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Weathering the Storm: How To Avoid The Biggest Mistake Most Investors Make

Weathering the Storm: How To Avoid The Biggest Mistake Most Investors Make

Peter Disch, Founder & CEO of Great Point Wealth Advisors, shares market insights and explains why selling low is the most common mistake investors make.

“A well-thought-out financial plan can impact every aspect of your life for the better,” says Peter Disch, Founder & CEO of Great Point Wealth Advisors. “Mental health and wellness can be hugely affected by your financial stability. So much misinformation circulates around personal finance and that creates doubt, which leads to anxiety. Anxiety can cause bad decisions, which perpetuates a terrible spiral.”

As an example of a bad decision, Disch outlines the biggest mistake an investor can make, and yet it is the most common. “The biggest mistake any investor can make is selling out of the equity market when it’s low.” This sounds pretty simple, which is Disch’s specialty. Removing the complexity for clients is embedded in the ethos of Great Point Wealth Advisors.

“Some advisors want to make it sound more complicated than it is,” Disch says. “That is a self-serving mentality where they are trying to prove the worth of their advisory fees. I want my clients to really understand the bigger picture and feel confident in what their money is doing and why. Education is a really important part of the fiduciary duty in my opinion.”

Part of this fiduciary duty is to dissuade clients from panicking and selling shares when the market is low. “A typical client response to a fall in share value is to want to sell and invest later ‘when the market improves.’ But that is entirely the wrong approach,” Disch says. “This would be turning a temporary decline into a permanent loss. It’s like seeing something at a store for 20% off but deciding to return and buy it later when it’s more expensive.”

Even during times of global uncertainty, when the market may fall dramatically, Disch advises his clients to stick with it. “During March 2020, many clients wanted to sell because of the price drop. But I advised them not to and just a few months later things were on the up again. No one ever knows what the equity market is going to do in the short term. It could lose 40% or even 50% at any time for any reason. But we do know that over six or seven plus years, it basically always goes up.”

This means time frames are key in terms of strategy. Disch says, “If you are 45 years old with an IRA for when you’re 60, that money should be invested pretty aggressively because you have at least a 15-year horizon with those funds. You should be out there actively seeking to capture the returns that are readily available in the market.”

“However, if you want to buy a house in the next couple of years and have money for a down payment, the time frame is not retirement-related so the money needs to be invested and thought about very differently. Investing a large sum with the goal of increasing it over two or three years is a terrible idea because the market can go down at any time and leave you worse off. This makes you a puppet of the market. If the market is bad, so is your life and vice versa.”

Great Point Wealth Advisors takes care to help clients understand their goals and what risk level makes sense for their portfolio. “We know the market will inevitably go down, maybe by as much as 50%. We know that will happen, we just don’t know when,” says Disch. “So we position clients with diversification so they know our management style is always going to rebound and the attainability of their goals will always be intact.”

At 44, Disch is a relatively young advisor, with over 20 years of experience in the financial advisory industry. Recognized by Forbes as a Best in State Wealth Advisor since 2019 and named on its list of America’s Top Next Generation Wealth Advisors, Disch is passionate about simplifying the financial world for his clients.

“We are true advocates for our clients,” Disch says. “We are not salespeople because our clients are the only ones paying us. I used to work for a firm that gave sales incentives for certain financial products or commission-based models, but that didn’t feel right to me. I wanted to be able to guide clients based on what was really the right choice for them, so I founded my own company.”

“We want to give our clients confidence and remove as many doubts as possible. We basically remove about 90% of the complicating factors in finance and focus on the small percentage of things that actually matter in terms of personal finance.” Supporting clients through volatile market periods is just one of the ways Disch is helping people avoid the number one mistake of buying high and selling low.

To find out more about how Great Point Wealth Advisors can help you manage your money, check out their website.

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