Investing 101: Fundamentals to Consider (Sponsored by Univest Corp)

The following article is provided by Univest Bank and Trust Co. For additional information about Univest’s many services, please visit the web site at

Investing 101: Fundamentals to Consider

By: Timothy Chubb, Chief Investment Officer, Univest Wealth Management

Financial literacy is incredibly important, but a 2015 S&P Global FinLit surveycovered by Forbesshowcased alarming stats – only 57 percent of U.S. adults are financially literate. Individuals are much more likely to tee themselves up for financial success if they understand basic components of wealth management. In this article, we’ll dive into a primer about investing, the misconceptions surrounding this effort and how individuals can easily incorporate an investing strategy into their life.

One of the biggest mistakes we see investors make is chasing yield and not considering the underlying business or why the dividend yield is so high in the first place. Oftentimes investors are so intrigued by the dividend they tend to buy a business that is paying out too much of their earnings in dividends as a means to attract shareholders. Often, a high yielding stock is one that has fallen precipitously in price recently which could indicate the dividend needs to be cut to cover the other expenses of running the company.

At Univest, we preach total return investing and having a blend of capital appreciation and income. A major rule of thumb when it comes to equity investing is to look for companies that have growing dividends because that can be an indicator that management is confident in future earnings and cash flow growth. Also, look to companies that have solid earnings and revenue growth to support the dividend and still have plenty leftover to reinvest back in their business for future growth. Looking for a modest valuation plus a reasonable dividend, as opposed to buying companies with the highest yielding dividend, can be a smart tactic.

Another best practice is to have a diversified portfolio. Many investors tend to pile into a few sectors or one stock in particular. For example, they might inherit a local utility stock and never sell it to avoid a tax bill, but these businesses can change over time for the worse. There’s lots of reasons you don’t want to own a concentrated position, so make sure to diversify among domestic equities and have balance across most, if not all, sectors. If you are ready to sell a concentrated position, proper planning should be considered. Create a game plan with your advisor that sets a budget for capital gains and allows you to whittle down the position over the course of the year as opposed to making a big portfolio change all at once.

Empower yourself and truly harness the power of investing. Sure, it can seem overwhelming and it is easy to push off “to another day,” but the earlier you start investing, the better off you will be. Be honest with yourself and set actionable and attainable goals. For example, decide to set aside five percent of your paycheck to put into an investment account.

Finally, work with an advisor who can help guide you through how much money you will need for retirement and create a plan to get there. Remember, the process will happen over time. Consider this,over the course of a 30-year career, your money should double three times which could be achieved by using the power of compounding to your advantage. By starting small today, you can set yourself up for financial success tomorrow.To have a conversation about creating a plan based on your tolerance for risk and investing goals, please contact us at 888-578-0770.


Univest uses the marketing name Univest Wealth Management to provide (1) investment and wealth management, fiduciary services and trust services through its subsidiary Univest Bank, (2) specific fiduciary and investment advisory services through Girard Partners, Ltd., (3) securities products, insurance products and brokerage services through Univest Investments, Inc., a registered broker-dealer and member of FINRAand SIPC, and (4) investment management and related products and services to Pennsylvania municipal entities through TCG Advisory, Inc. Investment products and services are not FDIC insured, and are not a deposit of Univest Bank or bank guaranteed, and are subject to risks, including possible loss of any principal amount invested.