By: Laura Walton AFC®
Spring is early…trees are leafing out, desert flowers are starting what promises to be a record bloom year, allergy sufferers are suffering and bird song, if you’ve noticed, is abundant. On Sunday, we joined friends and a professional birding guide in Madera Canyon. It was an eye-opening experience and, guess what, it offered some financial takeaways…
Eye-opening and ear-opening. Our guide Melody (this is really her given name, not her birding handle) spots the birds first by listening to them. Try spending a couple of minutes in the mountains walking quietly and stopping every so often to listen. Melody, of course, could identify the calls while we were just struck by the abundance of chatter. Once a bird was identified by its call, we started looking for it and, once spotted, Melody taught us something about its habits and habitat. The result? Birds become top of mind. Now we see and hear them everywhere!
Financial takeaway: Most investors don’t pay much attention to fees and, if they do, don’t have a frame of reference by which to evaluate them. Once you learn about the effect of high fees on your investments, you notice them and evaluate them against the value you’re receiving. As a general rule, we recommend not paying more than .5% in Operating Expenses for a mutual fund and refer to Morningstar.com as a good source for that information.
Melody doesn’t believe in using artificial bird calls, the newest thing in birding. Apparently, it’s not uncommon for birders to call in birds using recorded calls. There are, of course, even apps for this. Melody believes that it’s not only not traditional (lazy might be another word) but it actually disrupts bird patterns. They hear a male calling and assume that habitat is taken. They then have to move on and find a different nesting area all of which takes time and energy.
Financial takeaway: Don’t follow the crowd. The crowd often sells when the market is low and buys when the market is high, damaging their returns. A headline in this past weekend’s Wall Street Journal read “Individual Investors Wade In as Stocks Soar”. Instead, we recommend having a financial plan that reflects your goals and risk tolerance and sticking with it. Take advantage of market swings by dollar-cost averaging – a strategy that allows you to buy more shares when the market is low and fewer when the market is high – the best of all worlds.
Melody shared some interesting birding stories. One gentleman came all the way from Japan to find the Elegant Trogon, a striking bird that inhabits Madera Canyon in the summer months. She said they walked and walked, for a couple of hours, and never caught site of one. On their way back to their car, they found what? An Elegant Trogon sitting on it.
Financial takeaway: Sometimes you can try too hard. Investors want in on the magic, the secret to the big returns. But, when LeBron James, the highest paid athlete in America, asked Warren Buffett for investing advice, there was no secret. Warren told LeBron to invest in low-cost index mutual funds.
Enjoy our early spring and invest with confidence!