

10-Yr Bond

3.4480

0.0000(0.00%)

 

Vix

26.30

+0.03(+0.11%)

 

GBP/USD

1.1401

-0.0022(-0.19%)

 

USD/JPY

143.2710

+0.3650(+0.26%)

 

BTC-USD

18,839.41

-1,184.08(-5.91%)

 

CMC Crypto 200

431.85

-31.60(-6.82%)

 

FTSE 100

7,236.68

-45.39(-0.62%)

 

Nikkei 225

27,567.65

-308.25(-1.11%)

 

Susannah Snider, CFP

I’m constantly losing money on stock and cryptocurrency investments. And I paid for the advice that has given me the information that I’ve used to do this. For example, I was told to buy SoFi and lost money the whole time when I invested in it. What can I do?

I can hear your frustration oozing through this question. And I get it. After all, what’s the point of paying for financial advice if you’re not going to make money on the guidance you receive?

But before you fire your financial advisor (and you may want to after reading this), it’s important to review reasonable expectations about what a financial advisor can guarantee, how to avoid scams and bad actors and what to expect when it comes to market losses and gains.

financial advisor may help you understand the pros and cons of certain investment decisions.

What Professional Financial Advice Can Do for You

Make sure to find a fiduciary financial advisor.

It’s important to note that no financial advisor can predict the markets. Sure, advisors can use charts and historical models to make educated guesses. But you should view most claims of guaranteed investment returns with a healthy dose of skepticism. Individual stocks and cryptocurrencies both come with a great deal of risk, no matter who’s telling you to buy them.

Instead, what an excellent holistic advisor can do is help you formulate a financial plan that weathers market downturns and tamps down on exposure to risky or speculative financial products.

That financial plan may include stocks that do, at times, lose money. It could even include cryptocurrency investments that only comprise a reasonable part of your portfolio (read: money you’re willing to lose). But your funds should be diversified and placed into different buckets that allow your money to survive market downturns without bankrupting you.

For this assistance, you’ll typically pay a fee, often somewhere around 1% of assets under management (AUM). You may alternatively pay an hourly fee or per-project fee based on how your agreement is structured.

The Importance of Finding a Fiduciary

When finding a financial advisor, I typically recommend working with a fiduciary. That’s someone who is legally obligated to act in your best interest.

There are some shorthand ways to determine whether you’re working with a fiduciary financial advisor. Certified financial planner (CFP) professionals must be fiduciaries. Advisors listed on SmartAsset’s platform are also fiduciary advisors. You can also ask when interviewing potential financial advisors whether they’re fiduciaries and if they act in that capacity at all times.

I like to share this information because anyone can call herself a “financial advisor,” even someone hawking risky financial products on YouTube or selling shares of an investment on Facebook. If you’re getting advice that seems off, consider who you’re getting it from and whether the person is required to act in your best interest when making that recommendation.

Identifying Scams and Fraudsters

A financial advisor can’t guarantee your investment will always stay in the black.

While it’s not necessarily bad form for an advisor to suggest or pick individual stocks, I wonder if these selections were presented to you clearly. Fiduciary financial advisors can’t protect you from all market losses, but they should suggest investments that complement your overall portfolio and caution you against overexposure to certain assets.

Any advisor worth his or her salt isn’t going to tell you to invest more than you can afford in a single cryptocurrency or security.

Checking an advisor’s record for disciplinary actions or complaints can help you feel identify bad actors in the space. A few ways to vet your financial advisor include:

Use FINRA’s BrokerCheck. Enter an advisor’s or firm’s name into BrokerCheck, a free tool, which will give you arbitrations and complaints, licensing information and regulatory actions.

Use SEC’s Investment Adviser Public Disclosure. This tool, which ties to BrokerCheck, also allows you to view information about an investment advisor and its business operations.

Check their credentials. Licensing such as the Series 7 allows advisors to sell securities. Plus, CFPs and chartered financial analysts (CFAs), for example, must pass a series of educational hurdles and adhere to professional standards.

Can Your Financial Advisor Protect You Against Market Losses?

Short answer: No. A financial advisor, even an ingenious investment manager, can’t guarantee that your portfolio will always be in the black. Unless you’ve got your money squirreled away in a few savings accounts or certificates of deposit, you’re likely going to ride the market’s gyrations, no matter who’s giving you investment advice.

Some things an advisor can do include:

Help you design a diversified investment strategy with a risk profile that matches your investment time horizon and stomach for risk.

Assist in placing money into “buckets” for short-, medium- and long-term goals.

Suggest investments or strategies that can help you meet your financial goals.

Give you the freedom to play around with money in individual investments. But a good advisor will encourage you to only “gamble” with money you can afford to lose. Many advisors suggest that cryptocurrency, for example, take up no more than 2% to 5% of an investor’s portfolio.

Bottom Line

Paying for advice doesn’t guarantee that you’ll avoid all market losses. But if you’re feeling squeamish about the way these investments were presented to you and how they were described, it’s worth reviewing your financial advisor’s credentials and assuring you’re working with someone legit.

