Written by, Dave Young, President & Founder of Paragon Wealth Management
We are regularly asked this question. Investors don’t know what to do. They are concerned. Many seem to always be in the wrong place at the wrong time. They missed out on the gains of the past five years and are now concerned they may be investing at the top of the market.
It seems like the risk pendulum swings from one extreme to another. In the 1990’s investors did not take enough risk and missed out on amazing returns. By 2000 and 2008 investors finally began to believe that markets only go up. They became aggressive just in time to be devastated by 50% losses and years of bad returns. By 2009, many investors had thrown in the towel. Those investors then missed out on the big gains of the past five years.
In order to build wealth you must invest for the long term. Stocks and real estate are the two most reliable investments for most investors to build wealth over time. Over the long term they appreciate in value much more than bonds or bank savings options.
In the short term stocks and real estate fluctuate in value and scare many investors away. Putting money into stocks or real estate for less than five years does not usually work out.
I believe there are four principles that must be followed to build significant wealth over time. Sound investing is not a single decision. It is a process.
1st – You must invest using an investment strategy that has been proven to work over time.
2nd – Your strategy should provide you with exposure to the stock and real estate markets.
3rd – Your risk tolerance (investment comfort level) should be set properly so that you are not forced out of your investments at the wrong time.
4th – You must invest for the long term thereby giving yourself the ability benefit from the ups and downs of market cycles.
Please call us if you have any questions or would like to make any changes to your accounts.
Paragon Wealth Management is a provider of managed portfolios for individuals and institutions. Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy. All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Past performance is not a guarantee of future results.
Written by Dave Young, President
Step #4: Avoid Unnecessary Debt
Debt can be useful if used properly. On a recent trip to Africa, I noticed that there were half built buildings everywhere. Projects were at different levels of completion and then abandoned. When I asked my guide why the structures were halfway done, he responded, there is no banking system. There is no way for the common man to borrow money. People can only complete part of the building because they lack the funds to pay for building supplies right away. So they build what they can pay for now, and then come back and build more next year when they have more money.
If debt is used sparingly, for assets that appreciate or allow you to make more money, then debt makes sense. For example, a house, a car, or an education all make sense.
Using debts for consumables or things that go down in value, makes no sense. Most credit card debt is for things that hurt rather than help your financial situation.
My definition of a credit card is, “A means of buying something unneeded, at a price you can’t afford, with funds you don’t have.”
Set a goal to live debt free. With 1.5 billion credit cards in circulation, an average household credit card balance of $8,562 and an average interest rate of 19%, it’s no wonder that one out of every 50 households filed for bankruptcy in 2005. In the United States the household debt-to-income ratio reached an all time high.
Accumulating debt is the exact opposite of accumulating wealth. If you are paying debts, you are helping someone else accumulate wealth. With the few exceptions mentioned above, avoid debt like the plague.
Written by Dave Young, President
Step #2- Spend Less Than you Earn
This seems like obvious advice, but it is often ignored.
According to a recent article in Smart Money, Americans collectively spent more than they earned after taxes for the past two years in a row. This bad habit afflicts people at all income levels – those with less may feel as if the extra expenses are a necessary evil, while those with more may assume their high income protects them from any future financial trouble. This mentality must be changed in order to build wealth.
I’ve personally met individuals who earn $40,000 a year but save $5,000 of that for the future. Although it may seem like a small annual amount, that money adds up to future wealth and security. In contrast, I have met others who earn $200,000 a year and spend $220,000. This is a quick way to destroy a fortune.
While it may sound simplistic, in order to build wealth, you must spend less than you earn.
To be continued…
Clients don’t need to go to Wall Street to receive excellent returns on their investments
Written by: Shannon Golladay, Public Relations
PROVO, UT– Utah money manager, David Young, has outperformed the S&P 500 with his Top Flight Portfolio for almost 10 years and been kept a secret for over 20.
Young, President of Paragon Wealth Management, manages the Top Flight Portfolio. It has generated a total return of 457% verses 86% for the S&P 500 from its inception on January 1, 1998 through October 31, 2007. Its compound annual return is 19.3%, versus 6.6% for the S&P 500. (Click here to see Paragon Top Flight Portfolio for complete track record and full disclosure.)
“My goal is to make my clients’ lives easier by helping them make good investment decisions,” said Young. “Ultimately, I would like to help them make work optional.”
Young started investing his own money in 1986 after he sold his 12 franchise businesses. He went to several investment groups to invest the funds from the sale, but he couldn’t find anyone he wanted to use.
“I tried several brokerage firms in the mid-80s, the traditional option at the time, and they did not meet my needs,” said Young. “I knew there had to be a better option.”
In 1986 Young formed “The Center for Financial Excellence” where he built basic quantitative models to determine when to be in or out of the equity and bond markets, and he used no-load mutual funds as his investment vehicle. He began to handle his own accounts and soon began managing his friends’ and family’s money. When he avoided the 1987 stock market crash, his methods sparked a lot of interest.
In 1992, Young formed Paragon Capital Management, which is now called Paragon Wealth Management, and registered with the SEC. He added staff and began attracting clients with larger amounts of money. He built more sophisticated and complex quantitative models to determine investment strategies regarding styles, sectors, and markets. Portfolio allocations were based around short-term, intermediate, and long-term models.
Young established the Paragon Top Flight Portfolio in 1998, incorporating Paragon’s most effective models and systems to date. In 2001 he established the Managed Income Portfolio, designed as a very conservative alternative for clients who want limited volatility. Both portfolios primarily invest in Exchange Traded Funds (ETFs).
Today, Young is optimistic about the future, and his Paragon Top Flight Portfolio continues to consistently out perform the S&P 500.
About Paragon Wealth Management
Paragon Wealth Management is a money management firm located in Provo, Utah. With over 20 years of experience, they are dedicated to creating success for their clients. It is estimated that only 10% of investments advisors have fiduciary responsibility, and Paragon falls in this elite group. Paragon receives no commissions and does not sell any financial products. They simply charge a management fee. Unlike traditional advisory relationships, Paragon clients are free to withdraw their money at any time without paying any surrender charges. For more information contact Shannon Golladay at 801-375-2500.