Stock planning tax finance

Investing has its risks, but also its benefits.

But how do you stack your odds, making it easier for you to come out on top? According to Scott Lepa, senior investment analyst at MGO Inc. in Beachwood, there are some methods to better ensure gains from investments.

Lepa suggested investors first determine what their goal is.

“When making investment decisions, ask yourself, ‘does this get us closer to our long-term goal?’” he said. “Too often, I’m asked what I think of a specific investment and when I think about an investment in a vacuum, I really have no opinion, unless I know the person’s long-term goals.”

Investors should also remove emotion from investment decisions, he added.

“Emotional decisions can limit the potential for success,” Lepa said.

But before even investing in something, Lepa said there are best practices to set yourself up for success.

“Properly investing requires a plan to reach a goal,” he explained. “Properly investing requires diversification. Properly investing requires the discipline to follow a long-term plan and not be enticed by the latest and greatest shiny thing.”

Lepa suggested working backwards to properly define your desired end game, saying, “Define the 10-year goal, 20-year goal and lifetime goal, and then let’s work backward to determine how much we need to save, how much we need to invest and what sort of investment return we are targeting. Then, let’s structure investments to give us the best potential to meet those goals, while exposing assets to the least amount of risk possible necessary to achieve the goal.”

Lepa also suggested it’s best to work with a professional when trying to get the most out of your investments.

“Work with people you trust,” he noted. “Work with experts that have your best interests in mind. Make sure you ask questions if you don’t understand. Make sure you’re comfortable with all aspects of a comprehensive long-term plan before moving forward. Remember, communication is key. Anything that can be misunderstood, will.”

Professionals can also help to eliminate emotion from the process, helping to keep the investor focused on what is important.

“The biggest role that a professional can play in the investment process is to eliminate emotion from decision making while keeping the focus on long-term goals and not short-term market gyrations,” he said. “I’ve been doing this for 25 years and I’ve seen the tech bubble of the late ‘90s and 9/11, and the financial crisis followed by the longest bull market in history. With each of these events, focusing on your plan, focusing on what you can control has proven successful over time.”

When it comes to selling to make that profit, Lepa said there are just as many factors to consider.

“There are so many factors to consider when selling an investment,” he explained. “Is the investment overvalued? Is there a liquidity need? Is there a tax benefit to selling? Are there better investment opportunities elsewhere? Once an investor has considered the sale from a multitude of different angles can a decision be made relative to sale.”

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