Ally Invest Digital Conference with Lule Demmissie (President, Ally Invest), Anna N'Jie-Konte (Founder, Dare to Dream Financial Planning), Lindsey Bell (Chief Investment Strategist, Ally Invest)

The Ally Invest Digital Conference brought together investors of all levels for a day of virtual conversation, questions, and education with a group of financial experts. From discussions on diversification to exploring options ladders, the sessions covered a range of investing topics with insights and guidance from some of the industry’s leading minds.

Couldn’t attend? Don’t worry, because we’re recapping a few of the top questions gathered during the conference and answering them here.

1. What does diversification really mean? Are you more diversified if you have several investment accounts, like a 401(k) and an IRA (individual retirement account)?

Diversification is an investment strategy that aims to minimize your risk by investing in a variety of different assets. When you have a diversified portfolio, you aren’t as reliant on any one security, because your exposure is spread across many. Diversification isn’t based on how many investment accounts you have, but what you are invested in across your entire portfolio.

Here’s a simple example: Say you have an IRA with one broker, a personal investment account with another, and an employee-sponsored 401(k). Each account is totally separate, but all three primarily hold the same security. If something were to happen to that stock, all three accounts would be affected in the same way. On the other hand, you could have just one investment account that consists of several different stocks, bonds, ETFs, and more held within it. This single account would be far more diversified.

2. Can you have an account with both a Robo Portfolio and Self-Directed Trading?

Lindsey Bell, Chief Investment Strategist for Ally Invest, explains that yes, you can participate in both a Robo Portfolio and Self-Directed Trading — and many Ally Invest customers do. Basically, Self-Directed Trading means you pick out exactly what you invest in and rebalance your portfolio manually when necessary (that’s why it’s known as D.I.Y. investing). With a Robo Portfolio, a robo-advisor picks your holdings based on your goals and risk tolerance and makes sure your portfolio continues to reflect those over time. It’s important to invest in a style that works best for you, and you may not know what that is until you give both options a try.

Read more: How to Pick the Best Investment Tool for You

3. What are the pros and cons for investing in exchange-traded funds (ETFs) compared with mutual funds? Are there options for both that follow the S&P 500?

Ben Carlson, Director of Institutional Asset Management at Ritholtz Wealth Management, spoke on the importance of diversification. Two types of investments, ETFs and mutual funds, are often considered tools for increasing diversification within a portfolio, as these types of funds both invest in many underlying securities.

ETFs may offer more flexibility in that they trade throughout the day like stocks. Mutual funds only trade once per day at market close based on their net asset value (NAV). ETFs are often cheaper to invest in due to lower associated fees than mutual funds.

You will find both ETFs and mutual funds that track the S&P 500, as it’s a very popular index. And when comparing these two investment vehicles long-term, it’s likely that an ETF and mutual fund tracking the same index will see similar returns, minus the expense ratio costs.

Read more: When It Comes to ETFs vs. Mutual Funds, There’s No Favorite Child

4. Is it a bad idea to hire a financial planner if you don’t have a lot of money to start investing with? Is it better to wait and save?

You don’t need to have a lot of money to work with a financial planner, says Anna N’Jie Konte, founder of Dare to Dream Financial Planning. While some people want to work with a financial planner because of their complex financial situations, others need guidance with debt management, and some seek help with financial habits they want to change. According to Anna, many in the traditional wealth management industry may want to see a large portfolio before talking with potential new clients — but you can find others who are more focused on helping those more early on in their financial or wealth building journey.

5. I’ve been investing for a couple of years, but sometimes it still feels like gambling, especially with the volatility of late. How do you take the emotion out of it?

Putting your money in the market — and accepting the level of risk that comes with it — can drum up emotions for anyone. But having a long-term plan, upping your investment knowledge, and avoiding over-sensationalized media hype can help you separate emotions from your strategy. Plus, having a diversified portfolio can help you maintain a  level of risk that you are comfortable with, which is critical for weathering market volatility, according to Portfolio Manager David Peltier. Finally, if your emotions are still driving your self-directed trading strategy, you might consider a robo-advisor to help automate your investment approach.

Read more: Trading Psychology: Keep Your Cool Around Hot (and Cold) Stocks

6. What are dividends and should they play a role in making decisions about stocks?

Dividends are payments made to shareholders from a portion of a public company’s earnings. They are typically distributed monthly or quarterly, and not all companies make regular dividend payments.

Dividends can be great for longer-term investors looking to pad their portfolio and increase their returns from stocks, according to Glenn Tompkins, Senior Instructor at VectorVest. When considering stocks that pay dividends though, it can be a good idea to also evaluate the dividend safety — or the likelihood the company issuing the stock will continue to pay or raise dividends.

7. What is dollar cost averaging?

Dollar cost averaging is an investment strategy in which you buy an asset at regular intervals, regardless of the share price. So, rather than try to time the market to buy assets based on the best possible price, this strategy aims to even out the up and downs of market volatility. For example, say you plan to buy 12 shares of an ETF this year. Instead of waiting to buy all 12 shares at once when the price is low, using dollar cost averaging, you might buy one share on the first of every month regardless of whether the price is higher or lower.

8. Why trade stocks at all instead of buying call options?

Shelley Seagler, Director of Education for Snider Advisors, and Brian Overby, Ally Invest’s Senior Option Analyst, discussed options strategies for managing risk and boosting long-term income in your portfolio as part of a larger investment approach. Both stocks and options have benefits and risks, and both of these investments can add diversification to your portfolio. While investing in options might present greater opportunity for profits and may be a more a flexible investment than traditional stock, buying call options can also require more research and hands-on attention than you want to take on.

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