Sound Asset Management Inc.
Russell Wayne is a Certified Financial Planner and President and Chief Investment Officer of Sound Asset Management, Inc., an independent financial advisor based in Weston, Connecticut primarily serving clients in the greater New York tristate region and throughout New England.
Russell began his career with Arnold Bernhard & Co., Inc., the parent company of Value Line, Inc. Positions he held while associated with Value Line included Managing Editor, The Value Line Investment Survey; Portfolio Adviser, The Value Line Mutual Funds; Executive Editor, The Value Line OTC Special Situations Service; Business Manager, Value Line, Inc.; Portfolio Manager, Value Line Asset Management; and Director of Investment Software, Value Line Software.
From 1991 to 1995, Russell was Vice-President and Chief Investment Officer with Heine Management Group. He was also Vice-President and Secretary of the LMH Fund, Ltd. Clients for whom he has managed portfolios include Xerox, Texas Utilities, National Maritime Union, and United Cerebral Palsy Association.
Russell has been a featured guest on television, including CNN and the Bloomberg Network. He has been quoted in leading business print periodicals and well-known websites, including The Wall Street Journal, Barron's, BusinessWeek, The Wall Street Transcript, The New York Times, Investment News, MSNBC, Yahoo! Finance, NASDAQ, and Facebook.
Russell earned his B.A. and M.B.A. at Hofstra University. He earned his Certificate in Financial Planning from Florida State University and has pursued postgraduate studies at New York University School of Law. He is listed in Who's Who In The East, Who's Who In Finance and Industry, Who's Who In America, and Who's Who in the World. Russell has contributed to a number of published works. His own published works include Markets, Myths, and Memories (2010) and Live Well and Sleep Well With Your Investments Now and When You Retire (2016).
Russell is a proud member of the National Association of Personal Financial Advisors.
M.B.A. (Finance and Investments). B.A., N.Y.U. Law, Hofstra University
Certified Financial Planner, Florida State University
Assets Under Management:
Yes, definitely pay off your credit card bill. As you probably know, the interest on credit card balances is usually excessively high, quite possibly over 20%. So if you're paying ony the minimum each month, you're hurting yourself and it will take a very long time to get down to zero.
The fact that you've had a return of 15% or so in the past is no guarantee that you will continue to be so fortunate in the future. Indeed, given the richness of current market valuations I think it's quite likely that returns over the next few years won't get above single digits. Whoever thinks the market will hit 26,000 next year is spending too much time in FantasyLand. Although it's possible that the current rally may be extended, that will almost certainly lead to a substantial correction. Please do keep that in mind.
The best course of action is to reduce your debts and take a more moderate view of prospective returns on your investments. By doing so, you will be better prepared for the inevitable ups and downs that lie ahead.
We've been in a bull market since the spring of 2009 and as stock prices move higher overall valuations are getting quite stretched. Although no one can predict the future, almost every year has had an interim correction of 10% or so and it's increasingly likely that a substantial temporary pullback lies ahead. With rare exception, it's been a good idea to concentrate on debt reduction first. The interest rate on your debt appears to be fixed, but the return on your retirement accounts could be in the black . . . or in the red, at least over the next year or two. Given these circumstances, you would be best served whittling down the debt and then making further contributions to your retirement accounts.
Speculating on the course of the stock market is risky in the extreme. Over time, stock prices move higher, but there have been many substantial pullbacks along the way. With that understanding, I think your best course is debt reduction first, then adding to your retirement accounts.
The possibility of borrowing from your life insurance policy depends on the type of policy it is. If it is what's typically referred to as a whole life, universal, or variable universal policy, the answer is yes. If you borrow from one of these types of policies you are withdrawing from the cash value of the policy. There will be interest payable and may be additional fees assessed. You will need to pay the interest when due. If not paid, that may trigger a taxable event. Keep in mind that whatever is withdrawn and not paid back will be deducted from the death benefit.
If it's a term life policy, the answer is most definitely no.
If you become a stock broker, you will become a sales person authorized to execute trades on behalf of your clients. Although clients will have assets deposited in their accounts, you will need their authorization before you make any trades. The only way you would be able to trade without further authorization would be to have them give you full discretion over their accounts.
Financial advisors come in a variety of forms. These include stock brokers, insurance agents, and accountants, among others. If this is the direction you are considering, you should seek to become a Certified Financial Planner, which requires 6,000 hours of experience, a bachelor's degree, and successful completion of a seven-hour exam with 170 multiple-choice questions. It's a demanding program, but one that will place you among the most competent financial advisors.
In answer to your question, you are probably over-diversified if you have more than a couple of dozen holdings. That will have a negative impact. It will increase your costs, require far too much time monitoring where you stand, and keep you from having a sharper aim at your investment objective.
This is a particularly interesting question for me since I have a client whose actions would certainly come under the heading over-diversification. When I first met him, he had more than 120 different holdings, including mutual funds and individual stocks. I shudder to think of the recordkeeping involved.
Diversification is a critical issue because it responds to the concern about putting all of one's eggs in one basket. One of the key objectives of proper investing is to achieve worthwhile returns while reducing fluctuations along the way. The way to do that is to have investment funds spread among a variety of asset classes. This is done because different asset classes generally move in different directions. The technical term is non-correlation, which means that some asset classes move up while others are moving down. A well-diversified portfolio is one where there's sufficient non-correlation to reduce volatility significantly below that of the market averages.
One example is stocks and bonds. The average annual long-term return from stocks is about 10%; bond returns are about half that. But bonds are far less subject to fluctuation than stocks, which is why they are usually included in portfolios of investors with time horizons of less than 20 years. And in 2008, when almost every asset class went down dramatically, bonds held their own.
To get a handle on whether your portfolio is over-diversified, you might begin with an evaluation of your asset allocation. How much is in equities, how much is in fixed income, and how much is in alternative investments? Without knowing your personal situation, I can't say more about where those percentages should be. But the next step would be to review the funds, ETFs, and stocks to determine where the duplication of underlying holdings is.
The client I referred to above had 15 different energy stocks. That was excessive, especially since they could be replaced with one ETF focused on energy. Similarly, if you have major funds, you should be aware that they have to focus on the same highly liquid stocks, so it's likely that you have duplication there as well.
My suggestion; define your asset allocation, identify and eliminate duplications, and focus on low-cost ETFs and funds. By doing so, your task will be easier and less time-consuming, and you will be more flexible in your ability to keep improving your portfolio over time.