VIDEO: Active Investment Management Can Be Successful

VIDEO: Active Investment Management Can Be Successful

By Joe Dowdall, CFP®, RICP®, CRPC®, CCFC

Are you looking to get more from your investments? In this video, Joe Dowdall talks about active and passive investing and when to choose either method of managing your investment portfolio. He explains how to be successful in actively managing investments as well as the benefits. Watch this video to learn more.

Transcript

A Morning Thought on Investment Management

Now, if you’re like most people, you didn’t wake up this morning thinking, “I wish I could learn more about investment management.” But if you’re exploring the world of investments and planning, you know there are a lot of decisions to make along the way.

Today, I want to talk about one of those decisions—and I’ll explain why it’s like choosing between the escalator and the stairs.

Introducing Joe Dowdall, Financial Planner

First, let me introduce myself. My name is Joe Dowdall, and I’m a financial planner at Worth Asset Management. I work with clients on investments and financial planning, particularly helping them prepare for retirement while navigating tax pitfalls and related challenges.

Active vs. Passive Investment Management: An Analogy

One big decision in investment management is choosing between active management and passive management. Let me explain this using an analogy.

Imagine you’re at an airport, deciding whether to take the escalator or the stairs. Both options will get you to the next floor, but they differ in effort and control.

• Escalator (Passive Management):
  If you take the escalator, you can just stand there and let it do the work for you. It’s easy, requires minimal effort, and you can look around as you go.
• Stairs (Active Management):
  Taking the stairs requires more effort—you control the pace, avoid risks like slippery steps, and have full control over the journey.

Similarly, passive management involves investing in the market—say, a benchmark like the S&P 500—and letting the market dictate your portfolio’s performance. In contrast, active management means taking a hands-on approach, selecting specific investments, and hoping the effort results in a better outcome, like higher returns or less volatility.

When Passive or Active Management Makes Sense

Passive management can be a good fit for those who lack the time or energy to actively manage their investments. It’s a “set it and forget it” strategy, relying on the market to drive results.

On the other hand, active management involves effort and expertise. At Worth Asset Management, we use an active approach because we believe the time and research we put in can provide better results for our clients—whether it’s through improved returns or a smoother ride with lower volatility.

The Importance of Discipline in Active Management

To succeed in active management, discipline is key. Your strategy must be well-researched and developed, and you need to stick to it, even during market volatility. Reacting emotionally to market swings can derail your progress.

At Worth Asset Management, we employ disciplined strategies to navigate market fluctuations and help our clients manage their investments effectively.

The Role of Tax Management in Active Investing

Tax efficiency is another reason we favor active management. One strategy we use is tax-loss harvesting, where we sell investments at a loss to offset gains elsewhere in the portfolio. This approach can reduce tax exposure and help clients avoid issues like Medicare surcharges or Social Security tax hits.

Passive management, by contrast, often doesn’t allow for this level of control. Investors in passive strategies are more limited in how they can adjust their portfolios to address tax challenges.

Finding the Right Fit for Your Investment Goals

There’s a place for both active and passive management. The right approach depends on your personal goals, circumstances, and the level of involvement you want.

At Worth Asset Management, we believe an active approach provides a more effective investment solution by allowing us to focus on returns, risk management, and tax efficiency. With the time, resources, and expertise we dedicate to our clients, we can implement and maintain these strategies effectively.

For individuals managing their own investments without much time or interest in staying glued to market movements, a passive approach might make more sense.

Let’s Talk About Your Investment Approach

If you’d like to learn more about active management and how it can benefit you, I’m happy to chat. There’s no cost or obligation for a consultation.

You can reach me at 469-423-1989 or email me at joe@worthassetmgmt.com. Let’s have a quick phone call to see if it makes sense to explore this further.

Whether you’re navigating volatile markets or just curious about the benefits of active management, feel free to reach out—I’d love to help.