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Twelve Mistakes We Can Help You Avoid

1. Improperly Titling Assets

How is your house titled? Are your investment accounts in the name of your trust? What about your checking account at the bank? Many people are surprised to learn that even though they may have hired an attorney to draft an estate plan that includes a will and trusts, without properly titling their assets, their assets may ultimately go through probate upon their death. Neglecting to update the title to real estate (primary residence, vacation home, etc) is a very common mistake that people make. If a home is left in joint tenancy, upon the death of the second spouse, the home will need to be probated in order for the heirs to inherit the house.

At Highpass, we help our clients get their assets titled in accordance with their estate plan and their attorney’s advice.

2. Expecting the Future to be Like the Past (Forward Bias)

Most people expect future performance to be like the past and in turn extrapolate trends into the future. Don’t let this happen to you. This is a very dangerous way to go about investing and can lead to significant losses when markets change.

At Highpass, we look to the future and not the past.

3. Underestimating the Potential for Change and relying upon “averages.” (Normalcy Bias)

A thorough review of the last 110 years of stock and bond market data will show that dramatic changes can and do happen in the investment markets and “average returns” are rarely experienced. In fact, well above and well below the “average return” tend to happen with a high degree of frequency. Think of the investment markets like Texas vs. Hawaii. Both a have similar “average” annual temperatures, but the high and low temps in Texas are a whole lot different than Hawaii. Where do you want to be? Beware of “average” returns.

At HighPass, we build portfolios that seek to reduce volatility and don’t rely upon averages.

4. Excessive Optimism or Inadequate Skepticism (Confirmation Bias)

Either extreme can lead to more risk in a portfolio than an investor might otherwise be willing to take and ultimately significant losses.

At HighPass, we will always provide an objective analysis & feedback of extreme sentiments.

5. Portfolio Withdrawals in Excess of that Which is Sustainable

Annual portfolio withdrawals greater than 4% greatly increase the likelihood of eventually running out of money.

At HighPass, we can help you build a sustainable cash flow model for your portfolio.

6. Lack of a Clearly Defined Investment Strategy

If you don’t know where you are going, how will you get there?

At HighPass, we can help you design an investment strategy that is tailored to your unique goals.

7. Numerous Accounts with Lack of Coordination and Oversight

Not having a cohesive plan for your entire portfolio can lead to duplication of efforts by different investment managers, excessive risk taking, excessive costs, inefficient tax management, and underperformance.

At HighPass, we can help you design a strategy for your entire portfolio.

8. Concentration (Asset Class, Single Security, Sector, or Style)

Putting all your eggs in one basket can make you rich, but will likely not keep you rich. If you only grow one crop, and the crop fails, what will you eat in the wintertime? Many people tend to become emotionally attached to the stock of the company they worked for, inherited from their parents, or that made them a big return. The key is to remember that while you may love a stock, the stock doesn’t love you. Ask yourself how would you be impacted if a “good” company were to come on hard times, or even go bankrupt?

At HighPass we help you frame risk and view your investments objectively.

9. Improper Asset Allocation Relative to Goals or Station in Life

If you are close to retirement, an all equity or nearly equity strategy may not be right for you. With a short time horizon, how would you be impacted if the stock markets were to experience a sudden loss and not recover? Conversely, being too conservative can also limit your return opportunities and subject you to loss of purchasing power from inflation.

At HighPass, we help you develop a portfolio that is appropriately matched with your time horizon and risk tolerance.

10. Owing/Buying Insurance that Will Fail

Did someone sell you a variable universal life or universal life policy and then forget to help you manage the policy? Poor investment performance and increasing costs can sink an insurance policy in the long run.

At HighPass, we can review your existing policy to determine if you are on track or not.

11. Acting Impulsively or allowing Fear, Greed, Envy, or Ego to Cloud your Judgment

One emotionally driven mistake can destroy many years of investment earnings.

At HighPass, we are always here to listen. Our objectivity and experience can make a big difference when these emotions crop up.

12. Listening to Everyone Else and Getting Caught up in the Herd (Bandwagon Effect)

If you listen to everyone else, and believe what they believe, you will do what they do. What happens when everyone falls out of love with a popular investment? Think of the tech bubble of the late 90s. When there is no-one left to buy and everyone runs for the exits at once, prices tend to drop quickly.

At HighPass, we pride ourselves with having the courage to be a contrarian when necessary.