Investing Tips

If you have questions specific to your investing and retirement situation, a financial advisor can help. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

If your investments pay off, you may owe the capital gains tax. Figure out how much you’ll pay when you sell your stocks with our capital gains tax calculator.

Susannah Snider, CFP® is SmartAsset’s financial planning columnist, and answers reader questions on personal finance topics. Got a question you’d like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.

Please note that Susannah is not a participant in the SmartAdvisor Match platform.

Photo credit: ©Jen Barker Worley, ©iStock.com/Jirapong Manustrong, ©iStock.com/Viorel Kurnosov

The post Ask an Advisor: I’m Losing Money on Investments. How Can My Advisor Let This Happen? appeared first on SmartAsset Blog.

Advertisement

SmartAsset

How ‘Returnships’ Are Protecting Retirees’ Money from Inflation

Retirees who find themselves hit by higher prices, lower stock returns and big health care bills might consider boosting their bank accounts by heading back to work – and employers are waiting to welcome older workers back with open arms. … Continue reading → The post Hammered by Inflation? A ‘Returnship’ Could Keep Retirees From Running Out of Cash appeared first on SmartAsset Blog.

The Wall Street Journal

Electric Vehicles Took Off. Car Makers Weren’t Ready

More buyers are lining up for EVs, catching car companies flat-footed and triggering a race for more batteries, factories and materials. “Can I afford to keep waiting for this?”

SmartAsset

Merrill Lynch vs. Charles Schwab: Which Is Best for You?

Opening an investment account can be a daunting task. Researching fee structures, account types and product features take time and can be perplexing. Plus, with so many companies offering investment services, it can be tough to know if you’re making … Continue reading → The post Merrill Lynch vs. Charles Schwab appeared first on SmartAsset Blog.

TipRanks

2 Defensive Stocks That Can Weather the Market Volatility

We’re caught up in something of a market storm these days, faced with downward trends and high volatility. It’s time for investors to start taking defensive postures with their portfolio additions. The classic defensive plays, of course, are the dividend stocks – but there are other protective plays to make. Investors can narrow their focus to stocks with strong product lines in essential industries, where demand will remain viable even if the economy tips into recession. These companies, while

TheStreet.com

Big Changes Coming to Starbucks in Target, Kroger

Starbucks has been in Target locations for well over two decades. Since 2003, a Starbucks coffee shop has been put in almost all of the new builds of Target stores, (as long as there was enough room, that is). When an older Target store was remodeled, the popular coffee shop was usually worked into the remodel.

TheStreet.com

More Pain for Facebook and Nvidia

Facebook and Nvidia , two of the flagships of tech, seem to be going through a real ordeal. Both companies lost tens of billions of dollars in market cap during the trading week ending September 16. The network giant Facebook, which is now called Meta Platforms, is only a shadow of what it was a year ago.

TipRanks

Fisker, Rivian or Lucid: Which EV Stock Is the Better Buy?

Everyone knows by now, traditional ICE vehicles are on their way out, fast driven to obsolescence by electric vehicles (EVs). In fact, according to Needham’s clean tech analyst Vikram Bagri, EV adoption is “progressing faster than expected.” Realistically, this is not much of a shock considering the macro background. “The fundamental landscape for EVs is more constructive than ever with elevated gas prices, government support, and improving availability,” Bagri noted. “Though we expect to see so

Bloomberg

Stocks Fall in Cautious Start to Key Fed Week: Markets Wrap

(Bloomberg) — Stocks declined in a cautious start on Monday as investors await a slew of interest rate decisions in the days ahead and after global equities notched their worst week since hitting this year’s low in June. Most Read from BloombergBezos Loses Spot as World’s Second-Richest Person to AdaniTurkey Seeks to Be First NATO Member to Join China-Led SCOWhat to Watch as Commodities Traders Prepare for PowellBusiness Class for $20,000 Means Staff Fly Coach or Not at AllUkraine Latest: Biden

Forkast News

Markets: Bitcoin back below US$20,000 while Ether leads losses in crypto top 10

Bitcoin fell back below US$20,000 in early Monday morning trading in Asia after breaching that support line overnight, while Ethereum led the losses in the crypto top 10 by market capitalization, which were all trading lower. See related article: Markets: Bitcoin dips below US$20,000; Ether, ETC fall post-Merge Fast facts Bitcoin fell by 3.4% in […]

Investopedia

The Real Secret To Microsoft’s Success

Microsoft is no longer in the raw experimentation stage common to young and growing companies. Rather, its main goal is to create profitability streams, then maintain and expand them.

Investopedia

Roth IRA vs. Traditional IRA: Key Differences

The differences between Roth IRAs and traditional IRAs lie in the timing of their tax breaks, eligibility standards, and the access they offer.

TheStreet.com

Bearish Bets: 3 Stocks You Should Think About Shorting This Week

Using technical analysis of the charts of those stocks, and, when appropriate, recent actions and grades from TheStreet’s Quant Ratings, we zero in on three names. While we will not be weighing in with fundamental analysis, we hope this piece will give investors interested in stocks on the way down a good starting point to do further homework on the names. Dollar Tree Inc. recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.

Leave A Reply

Your email address will not be published.