When it comes to investing, “Know yourself! There are usually several paths to good results,” says Montecito Bank & Trust’s Chief Investment Officer Lloyd Kurtz. “Consider your goals, and the different approaches available to you. The best choice is the one that you believe in and can stay with for the long run.”
Here, he offers some golden nuggets for those interested in investing smartly.
What’s important for people to know about investing?
Investing always involves risk. When we put money to work in markets, we have the opportunity to earn good returns. But there are no guarantees, particularly over short time horizons. It’s a good idea to work with an advisor who can help you identify your goals and implement an investment program that works for your specific situation.
Why invest?
Diversified investment portfolios have historically provided good rewards to patient investors. Lower-risk vehicles like money market funds have been more stable, but returns over time have been lower, typically about matching the inflation rate.
Who should invest?
Anyone who wants to follow a plan to build wealth over time. Time is a vital ingredient: in our experience, patient, diversified investors usually do well. But if your financial goals are mainly focused on the short term (say, 1-2 years) it’s better to keep money in safe and liquid vehicles like money markets or CDs.
If you hope to make a lot of money in a short time, it’s important to recognize that this is usually much harder than it looks. Warren Buffett’s teacher, Benjamin Graham, warned that “speculation is most dangerous when it looks easiest,” and this advice fits with our experience.
When should people invest?
The sooner you start, the better. Saving and investing early in your career can make a surprising difference in your wealth at retirement. If you have children, it’s never too early to start setting aside funds for future college expenses.
What are the best ways to optimize tax savings?
Many investors can benefit from the use of tax-advantaged vehicles, such as 401(k) plans, IRA accounts, or 529 educational savings plans for college expenses. For most people, these offer significant advantages over funds kept in a regular taxable account.
Roth IRAs or Roth 401Ks often are a good vehicle for younger investors in lower tax brackets. Roth accounts are funded with “after tax” money, but they accumulate tax free under current rules.
What are the top 5 investments for 2025 and beyond?
One hard lesson in the post-Financial Crisis era is that it is very difficult to pick winners. A large majority of U.S. stock-picking funds lagged relative to indexes over the past 15 years, partly because of high fees, but also because they set themselves a particularly difficult task. Most investors should consider at least some allocation to index funds, which generally have lower fees and offer good exposure to broad asset classes like stocks and bonds.
Montecito Bank & Trust’s Chief Investment Officer Lloyd Kurtz has over 30 years of experience in investment management, with experience as a research analyst, portfolio manager and team leader. He is a nationally recognized expert in responsible and sustainable investing, and helped develop the Domini Social Index, the first broad-based responsible investment benchmark in the U.S. He is a Contributing Editor for the Journal of Impact and ESG Investing. Lloyd is passionate about investing, client communication and service.