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Obstacles to Capturing Investment Returns

Listen to The ETF Store Show every Tuesday at 9am on ESPN 1510 as we cover everything you need to know about Exchange Traded Funds and the world of investing.

On our most recent radio broadcast, ETF Store Investment Advisor Kit Barnes joined us to discuss four major obstacles that most investors face to capturing returns in their portfolios and how he has worked with clients to reduce or overcome these obstacles.  While the S&P 500 Index has returned 7.8% from 1992 – 2011, many investors have failed to capture anywhere near that return.  Investment fees, poor investment decisions, inflation, and taxes have all conspired against investor portfolios to eat away at market returns.  On the show, we explained how investors can tackle each of these obstacles by using exchange traded funds and having a sound investment plan in place.  Below is a quick summary of our tips and recommendations from the broadcast:

Obstacle       Actions to Improve Control
#1 Investment Fees
  • Know what your investments and your investment advisor cost (fund expense ratios, sales loads or commissions, transaction costs, advisor fees)
  • Substitute lower cost ETFs for higher cost Mutual Funds
#2 Investor Behavior
  • Have a plan! Stick to it – especially in volatile and scary times
  • Use investing systems like Dollar Cost Averaging and Rebalancing
#3 Inflation
  • Diversify investments to hedge against inflation (equities, TIPS, commodities, gold)
  • Use ETFs for asset classes not historically available to retail investors
#4 Taxes
  • Maximize tax-deferred and Roth investment options
  • Reduce capital gain distributions by using ETFs (vs. Mutual Funds)
  • Concentrate investments with high dividends or interest payments in tax-deferred accounts
In our weekly market update, we discussed the most recent jobs report and also looked ahead to what might drive the financial markets in 2013.  In our ETF spotlight segment, we examined a commodities exchange traded note, or ETN, (ticker DJP) and explained how in an inflationary environment, commodities can provide some inflation protection in a portfolio.  We also discussed the advantages and credit risk of the ETN structure and compared DJP to a similar mutual fund.  Listen to the full show here.
Picture of Nate Geraci
Nate Geraci

Nate is President of NovaDius Wealth Management, a registered investment advisor providing clients with comprehensive financial planning and portfolio management. Previously, Nate helped launch The ETF Store, an investment advisory firm specializing in Exchange Traded Funds.

He is the creator and host of the weekly podcast ETF Prime, which Bloomberg has called one of the “most helpful plain-English resources for investors who want to demystify exchange-traded funds”.

He is creator and Host of Crypto Prime, which features interviews with top experts from around the world on bitcoin, crypto, NFTs, and the entire web3 ecosystem.

Nate is also Co-Founder of The ETF Institute, the first and only independent organization providing ETF industry professionals and financial advisors with certification, education, and training pertaining to ETFs.

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