Wall Street Hopes You Never Ask This

Financial and political power congregates on Wall Street… epicentre of the American financial universe, and the subject of many a movie about the ruthless and the rich. But to the average American investor, putting your money into stocks, bonds and mutual funds is just “what you do.”

Investing (or should we say, speculating) in the stock market is exactly what roughly 100 million Americans do – often, with few questions.

If they can get you asking the wrong questions, they don’t have to worry about answers.

According to data from a 2013 Pew Research Center survey, over half of Americans between age 30 and 65 have money in the stock market, a percentage jumps to 80% for Americans with incomes of $75k or more. Funds that are typically stock-based (over 50% in equities) such as target-date funds, balanced funds, and (most) managed funds are now the default option (where an employee’s money goes if they do not specify otherwise) for 401(k) retirement funds.

The Department of Labor actually changed the default option for qualified plan investments from stable value funds at stock-based funds the end of 2007, less than one year before the stock market started the long slide that deleted TRILLIONS of dollars from American investors’ accounts. However, few if any of the administrators, managers, and advisors who watched retirement accounts switch from stable to volatile funds raised questions or protests as to whether this was a good idea.

Frankly, the managers and advisors who benefit from funneling dollars into the stock market (mostly via mutual funds) would prefer that you don’t ask the hard questions about where your money is going. And the media – financially dependent upon advertising dollars from financial firms – won’t ask the hard questions either.

Instead, the marketing dollars that build top of mind awareness for brokerage firms determine that the questions being asked are the ones that encourage investors to keep handing over their dollars.

Simply put, Wall Street wants you to ask the soft questions… the easy questions… the wrong questions:

  • "How much should I have in stocks vs. bonds?"
  • "Which mutual funds had the highest returns last year?"
  • "How much risk do I need to take to earn the rate of return I need?"
  • "What target-date fund should I invest in?"

Most of us don’t know how to demand the truth about our money. We let the media (and the popular financial gurus it promotes) shape our understanding of financial philosophies, strategies, and products, rarely to our own benefit.

However, no matter how much money you have to invest in financial service products, Wall Street hopes you’re NOT asking THESE questions:

“Should I invest based on anticipated (or past) rates of return, or are there more important considerations?”

“How can I avoid the peaks and valleys of the market altogether? Are there better investment choices than stocks and bonds?”

 “How will taxes and fees eat into my investment returns?”

“How do I know you operate in my best interests?”

“Is this investment strong enough to collateralize, if wanted or needed?”

“How can I maintain control of my own money?”