The author of the best-selling book Turning Financial Planning Right-Side Up (McGraw Hill 2005), Jeffrey Small, has helped thousands of regular people master the “inside game” of investing and avoid media bias. He’s an industry expert and has appeared on many of the nation’s top TV and radio shows, including CNBC, Fox News, and Fox Business. In addition, Jeff has personally strategized with thousands of local investors to create a master plan for their investments that fuels their income stream, allowing them to enjoy retirement with his firm, Jeff Small Arbor Financial.
The United States was hit by a global recession that has continued into the first half of 2021. In addition, financial markets have been volatile and uncertain throughout this period, creating more uncertainty for investors. In this interview, Jeff talked about making investment choices during uncertain times and gave tips on focusing on dividends.
Jeff, what are some of the top mistakes that people make when it comes to their investments?
People always want a quick fix and a silver bullet without doing much work. People tend to think that they need the latest guru in the industry; however, most people do not have deep enough pockets to invest with these people. They would be better off if they did their homework and invested wisely using what they already know.
What should investors be thinking about when it comes to investments during a time of uncertainty?
First, you need to make sure that your assets are adequately diversified. But more importantly, focus on dividend-paying stocks because they generate a healthy income for their shareholders and allow investors to reinvest dividends back into additional shares in these companies. Unfortunately, these days, there are very few companies that pay a dividend.
What are some of the most successful strategies that investors can use to grow their wealth during turbulent times?
One of the most successful strategies is to invest in high-quality blue-chip stocks that have been around for decades and have always had a solid track record. They have products that people love, competent employees, and management that is trustworthy.
What should investors be looking for in companies to make them more successful?
They should look for businesses with products they love, employees they trust, and management teams capable of steering the company through difficult times. It is crucial to ensure that their boards of directors are filled with independent directors and not friends and family.
What is one of the most important pieces of advice you would give to investors on how they can grow their wealth during turbulent times?
Focus on dividends and use them as a tool for reinvesting into additional shares in these companies, thereby increasing your potential long-term returns. Remember, dividends are not bond coupons. Dividend-paying stocks are more volatile in the short term, but that is less important as time goes by because, as a shareholder, you benefit from the company’s profits over the long haul.
How can investors identify dividend-paying blue-chip companies? Finally, how can investors identify these types of companies for those investors who do not have access to Wall Street analysts who follow these companies?
There are many tools available online to help individual investors. For example, I always recommend using Morningstar, a great website that gives you access to everything you need to know about each company. This is very important because most Wall Street analysts are biased and do not have your best interest at heart.