Sam Mickey is the founder of Sam Mickey Consulting and is a financial advisor in Boston, Massachusetts. Sam provides customized tax-efficient financial, insurance, and estate planning strategies for individuals and their families, with specialization in the following:
- Savings and Investments
- Retirement and Estate Planning
- Life Insurance
- Long Term Care Insurance
- Disability Insurance
Sam Mickey began his professional career as a Research Analyst at 3i Capital Group, a leading international investment company focused on mid-market Private Equity and Infrastructure and later joined AXA Advisors, a global financial services company with $866 billion in assets under management.
Sam Mickey successfully passed Financial Industry Regulatory Authority Series 7 and 66 licensing exams and is licensed as an agent for life, health, accident, and long-term-care insurance.
We had the chance to interview Sam and learn a little more about finance and investing.
What does your typical day look like and how do you make it productive?
My typical day includes several blocks of meeting times as well as set times to reach out to new clients. In order to be productive, I need to constantly be contacting new opportunities. We essentially spend one week trying to fill the calendar for the next week.
How do you bring ideas to life?
To bring ideas to life, I would typically seek out a partner with more experience than me on the topic. From there, we would brainstorm our best course of action, possibly seek approval from other peers, and just run with it. A lot of the time you have to simply try new ideas, and those who are not successful may have had issues putting themselves out there.
What’s one investing trend that really excites you?
I have been an avid investor in crypto currencies since I was in college. While I do not recommend them to most clients, and they are extremely volatile, I do believe that they are a very exciting opportunity. If we could make it so that financial transactions were instant instead of taking two to three days, there would be a lot of cost savings opportunities for the financial services industry. The whole industry and all of its clients could potentially yield higher returns if the global fee structure and lag is lowered.
What should investors understand about diversification?
You have a set dollar amount you’re willing to invest. But you don’t want to put it all in one place, to minimize your risk. So, you put some in X investment, more in Y investment, and another portion in Z investment. This is the process of diversification. A smart strategy is to mix up the types of assets you’re investing in. It’s rare for stocks, bonds, and cash investments to move up or down together at the same time. Therefore, consider investing in multiple categories to diversify your investments and ensure balance among your investments. To further diversify your portfolio, consider diversifying your investment within each class. For example, take the allotted amount for stocks and further divide it among industries, such as health care, technology, infrastructure, etc. This way, you protect your investment from volatility in one particular industry.
A simplified way to ensure diversification is to consider a mutual fund or exchange traded fund. A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, debt instruments and other investments. However, be sure that your mutual funds are well diversified and allocated among a variety of different sectors.
Why is rebalancing important?
Rebalancing is a way to get your portfolio back on track to ensure an equal and stable investment strategy. There are three main ways to rebalance:
- Sell. By selling some investments that are overweight relative the rest of your portfolio, you can then invest in some that are underweighted.
- Buy. Purchase additional or new stocks, bonds, or other investments in underweight categories.
- Adjust contributions. As you continue to put money into your portfolio, you can direct a different portion of the money to underweighted categories.
It’s important to note that as you consider rebalancing, there may be additional taxes or transaction fees associated with the rebalance. It’s best to consult with an experienced financial advisor who can help you rebalance the portfolio with an eye toward reducing risk or transaction fees.
What is the FDIC?
The FDIC stands for Federal Deposit Insurance Corporation and “… is an independent agency of the United States government that protects you against the loss of your deposits if an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government.”
The creation of the FDIC came out of the 1929 stock market crash when millions of Americans lost their life savings from banks that had gone bust, and the entire nation plunged into an economic crisis that came to be known as the Great Depression.
Like any insurance – there are limits of what the FDIC might payout. For example, a single account for one person with no beneficiaries is granted up to $250,000 per owner. Joint accounts as well as IRAs and certain other retirement accounts are paid up to $250,000 per co-owner.
The first step to recovering your losses is to first make sure you work with banks that are members of FDIC. If you are not sure – ask or call the FDIC. You will not recover a cent if your money is in a non-FDIC institution.
What happens if you have invested assets in a brokerage firm and it fails?
The Securities Investor Protection Corporation (SIPC) protects investors from lost or stolen securities and helps manage assets during the insolvency of an investment firm. It was created in 1970 by the U.S. Congress recovering billions of assets for hundreds of thousands of investors.
Unlike the broad coverage of the FDIC, the SIPC does not offer relief to all investors. Because the stock market is different from the banking industry their policies on protection differ. SIPC will not return a sum of money to investors when the value of their stocks, bonds and other investments falls. SIPC replaces missing stocks and securities (when possible).
If your money, stock or securities were stolen, you can expect help from the SIPC, if you are sold worthless stocks and securities, SIPC will not cover you. To ensure protection, you should make sure your broker is a member of SIPC.