How I Invest: No Longer Chasing Hot Tips

Ryan Atkinson put his money into the latest hot thing for years. But after tallying up the results, he opted for a radically different approach

Written by As told to Jim McElgunn

Job: Managing Director, Redwood Global

Age: 39

Value of Portfolio: $1 million-plus

Targeted Annual Return: Annual Return 7%

Core Investment: Exchange-traded funds

“I have been investing for close to 20 years. In my younger days, I went with the hot tip of the month from friends, and I did a bit of day trading. But five years ago, I realized how few success stories I’d had. Chasing hot tips is just gambling—you might as well go to a casino.

“So, I sought out a professional money manager. He charges 1.25% to generate consistent returns—and doesn’t go crazy trying to beat the market by 20%. I get enough of a white-knuckle ride running my business, so I have a ‘sleep well at night’ investment strategy. I won’t risk losing a major portion of my money, and I’ll be really happy to get a 7% return on the whole enchilada—which is tough these days.

“My money manager has 75% of my portfolio in exchange-traded funds, which are highly diversified and have very low management fees. I have ETFs in a cross-section of sectors, such as precious metals, real estate, financial stocks and U.S. equities.

“For the other 25%, I have a portion in cash, in order to be really safe should anything happen. And I balance out my portfolio with some selected equities that are a bit more aggressive.

“I don’t avoid any particular category of investment vehicles. But now, if I hear a hot tip, I ask my advisor what he thinks. With the Facebook IPO, I got caught up in the hype and called my advisor to say, €˜Hey, why don’t we grab some of this stuff?’ But he said his researchers were warning that investors should stay away. That was one crisis averted.”

Photograph by Reynard Li

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